This former penny stock’s already tripled this year – and just landed another SpaceX deal!

This one-time penny stock’s been a 10-bagger in five years. Two big SpaceX deals in a matter of weeks have piqued our writer’s interest in investing.

| 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.

Abstract 3d arrows with rocket

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

When investing in a share in the dark, cold days of early January, the idea that it may have already tripled by the end of August is a thought to warm the cockles! But that is exactly what has happened with Filtronic (LSE: FTC). Having been a penny stock just a few months ago, the share has soared 252% so far in 2024. What a return!

Something else that has returned is a large customer. Filtronic announced today (30 August) that rocket company SpaceX has placed a follow-on production order for its E-band solid state power amplifier modules. Those will be used to support SpaceX growing the size of its Starlink satellite Internet service.

Valued at roughly £6.4m, Filtronic said the order means it now expects to trade ahead of expectations in its 2025 financial year.

Should you invest £1,000 in Smith & Nephew Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Smith & Nephew Plc made the list?

See the 6 stocks

As an investor, have I missed the boat with this one-time penny stock? Or might its share price, as well as its products, still be heading to the stars?

Mixed financial track record

With £25m of revenues last year, that £6.4m contract win is significant for Filtronic. I also think the fact that a customer with the high technical demand of SpaceX is coming back with a sizeable repeat order is a powerful endorsement of Filtronic’s offering. It could help attract other customers, opening the door to revenue growth not only from SpaceX but also other companies.

But when it comes to the numbers, historically, revenue has not been as big a challenge for Filtronic as profit. Last year’s profit of £3.1m after tax was decent. But the year before, the number had been less than a sixth of that.

That helps explain the wild ride it has had. But what now?

Could the prospect of ongoing revenue growth mean fixed costs can be spread thinner, boosting the bottom line even more? Or could servicing big contracts stretch the modest-sized company and incur spending that drags it back into the red, as it was a few years ago?

I’m tempted to buy

Time will tell, and it could go either way. But I am optimistic. It was only last month Filtronic announced a multimillion pound SpaceX order – and now it has announced another one.

If it can scale up sales significantly I reckon the company could boost profit margins. It is an expert in a specialist field. Clients are willing to pay well – no smart customer wants to risk losing a hugely costly satellite because they scrimped on buying the right components.

This year’s share price rise has been incredible. But over five years, the shares have soared 944%!

Created with Highcharts 11.4.3Filtronic Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

The price-to-earnings (P/E) ratio of 53 is too high for my taste, but if I am right about the prospect for fast earnings growth, the prospective P/E ratio could be lower.

I am tempted by the investment case here and will be weighing up making a Filtronic buy in September.

Like buying £1 for 31p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 10%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

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 assessed. Consider taking independent financial advice.

C Ruane 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

artificial intelligence investing algorithms
Investing Articles

Up 272% in just a year, is Palantir stock just getting started?

This writer recognises that Palantir has grown its business very well -- but does the stock price offer him an…

Read more »

Runner standing at the starting point with 2025 year for starting in new year 2025 to achieve business planing and success concept.
Investing Articles

Up 50%? The Aston Martin share price forecast is mind-blowing! 

If analysts are right, the Aston Aston Martin share price could absolutely rocket in the year ahead. Harvey Jones says…

Read more »

Investing Articles

As the S&P 500 drops, here are 2 Stocks and Shares ISA holdings I’m watching

Our writer has different views on how President Trump's tariffs might affect these two US holdings in his Stocks and…

Read more »

Surprised Black girl holding teddy bear toy on Christmas
Investing Articles

£10,000 invested in Tesla stock at Christmas is now worth…

Tesla stock has been one of best-performing investments of the past decade. But things haven't gone to plan for investors…

Read more »

Investing Articles

Up 279% in 5 years, could Meta stock keep soaring?

Meta stock has more than tripled in five years. This writer sees lots to like about the business but also…

Read more »

Pink 3D image of the numbers '2025' growing in size
Investing Articles

25% total return in a year? Is now the perfect time to buy BP shares?

BP shares are on the front line of today's global economic and political uncertainty but analysts think they can still…

Read more »

Affectionate Asian senior mother and daughter using smartphone together at home, smiling joyfully
Investing Articles

With Cash ISA changes coming, could now be the time to consider buying shares?

Changes to the Cash ISA could lead to greater investment in the stock market. This could be a good thing…

Read more »

Investing Articles

These FTSE 100 dividend shares just got cheaper, thanks to President Trump!

Investors buying dividend shares can lock in bigger long-term yields when share prices take a tumble. These two just did…

Read more »