While investors continue to chase low-quality ‘meme stocks’ in the pursuit of big gains, there are a lot of under-the-radar FTSE shares that are quietly making investors a fortune. You won’t find these shares on Reddit threads or TikTok but that doesn’t seem to be stopping them from rapidly multiplying investors’ wealth.
Interested to learn more? Here’s a look at one such share that’s generating prolific gains for investors at the moment.
Working with SpaceX
Filtronic‘s (LSE: FTC) a British company that specialises in wireless communication solutions. Recently, it’s been having a huge amount of success selling E-band Solid State Power Amplifiers (SSPAs) to Elon Musk’s space company SpaceX.
This success is reflected in its share price. Over one year, it’s up about 80%. Over five, it’s up an incredible 1,600% (turning £5,000 into around £85,000).
That’s roughly in line with the returns from Nvidia shares over the last five years. So it’s fair to say we’ve a genuine winner here.
Worth a look today?
Is it too late to consider buying this growth stock? I don’t think so. If the orders continue to flow in from SpaceX, Filtronic’s revenues and profits are likely to keep rising rapidly. This should boost the share price.
It’s worth noting that the global space industry is still in its infancy and has a lot of long-term growth potential. According to experts at McKinsey, it could be worth $1.8trn by 2035 (versus $630m in 2023).
Risks versus reward
That said, customer concentration’s a risk here. If SpaceX decides to develop similar solutions in-house then Filtronic’s growth could slow rapidly, bringing the share price down. Because the recent contracts from SpaceX have been large. For example, one awarded in August was worth $62.5m.
Note that Filtronic’s price-to-earnings (P/E) ratio’s currently 46. So it’s priced for strong growth.
The good news here is that Filtronic’s expanding into other industries such as defence and aerospace and having success here too. For example, in July, it won a £13m contract from defence powerhouse BAE Systems to supply high-performance modules for an electronic sensor system.
One other risk that’s worth mentioning is timing of orders. With this kind of company, orders can be a little sporadic. This can lead to shifts in investor sentiment. For example, investors can get very bullish when orders come in (pushing the share price up sharply), only to lose interest when orders go missing for a while (leading to short-term share price weakness).
A lot of potential
Weighing everything up however, I think this stock’s worth considering as a growth play. Today, its market-cap’s only £310m so it’s still a tiny company.
Note that analysts at Berenberg have a 196p price target. That’s roughly 47% above the current share price.
