Here’s why penny stock Abingdon Health (ABDX) has rocketed 140%

The Abingdon Health Ltd (LON:ABDX) share price has exploded in just a few days. Paul Summers wonders whether this can continue.

| 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.

If I needed proof that investing in market minnows has the potential to dramatically increase wealth, I’d take a look at the Abingdon Health (LSE: ABDX) share price. In just five days, this penny stock has climbed 140% in value.

What’s behind this rise. And, importantly, can it continue?

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!

Why the ABDX share price is flying

York-based Abingdon Health describes itself as a “world-leading developer and manufacturer of high-quality rapid lateral flows tests“. The reason why its share price has been soaring in recent days is down to the launch of the BioSURE Covid-19 IgG Antibody Self Test. BioSURE — Abingdon’s partner — already produces rapid tests for HIV. 

This test itself uses a minute amount of blood from a finger and gives results in around 20 minutes. Essentially, it allows people to monitor their own antibody status in the comfort of their home either before getting jabbed, after getting jabbed or post-infection. Based on the thickness of the line on the testing strip, people can quickly understand whether they are protected against Covid-19 or not. 

Such a test is patently useful as economies around the world continue to recover from multiple lockdowns and lost activity. So, could this just be the start of a sustained rise in the ABDX share price?

Revenue could soar

There are certainly reasons to be bullish on the outlook. Production of the test is now in full flow at the company’s facilities in York and Doncaster. Importantly, Abingdon is also the exclusive worldwide manufacturer of the test.

There are other positives. I’m not an expert on pricing. However, £32.95 (the cost of the test) doesn’t seem excessive. Moreover, it’s likely that demand for Abingdon’s test will exist for some time as more governments shift to the idea we all need to manage rather than defeat Covid-19. It may become especially useful if booster vaccinations are deemed necessary.

Another thing worth knowing is that the BioSURE Covid-19 IgG Antibody Self Test is just one of a number of Covid-19-related products being manufactured by the firm. Assuming others make the grade, revenue growth at Abingdon could conceivably soar.  

Buyer beware

As wonderful as the performance of the ABDX share price has been, it goes without saying that there are one or two things I need to remember before investing here. 

The first is that small-cap stocks, especially those in this area, are prone to ‘pop and drop’ behaviour. A quick peek at the share price graph of diagnostic firm Novacyt bears this out.

Will Abingdon follow a similar trajectory? Well, no share price rises in a straight line. It’s inevitable some traders will want to bank profits at some point. Whether the stock continues to multi-bag before then is, naturally, very hard to say.

A related issue for investors is that Abingdon has a very small ‘free float’. Just 25% of its stock is traded on the market. That may help explain why the share has done so well recently. It only takes a few trades to really move the needle. Since the ABDX share price has the potential to also move violently downwards, I think there’s one thing I can comfortably predict: volatility. 

Overall, I rate the shares as a (very) cautious buy for my portfolio. Nevertheless, I’d only ever play with money I could afford to lose.

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

Paul Summers has no position in any of the shares 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.

More on Investing Articles

A beach at sunset where there is an inscription on the sand "Breathe Deeeply".
Investing Articles

Stock market crash: here’s why falling prices is good news

Over in the US, a stock market crash is battering high-priced stocks. But I see falling shares as an opportunity…

Read more »

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Investing Articles

These 5 FTSE 100 shares crashed in 2022. I’d buy 1 today

Although the FTSE 100 index is flat in 2022, some Footsie shares have crashed hard this year. But I see…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

How investors can boost their passive income when the FTSE is falling

Stock markets are plagued with fears right now. Here's why I firmly believe those fears improve our passive income prospects.

Read more »

Image of person checking their shares portfolio on mobile phone and computer
Investing Articles

2 cheap UK shares to buy right now!

Recent market volatility means many top stocks now trade at rock-bottom prices. Here are two cheap UK shares I'm thinking…

Read more »

Rolls-Royce's business aviation engine, the Pearl 700
Investing Articles

The Rolls-Royce share price is just pennies. Am I missing something?

As the Rolls-Royce share price lingers in penny stock territory, our writer revisits the investment case that has attracted him…

Read more »

Compass pointing towards 'best price'
Investing Articles

How to put a valuation on the Woodbois share price

The Woodbois share price has fallen from its recent spike, so should I buy now? And how can I work…

Read more »

Inflation in newspapers
Investing Articles

I’d fight inflation with these 2 FTSE 100 dividend shares

With inflation hitting a 9%, I'm boosting my passive income and turning to these two FTSE 100 dividend stocks.

Read more »

New Ways of Investing - Hands Only Using Smart Phone
Investing Articles

2 cheap Footsie stocks to buy for BIG dividends!

The recent stock market sell-off leaves plenty of top stocks looking too cheap to miss. Here are two great Footsie…

Read more »