Avacta exploded higher, and I’m finding other strong-performing shares too

In this stock-picker’s market, Avacta isn’t the only opportunity. Here’s where I’m finding some decent share ideas right now.

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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.

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On 3 April, the Avacta (LSE: AVCT) share price stood close to 20p. Today, it’s near 182p. You don’t need me to tell you how holding the stock could have transformed your portfolio.

The biotechnology company’s share price exploded higher when it announced an agreement with Cytiva to develop a saliva-based rapid antigen test to indicate whether a person has the Covid-19 infection.

Then, on 20 May, Avacta revealed it had entered a “global, exclusive, direct-to-consumer sales and marketing” agreement for its Covid-19 antigen test with Medusa 19 Ltd.

A substantial market for the Avacta test

Avacta’s chief executive, Dr Alastair Smith, said in the recent update the potential size of the market for the firm’s saliva test is “substantial.” He reckons the demand will come from businesses for workforce screening as well as directly from consumers.

It seems like a no-brainer to expect these tests to fly off the shelves in the current pandemic. But it remains unclear how profitable sales will be. And the company has invested significant sums of money into getting the test off the ground. Meanwhile, the coronavirus will only run for so long. The R (reproduction) value of the virus has been falling, and the market for tests could vanish if a vaccine arrives.

If I’d been lucky enough to have been holding shares in Avacta through the recent rises, I’d take at least some of my money off the table now and possibly all of it. I reckon investing can be at its best if we aim to run to where the ball is going rather than where it is now. For me, that means looking at other opportunities today.

And I’ve been finding some strong-performing shares in the stock market recently. Luckily, many haven’t exploded up so far and as fast as Avacta. But the trends are up, driven by resilient underlying business performance.

A stock-picker’s market

I reckon it pays to be selective though. It’s true that lockdowns are easing and many businesses can soon resume trading, such as retailers. But a world with coronavirus will be different, and that looks set to lead to reduced revenue and profits for many companies. Meanwhile, there are some sectors with uncertain futures, such as the hospitality industry and travel.

However, other sectors are doing well, such as IT, computing, healthcare, food supplies and others. In many cases, business hasn’t been affected much by the crisis and has sometimes been enhanced by it.

Right now, I like the look of shares such as Avast, Beeks Financial Cloud, Codemasters, Faron Pharmaceuticals, Genus and Sage, to name but a few. But don’t buy the shares without first researching and analysing the underlying business though.

If you like what you’re seeing after doing your own research, I reckon you’ll find other attractive opportunities in the sectors I’ve mentioned. And promising shares in other sectors too. Good hunting!

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

Kevin Godbold has no position in any share mentioned. The Motley Fool UK 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.

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