I always keep an eye on small-cap opportunities. With that in mind, I feel technology firm BATM Advanced Communications (LSE:BVC) is one such opportunity. The company is very topical too. BVC has a subsidiary that has been developing a Covid-19 test and that’s behind the recent spike in its share price.
Small-cap opportunity
BATM Advanced Communications is a leading provider of real-time technologies for networking and cyber security solutions for bio-medical and bio-waste treatment solutions. It operates via two divisions — Bio-Medical and Networking and Cyber Security. Headquartered in Israel, it has a global reach with offices and operations in North America, Europe and Asia too.
When the market crashed, the small-cap was not affected as badly as some other FTSE incumbents. The BVC share price decreased just over 30% between February and March from 47p per share to 31p per share. And boy, has it bounced back! At the time of writing, the shares can be purchased for nearly 135p each.
Covid-19 applications and trading update
There are a couple of reasons behind this hike in the share price. Firstly as I mentioned, a subsidiary — Adaltis — launched a Covid-19 test kit that diagnosed if a patient has had the virus by detecting antibodies in their blood. It was news of orders being shipped to European countries that caused the share price to rise.
Secondly, its interim results made good reading for current and prospective investors, in my opinion. The results for the six months to 30 June showed revenue up over 35% compared to the same period last year. As a result of this, gross operating profit jumped close to 50%. The Bio-Medical division makes up 65% of the firm’s revenue and is where most of its current burgeoning products reside. Revenue was up over 65% in this division. But Networking and Cyber Security also played its part in its growth with a 5% increase in revenue.
The outlook for the remainder of the year is favourable, which makes me more confident. BVC has confirmed it has a substantial backlog of orders that it’s working hard to fulfil and both divisions are expected to report record revenue growth for 2020. Overall group revenue should be up 30% compared to 2019. You would be hard-pressed at the moment to find many other small-cap stocks reporting such positive results and future outlook.
Buy now or regret it?
I really like the look of BVC as a small-cap opportunity. It has a clear and solid business model within its two divisions. It seems the Bio-Medical unit is thriving especially given the Covid-19 situation. But the Networking and Cyber division is performing well quietly in the background too.
At its current level, I feel it’s still a bargain, even though its share price has increased over 150% since the beginning of May. I expect this upward trend to continue. BVC is in a strong cash position too and expects to be able to pay a full dividend for 2020 which further cements my stance on the business.
