Every once in a while, a penny stock transforms into something nobody saw coming. That’s precisely what’s happened with Filtronic (LSE:FTC).
Five years ago, shares in the UK-based microelectronics company could be picked up for next to nothing. Today, after a 2,470% surge, the once-forgotten penny stock has blasted its way into mid-cap territory.
But could there really be even more to come? Let’s find out.
How SpaceX turned a small UK firm into a serious player
As a quick introduction, Filtronic specialises in designing and manufacturing highly complex radio frequency components. In oversimplified terms, these are essentially the ultra-precise electronic parts that allow satellites, rockets and defence systems to transmit and receive data at extraordinary speeds.
For years, it was a fairly niche and slow market, but with SpaceX revolutionising the space economy, everything’s changed. The company now holds a multi-year, $62.5m contract with SpaceX to supply next-generation gallium nitride E-band components for the Starlink satellite constellation.
That means, as SpaceX launches thousands more satellites and expands Starlink’s global coverage, demand for Filtronic’s specialist components is growing with it. And the most recent trading update confirmed that this critical supply strategy’s delivering.
For its 2026 fiscal year (ending in May), Filtronic is on track to deliver at least £55.5m in revenue paired with £11.1m in underlying EBITDA with the latter coming in ahead of analyst expectations.
At the same time, its new Sedgefield headquarters and manufacturing facility is now fully operational, with capacity to support revenues in excess of £200m a year. That means the business is getting ready and planning ahead for a near-4x expansion of its current operations.
And in the words of leadership, CEO Nat Edington set out the group’s ambitions plainly:
We are building increasing visibility across key programmes and entering fiscal year 2027 with real momentum and confidence.
So is this a no-brainer?
Inspecting Filtronic’s valuation
Here’s where the honest conversation begins. After a 2,470% rise, Filtronic’s no longer trading at a penny share price tag. Instead, the business is being marked up as a quality growth stock with some pretty lofty expectations being baked in.
The SpaceX contract’s real, and the order book’s strong. But with an underlying price-to-cash-earnings ratio of over 50, investors are seemingly expecting management to continue converting design wins into large-scale production contracts.
That certainly seems to be what’s happening at the moment. But there’s no guarantee this pattern will continue. And that could be particularly troubling if SpaceX’s procurement strategy changes given how dependent Filtronic now is on this single customer.
A risk worth taking?
Filtronic reports its next set of full-year results in August, which will be the next major checkpoint. However, there’s no denying Filtronic’s a genuinely exciting business riding one of the most powerful structural themes of the decade: the commercialisation of low-earth orbit.
The technology’s real, the contracts are real, and the new manufacturing facility sets the stage for a significant step-up in scale.
Sadly, without more transformational contracts signed, the share price may struggle to replicate the explosive returns of the last five years. And that’s a big source of uncertainty, which is why I’m not rushing to buy any shares today.
But for investors with a high-risk tolerance looking to profit off of SpaceX’s rise, Filtronic could be worth a close look.
Should you invest £5,000 in Filtronic Plc right now?
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And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Filtronic Plc made the list?
Zaven Boyrazian does not hold any positions in the companies mentioned.
