The Motley Fool

Novacyt exploded higher, and I’m finding other strong-performing shares too

Image source: Getty Images.

Not all shares have done badly in the recent stock market crash. Take small-cap Novacyt (LSE: NCYT), which describes itself as a “rapidly growing” international diagnostics company.  

It generates revenue by selling diagnostic and pathogen testing kits based on molecular and protein testing technologies. The firm serves the human clinical, life science, food, and industrial markets.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Right place, right time

At the beginning of 2020, the share price stood close to 14p. Today, as I write, the stock changes hands near 394p. Essentially, the progress has been driven by the launch and rapid uptake around the world of the firm’s novel coronavirus test.

If you had £1,000 in the share at the beginning of the year – perhaps as a small part of a diversified portfolio – you’d now have an investment worth about £28,000. However, I wouldn’t invest in the stock today. In an update on 29 April, chief executive Graham Mullis said: “This exceptional demand for our Covid-19 test could continue for some months.”

Indeed, the demand will fall away at some point. Perhaps when we see a vaccine for Covid-19. Meanwhile, the forward-looking earnings multiple for 2020 runs just above 32, which looks pricey.

Novacyt has done well for its shareholders on the back of its coronavirus test. But I’d be looking to run to where the ball is going next, not remaining where it is now. So, if I had profits from an investment in the company’s shares, I’d probably take them now.

Opportunities now in the London stock market

And there are plenty of opportunities in the London stock market. But I reckon the pandemic will change the shape of the economy for the future. Some sectors, and the companies within them, will struggle. Many firms will likely fail.

Trading will be difficult and costly for many companies because they’ll need to apply physical-distancing measures for customers and employees. In many cases, revenue will fall. In shops, for example, fewer customers will be allowed in stores. We’re already seeing that effect, of course, but it’s clear that such steps will continue. One thing seems certain, higher costs and lower revenues will add up to lower profits.

Therefore, I’d be cautious about buying the shares of companies in fallen industries in the hope of a recovery. In many cases, businesses and stocks look set for modest turnarounds, and my guess is that many sectors will fail to recover to previous highs. At least until the virus is put to bed with a vaccine.

Instead, I’d look for companies and sectors trading well now. I’m seeing many decent-looking opportunities in industries such as healthcare, IT, software, betting and gaming, for example. To me, good trading now implies the potential for advancement in the months and years ahead, even in a world dealing with Covid-19.

One thing I’m sure about more than anything right now. Stock-picking is king.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Kevin Godbold has no position in any share 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.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.