Identifying shares that could replicate the recent success of Rolls-Royce isn’t easy. After all, it’s rare for a stock to rise 12-fold over a period of five years.
That’s why Filtronic (LSE:FTC) has caught my eye. Its share price has soared over 1,600% in three years. Over this period, it’s comfortably met Peter Lynch’s definition of a 10-bagger, something that appreciates at least 10 times (1,000%) in value.
However, could there be more to come? Let’s take a closer look.
What does it do?
Filtronic provides bespoke innovative radio frequency solutions, which it claims can’t be found anywhere else. It seeks to increase bandwidth, lower latency, and improve reliability. And with the spectrum becoming limited and increasingly complex, the company’s services are likely to become even more important.
Some of the solutions it provides include facilitating critical communications for emergency responders, enabling high-performance transmission of data from ground to space, and helping transfer the big data necessary for 5G telephone networks.
It’s doing particularly well in two industries that are experiencing huge growth at the moment. FY25 saw a record order intake from the space sector, including contract wins with SpaceX, the European Space Agency and Airbus. In the defence space – admittedly, this might not appeal to some ethical investors – it also secured new work with QinetiQ and BAE Systems.
How’s it performing?
Surprisingly, for a company that’s been around for over 45 years, it’s growing remarkably quickly. During the year ended 31 May 2025 (FY25), its revenue was £56.3m, 121% higher than for FY24. Its FY25 adjusted EBITDA was £17m, 248% better than in FY24.
But this growth trajectory’s likely to be interrupted in FY26. EPS is currently (2 February) forecast to be around half that for FY25. This reflects the completion of some one-off work for SpaceX. Analysts’ consensus is for FY26 revenue of £55.5m and EBITDA of £10.9m.
Its reliance on SpaceX is a double-edged sword. Filtronic says its “initial strategic partnership” with the group was “the enabler” for the FY25 revenue and profit growth. But with Elon Musk’s company contributing 83% of turnover during the year, this could be an issue if something goes wrong.
On the other hand, I’ve seen one forecast suggesting SpaceX will be worth $12.8trn by 2040. If correct, I’m sure Filtronic will be one of the beneficiaries.
What does this all mean?
The group’s share price rally means its forward (FY26) earnings multiple of 61 is on the high side. And when a company’s share price grows exponentially, investors could be forgiven for thinking they’ve missed the boat. However, in April 2025, I thought that about Rolls-Royce. But it’s now the best performing share I own.
| Financial year | Share price (pence) | Diluted EPS (pence) | P/E ratio |
|---|---|---|---|
| 31.5.21 | 9.00 | 0.03 | 300.0 |
| 31.5.22 | 9.88 | 0.68 | 14.5 |
| 31.5.23 | 13.00 | 0.21 | 61.9 |
| 31.5.24 | 59.00 | 1.41 | 41.8 |
| 31.5.25 | 125.25 | 6.05 | 20.7 |
| 31.5.26 | 189.00 (at 2.2.25) | 3.10 (forecast) | 61.0 |
In my opinion, Filtronic’s a stock to consider for the long term. It’s clearly good at what it does and, like Rolls-Royce, has established a reputation for engineering excellence. But with the majority of its revenue coming from one customer, there’s likely to be a few bumps along the way and I suspect its share price performance over the next few years is unlikely to match the recent success of Rolls-Royce.
However, with the defence and space sectors attracting lots of attention at the moment, I reckon those who are prepared to ignore these bumps and sit tight could be handsomely rewarded.
