A soaring FTSE small-cap tackling Covid-19 I think you should consider!

This Fool looks at a FTSE small cap company that has experienced massive share price growth due to its work on Covid-19 related solutions.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Young woman wearing face mask while walking in the streets of London

Image source: Getty Images

Global markets, including the Footsie, have been decimated by the Covid-19 pandemic. 

But there are companies out there that will attempt to combat the issue and a small-cap company doing just is Avacta (LSE:AVCT).

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

Covid response

Avacta is listed on AIM and may be little known, but it has a fairly long history (it’s been AIM-listed for close to 15 years). That’s an important point to note so don’t think it’s a ‘here today-gone tomorrow’ type of business. 

Biotech and health companies are at the forefront of attempting to tackle this virus and AVCT has established products that it’s now attempting to use in battling Covid-19. 

Testing

Avacta is a biotech company with two specific proprietary platforms. One of these is a targeted chemotherapy platform. And the other, which is relevant to Covid 19, is called Affimer. This platform offers an alternative to traditional antibodies and is derived from small human protein. 

AVCT has collaborated with two other organisations for separate products using its Affirmer platform. One of these has been to create a rapid testing solution. The other is to develop an antibody test. Both projects could be crucial in the fight against Covid 19.

Being a small organisation, Avacta’s work consists of a lot of collaboration with larger companies that need its platforms. In turn Avacta uses these other companies’ infrastructure and reach in certain areas. This is exactly what it has done for its Covid projects. 

Recent performance

Avacta has seen an increase of nearly 500% in its share price since the turn of the year. From 18.5p per share, it currently trades closer to 110p. That echoes the share price performance of some other Covid-19-linked small companies.

Earlier this month it released results for the 17 months to 31 December 2019 (17 months due to a change in its reporting period). The results looked promising to me. Revenue almost doubled compared to the previous full year, and its cash balance was up a healthy 70%. It also received a “milestone upfront payment” of $2.5m from one of its collaborators on a project that could be worth over $1bn long term.

Short-term risk or long-term reward?

What really excites me is the Affirmer platform in the fight against Covid-19. My research indicates its new method is groundbreaking in respect of antibodies. Such a platform could see AVCT’s standing in the industry grow rapidly.

This is a small-cap stock with some excellent projects in the pipeline. Some of these are directly related to a the Covid-19 pandemic.

It would be foolish of me not to note the risk involved here. Share prices have been surging for the many companies out there attempting to create Covid-19 vaccines and other solutions. Not all of these companies will succeed and prices could fall as fast as they’ve risen. The reason I like Avacta is that its original work on cancer treatment solutions will continue even if Covid-19 solutions don’t succeed. Avacta has many other projects in the pipeline so isn’t just banking on the coronavirus programmes. With the shares trading at just over 100p, I feel a small amount of money invested in this burgeoning small-cap could reap longer-term rewards. 

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Jabran Khan has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

macro shot of computer monitor with FTSE 100 stock market data in trading application
Investing Articles

Here’s a FTSE 250 stock to buy to benefit from the construction boom!

Jabran Khan details a FTSE 250 stock that could be primed to benefit from the infrastructure and construction boom.

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

Is the Royal Mail share price a buying opportunity?

With a 6% dividend yield and a price-to-earnings ratio of 3, is the Royal Mail share price in buying territory?…

Read more »

Scene depicting the City of London, home of the FTSE 100
Investing Articles

3 FTSE 100 shares! Should I buy them?

I'm searching for the best FTSE 100 stocks to buy following recent market volatility. Are these blue-chip UK shares too…

Read more »

macro shot of computer monitor with FTSE 100 stock market data in trading application
Investing Articles

Should I buy one of the cheapest shares on the FTSE 100 index?

This Fool explores one of the cheapest stocks on the FTSE 100 index by share price and decides if he…

Read more »

Asian Indian male white collar worker on wheelchair having video conference with his business partners
Investing Articles

With trading suspended, where could the Eurasia Mining (LON:EUA) share price go next?

This morning, the EUA share price was suspended pending an announcement - so could improving sales send the share price…

Read more »

Hand holding pound notes
Investing Articles

Are the FTSE 100’s top income stocks a bargain?

The FTSE 100 is renowned for its value and dividend stocks. So, are the index's top income stocks worth a…

Read more »

Compass pointing towards 'best price'
Investing Articles

Scottish Mortgage shares have slumped 40%. Time to buy now?

Scottish Mortgage Investment Trust (LON: SMT) shares have rewarded shareholders well in recent years. I'm thinking of buying now they're…

Read more »

Mindful young woman breathing out with closed eyes, calming down in stressful situation, working on computer in modern kitchen.
Investing Articles

3 recession stocks I’d buy in a hurry

With the economic outlook getting worse, our writer highlights a trio of recession stocks he would consider buying for his…

Read more »