Rolls-Royce shares continue to deliver fantastic returns for investors. Over the last year, they’ve risen about 65%.
But investors could have generated higher returns with shares in a smaller British industrial company (that few people have heard of). This company specialises in manufacturing components for electric vehicles (EVs), medical equipment, and data centres and right now, it’s having a lot of success.
A UK company with momentum
The stock in focus today is Volex (LSE: VLX). It’s a UK-based global manufacturer of power cords, cables, and data connectivity products for ‘mission critical’ applications.
This company can trace its roots back to 1892 when two entrepreneurs started a manufacturing company in Manchester. It has come a long way since then – today it has 25 manufacturing sites across the world and over 13,000 employees.
At present, the company’s share price is around £4.55. That means that £1,000 buys 219 shares (ignoring trading commissions).
In terms of performance, the shares are up about 35% (versus 18% for Rolls-Royce) over the last six months and about 67% over the last year. They still look pretty cheap though, especially compared to Rolls-Royce.
An investment opportunity?
In my view, this stock has a lot going for it right now. For a start, the company is growing at an impressive pace thanks to its strategy of focusing on manufacturing products for structural growth markets (eg, data centres and EVs).
In January, it advised that for the first nine months to December 2025, group revenue was $902.7m, representing year-on-year organic constant currency growth of 14.8%. It noted at the time that it was benefitting from particularly strong growth in its Complex Industrial Technology division, where it makes cables for data centres.
On the back of this performance, management said that full-year revenue (for the year ending 31 March) would be ahead of market expectations. It added that operating profit would be ahead of the Board’s previous expectations.
We also have an attractive valuation. Looking at the earnings forecast for this financial year (38 cents), the price-to-earnings (P/E) ratio is just 16.
That seems very reasonable to me. Note that Rolls-Royce currently has a P/E ratio of about 40.
One other thing to highlight is the fact that in early February, Chief Operating Officer John Molloy bought 31,620 shares in the company at a price of £4.55 (today’s share price). This trading activity suggests that the insider expects the share price to keep rising (no director buys company stock if they expect it to tank).
Worth a closer look
I’ll point out that this company is economically sensitive. If we were to see a major economic slowdown in the years ahead, I’d expect its shares to underperform.
Its fortunes are also tied to certain industries. If, for example, the data centre industry was to experience a slowdown, growth could be compromised.
All things considered though, the risk/reward skew looks attractive to me. I believe this under-the-radar growth stock is worth a closer look right now.
