Right now, many growth investors are fixated on names like Nvidia and Palantir. And it’s easy to see why – thanks to AI these companies are generating prolific gains. However, there’s an under-the-radar UK stock that’s generating similar kinds of gains. Operating in several high-growth industries, I think it’s worth a closer look right now.
A small-cap generating incredible gains
The stock I want to highlight today is Filtronic (LSE: FTC). It’s a designer and manufacturer of advanced radio frequency (wireless communication) solutions for the space, aerospace & defence, and telecoms infrastructure markets.
Listed on the UK’s Alternative Investment Market (AIM), it currently trades for £1.43. That’s roughly 1,520% higher than the share price five years ago, meaning it has outperformed Nvidia over that timeframe.
At present, the company’s market cap is about £320m. So, unlike Nvidia and Palantir, it’s still a tiny company (with plenty of room for growth).
A space stock
Now, looking at Filtronic today, I see substantial long-term potential.
Recently, the company has been having a huge amount of success in the space industry, supplying E-band Solid State Power Amplifiers (SSPAs) to Elon Musk’s company SpaceX. These convert low-power radio frequency signals into higher power ones.
It has been working with SpaceX for a few years now. However, this year it has announced several major contracts with the company including one worth £24m – its largest order to date with the group.
Looking ahead, there could be more deals to come with SpaceX (and other space companies), presenting opportunities for further growth. Today, the space industry is still in its infancy and analysts expect it to grow significantly over the next decade.
Opportunities in defence
Filtronic isn’t just a space play, however. Today, it’s also having success in the defence industry.
For example, in June, the company announced a new contract award with BAE Systems to supply high-performance modules for an electronic sensor system. This was worth £13.4m.
It also announced a contract with Italian defence powerhouse Leonardo in May. This contract – worth £0.8m – is for the supply of high-performance modules for an airborne radar application.
Looking ahead, the opportunity in defence could be substantial. That’s because recently, NATO members committed to spending 5% of GDP on defence by 2035 (up from 2%).
“Our record revenue growth and landmark wins in the Space and Defence sectors reflect the trust placed in us by global players and that our technology is meeting real world demand. As we enter FY2026, we are confident in our trajectory, with a strong order book, healthy cash position, and a strengthened leadership team in place.”
Filtronic CEO Nat Edington
Higher risk
I’ll point out that I see Filtronic as a higher-risk stock.
With this kind of company, revenues can be lumpy, resulting in inconsistent growth (zero growth is expected this financial year at present). This can result in share price volatility.
Another risk is customer concentration. Right now, a lot of Filtronic’s revenues are coming from SpaceX. If it turns to another supplier, or develops solutions in house, Filtronic could be in trouble.
The valuation is also quite high. Currently, the forward-looking price-to-earnings ratio is 46, meaning there’s minimal room for error.
I think it’s worth considering as a speculative Buy, however. It’s not a stock to bet the farm on, but a small position could pay off in the long run.
