The Motley Fool

This coronavirus stock is up over 1,000% since the market crash, but is it still worth buying?

Image source: Getty Images

A market crash usually causes the price of stocks to plummet. In the case of Avacta Group (LSE:AVCT), the opposite has occurred. Listed on the FTSE-AIM for approximately 15 years, AVCT is not a flash in the pan.

The Covid-19 pandemic opened up a vacuum, whereby pharmaceutical companies began to develop coronavirus-related products. As a result vaccines, testing kits, and track-and-trace applications among other products are being created.

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...

Avacta is a small biotech firm with two core proprietary platforms. One of those is called Affimer, which offers an alternative to traditional antibodies and is derived from small human protein. AVCT’s other work is related to cancer therapy drugs and treatment. Due to its size, it often partners up with larger known pharma giants who need AVCT’s proprietary platforms. 

Market crash sensation

As the market crash occurred, investors will have looked to pick up cheaper-than-usual shares in companies they have followed for some time. The opposite of this strategy would have been to look for burgeoning stocks related to the crash and pandemic, and I believe Avacta is one such stock. The height of the market crash is widely considered to be 18 March. On this date, I could buy Avacta shares for 14p per share. As I write, I would be buying at 176p per share. This is a mammoth 1,157% increase.

One of Avacta’s Covid-19-related partnerships is with Cytiva. Avacta has also recently signed a distribution agreement with Medusa Ltd for direct to consumer sales of its Covid-19-related products. Testing results have been positive for AVCT and I believe it is a market crash opportunity.

Half-year results

At the end of September, AVCT released results for the first half of the year. The update was largely positive and mentioned a new international partnership with a South Korean pharma firm for another new project.

Due to new partnerships and projects it is increasing R&D investment. Furthermore, revenues increased over 60% compared to the same period last year. It seems other pharmaceutical companies are seeking out Avacta’s platforms and work. This is definitely a positive sign and it seems the market crash and pandemic have benefitted Avacta.

My verdict

If I had a crystal ball and envisaged Avacta’s rise I would have been a very happy investor right now. I still feel it is a good investment at its current price, albeit with some risk involved. Full-year results posted earlier this year and recent half-year results show me growth is happening.

I believe there are still market crash bargains and opportunities out there. Avacta may not be as much of a bargain as it was in March, but I still feel it has more to offer. I would not be surprised if the share price increased as further progress of Covid-19-related products emerges. I would be tempted to pick up some shares as part of a diverse portfolio. 

The high-calibre small-cap stock flying under the City’s radar

Adventurous investors like you won’t want to miss out on what could be a truly astonishing opportunity…

You see, over the past three years, this AIM-listed company has been quietly powering ahead… rewarding its shareholders with generous share price growth thanks to a carefully orchestrated ‘buy and build’ strategy.

And with a first-class management team at the helm, a proven, well-executed business model, plus market-leading positions in high-margin, niche products… our analysts believe there’s still plenty more potential growth in the pipeline.

Here’s your chance to discover exactly what has got our Motley Fool UK investment team all hot-under-the-collar about this tiny £350+ million enterprise… inside a specially prepared free investment report.

But here’s the really exciting part… right now, we believe many UK investors have quite simply never heard of this company before!

Click here to claim your copy of this special investment report — and we’ll tell you the name of this Top Small-Cap Stock… free of charge!

Jabran Khan 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.