Let’s take a look at what this under-the-radar firm does and, most importantly, question whether such a performance can be sustained. 

What’s this hot stock all about?

Genedrive is a molecular diagnostics business. In its own words, the company’s platform supports “the diagnosis of infectious diseases and for use in patient stratification (genotyping), pathogen detection and other indications”. These include Hepatitis C, military biological targets and, perhaps most importantly, Covid-19. 

Genedrive has been listed since 2007 and shareholders have enjoyed/endured a rollercoaster ride since. However, anyone buying at the height of panic in March 2020 will have done extremely well. Just before Boris Johnson announced the first UK lockdown, the Genedrive share price languished at just under 9p. On Friday, the very same stock closed at almost 62p. 

Why is the Genedrive share price flying? 

On 29 November, Genedrive revealed that its COV19-ID test had been supplied to “a range of potential commercial partners” for review and evaluation. This news was compounded by last week’s announcement that the company had now received the CE mark as intended. In other words, COV19-ID conforms with European health, safety, and environmental protection standards.

I won’t go into the science too much here, save to say that Genedrive’s test (performed via a nasal swab) can deliver positive results in 7.5 minutes. Negative results arrive within 17 minutes. As CEO David Budd commented, this will “allow immediacy and convenience in molecular testing, rather than waiting many hours or days for results from a central laboratory.”

On top of this, Genedrive’s test “offers several orders of magnitude improvement in sensitivity” compared to the usual antigen lateral flow devices.

Rapid results should mean a reduction in transmission rates and, ultimately, a quicker return to normality. That’s potentially great news for, well, everyone but particularly for any operator in the travel, leisure and hospitality space.

More to come?

It’s clear that the Covid-19 tale has several more chapters to run. That could provide a sustained boost to the Genedrive share price. This is especially if deals with partners are announced over the next few weeks and months. A market-cap of just £57m certainly suggests a lot more room for growth compared to the likes of, say, diagnostic peer Novacyt.

Even so, it’s clear only those blessed with a stoical temperament should apply. While GDR has soared in only a few weeks, it’s still way below the 52-week high of 165p. Those who picked up the stock in February or March will still be nursing heavy paper losses.

Due to a relatively small free float (the number of shares available to trade on the market) of 60%, I think this kind of volatility is set to continue. As evidence of this, the Genedrive share price dropped almost 12% on Friday. 

(Very) cautious buy

Recent news from Genedrive is undoubtedly encouraging and I wouldn’t rule out further gains going forward. As such, I’d consider buying a slice of the company today. That said, I’d be sure to only use money I could afford to lose while also remembering that there are other ways to take advantage of the market’s Covid-19 concerns.

The post The Genedrive share price is up over 230% in one month! Is there more to come? appeared first on The Twelfth Magpie.

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Paul Summers has no position in any of the shares 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.

Novacyt

First up is former penny stock Novacyt (LSE: NCYT). Based on analyst projections, shares in the clinical diagnostics specialist trade on just five times earnings. That seems ludicrously cheap considering this month’s half-year numbers.

Total revenue jumped 50% to £94.7m in the first six months of 2021 compared to the same period last year. A little under £54m of this came from overseas orders and the private UK testing market. The latter includes buyers operating in, for example, the film and travel industries.

Looking ahead, Novacyt thinks there could be more growth ahead thanks to fresh contracts, a new PROmate Covid-19 test launch, travel routes reopening and the colder weather arriving. While this all sounds great, there’s a chance that the last two of these won’t happen as quickly as the company would like. An ongoing dispute with the Department of Health and Social Care isn’t ideal either. 

Taking into account how volatile the shares have been over the last year, Novacyt is still only a cautious buy for me.

Serica Energy

Another ‘cheap’ AIM stock is Serica Energy (LSE: SQZ). The North Sea-focused oil and gas company’s shares trade on just five times earnings. That might prove a bargain in time.  In July, SQZ announced promising flow test results from its 50%-owned Columbus development well. The stabilised rate was “at the upper end” of what Serica expected. Once up and running, it’s believed the well will produce roughly 7,000 boe/d (barrel of oil equivalent per day).     As someone with only mixed success in this sector, I’m hesitant to buy shares in Serica. That said, I like that the company began 2021 with no debt and £90m in cash. The fact that the AIM stock is already producing from its Bruce, Keith and Rhum fields (previously owned by BP) is another positive. 

However, the risks involved in future drilling campaigns (such as the North Eigg project), not to mention the opportunities available elsewhere, can’t be overlooked. So, Serica would be another cautious buy for me.

Atalaya Mining

For an even lower valuation, I’d check out Atalaya Mining (LSE: ATYM). It’s trading at just four times forecast earnings. 

Atalaya produces copper concentrates and silver by-product at its 100% Proyecto Riotinto site in Spain. It also has an agreement to own up to 80% of Proyecto Touro, a brownfield copper project in the same country. And, based on recent numbers, this is another AIM stock that could prove to be a steal.

Benefiting from a strong copper price, EBITDA rose to just under €100m in the first half of 2021. Like Serica, Atalya also has a strong balance sheet with net cash of €37.8m at the end of June.

Of course, risks abound. Aside from setbacks that plague exploration, ATYM is never in complete control of its fate. Long-term demand for copper looks robust but commodity prices can be very hard to predict in the near term. That’s fine if I’m being paid to wait. However, there’s no dividend stream with Atalaya.

It goes on my watchlist for now. 

The post 3 dirt-cheap AIM stocks. Should I buy? appeared first on The Twelfth Magpie.

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Paul Summers has no position in any of the shares 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.

What’s behind this rise. And, importantly, can it continue?

Why the ABDX share price is flying

York-based Abingdon Health describes itself as a “world-leading developer and manufacturer of high-quality rapid lateral flows tests“. The reason why its share price has been soaring in recent days is down to the launch of the BioSURE Covid-19 IgG Antibody Self Test. BioSURE — Abingdon’s partner — already produces rapid tests for HIV. 

This test itself uses a minute amount of blood from a finger and gives results in around 20 minutes. Essentially, it allows people to monitor their own antibody status in the comfort of their home either before getting jabbed, after getting jabbed or post-infection. Based on the thickness of the line on the testing strip, people can quickly understand whether they are protected against Covid-19 or not. 

Such a test is patently useful as economies around the world continue to recover from multiple lockdowns and lost activity. So, could this just be the start of a sustained rise in the ABDX share price?

Revenue could soar

There are certainly reasons to be bullish on the outlook. Production of the test is now in full flow at the company’s facilities in York and Doncaster. Importantly, Abingdon is also the exclusive worldwide manufacturer of the test.

There are other positives. I’m not an expert on pricing. However, £32.95 (the cost of the test) doesn’t seem excessive. Moreover, it’s likely that demand for Abingdon’s test will exist for some time as more governments shift to the idea we all need to manage rather than defeat Covid-19. It may become especially useful if booster vaccinations are deemed necessary.

Another thing worth knowing is that the BioSURE Covid-19 IgG Antibody Self Test is just one of a number of Covid-19-related products being manufactured by the firm. Assuming others make the grade, revenue growth at Abingdon could conceivably soar.  

Buyer beware

As wonderful as the performance of the ABDX share price has been, it goes without saying that there are one or two things I need to remember before investing here. 

The first is that small-cap stocks, especially those in this area, are prone to ‘pop and drop’ behaviour. A quick peek at the share price graph of diagnostic firm Novacyt bears this out.

Will Abingdon follow a similar trajectory? Well, no share price rises in a straight line. It’s inevitable some traders will want to bank profits at some point. Whether the stock continues to multi-bag before then is, naturally, very hard to say.

A related issue for investors is that Abingdon has a very small ‘free float’. Just 25% of its stock is traded on the market. That may help explain why the share has done so well recently. It only takes a few trades to really move the needle. Since the ABDX share price has the potential to also move violently downwards, I think there’s one thing I can comfortably predict: volatility. 

Overall, I rate the shares as a (very) cautious buy for my portfolio. Nevertheless, I’d only ever play with money I could afford to lose.

The post Here’s why penny stock Abingdon Health (ABDX) has rocketed 140% appeared first on The Twelfth Magpie.

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Paul Summers has no position in any of the shares 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.

When a market minnow attracts more buying interest than heavily-traded FTSE 100 shares such as Lloyds Bank, Rolls Royce and International Consolidated Holdings, it’s worth paying attention. Today, I’m looking at one such stock, Sareum Holdings (LSE: SAR).

Last week, Sareum was the second most popular buy on share-dealing platform Hargreaves Lansdown. Should I be buying its stock too?

Wait – what is Sareum?

Sareum is a Cambridge-based drug developer focused on tackling cancers and autoimmune diseases. Its most advanced programme (Chk1) is currently in Phase 2 of clinical trials. However, it’s Sareum’s other development programmes (TYK2/JAK1) that appear to have got investors in a frenzy.

Last week, the company announced that it had raised £1,470,000 (before expenses) by issuing shares at a price of 4.9p. Interestingly, this money has come from just one “high net worth individual” who had already invested in Sareum. 

This money will be used to advance the aforementioned TYK2/JAK1 programmes. Right now, the company has the goal of completing its preclinical studies for its SDC-1801 inhibitor drug in Q3 of its financial year. From here, clinical trials — including the potential application of its inhibitors to Covid -19 — will commence. 

So, time to buy the shares?

Not so fast. There can be no doubt that Sareum has been a wonderful investment in recent times. Anyone buying a month ago would now be sitting on a gain of roughly 175%. The result is even better for those who’ve been holding for the last year (1,150%). And yes, some positive data in the coming months could certainly see the shares soar even higher in 2021.

However, there’s are also reasons for thinking Sareum may have peaked.

Drug development is notoriously risky from an investing perspective. For every drug that succeeds, thousands do not. Delays are also very common. Indeed, Sareum has already stated that the completion of preclinical studies is “subject to successful progress”. Should the wait be longer than expected, some holders will inevitably jump ship. Moreover, clinical trials aren’t cheap and management has already stated that they are “subject to funding“. 

I’m also inclined to take a cue from what’s been seen in other Covid-related stocks over the past year. One example of this would be hyper-popular diagnostics firm Novacyt.

Having multi-bagged over the second half of 2020, Novacyt’s momentum has since reversed in a spectacular fashion. Priced at 1,190p a pop in January, the stock closed at just under 391p last Friday. Sure, I’m arguably comparing apples with oranges here. Even so, the on-off ‘coronavirus buzz’ could lead Sareum’s share to behave in a similar manner. 

Beware the dip

While I congratulate anyone already holding Sareum, the recent spike seen in its share price would make me nervous if I were a potential investor. It’s particularly worth highlighting that the company was also the third most popular sell by Hargreaves Lansdown clients last week. After such a strong run, some profit-taking is inevitable. However, this suggests that the Sareum’s near-term performance is firmly in the hands of traders, rather than long-term investors. 

At times like this, I remind myself that no share price rises in a straight line. So, if I were tempted to buy Sareum today, I’d only consider investing money I could afford to lose. There’s no shortage of promising small-cap stocks out there.

The post UK investors are buying Sareum Holdings. Should I? appeared first on The Twelfth Magpie.

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• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Hargreaves Lansdown and Lloyds Banking Group. 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.

The soaring NCYT share price

NCYT is a medical diagnostics company that develops and sells a range of pathogen testing kits. These are typically used within the medical, life science, and food industries. Before 2020 these products provided a steady stream of reliable and slowly increasing revenue.

But then the pandemic hit, creating the biggest opportunity for NCYT since its inception in 2006. To help fight Covid-19, the company launched the first rapid testing kit in January last year. This was the spark that led to NCYT’s share price explosion. 

By September, the share price has already increased to 380p surrounding speculation on sales performance. And then it released its half-year results for 2020, which CEO Graham Mullis called “transformational”. He wasn’t exaggerating.

Due to the massive demand and limited supply of rapid Covid-19 tests, NCYT received a monumental amount of orders that led to a 900% growth in sales. Total revenue increased to €72.4m from €7.2m a year before. And underlying profits rose from a loss of €0.66m to a gain of €48.3m.

Needless to say, when a company can boost revenue by nine times, become profitable, and solidifies its balance sheet in the space of six months, an explosion in its share price is perfectly understandable.

Can it continue to grow?

Even after NCYT’s surge in share price, the company continues to trade at a P/E ratio of around 14. That is pretty low compared to some of the other diagnostic companies out there. So it certainly seems to have the capacity to grow further.

However, I doubt another 6,450% explosion will be happening anytime soon. There is no denying that the revenue boost is outstanding. But it originated almost entirely from the sale of rapid Covid-19 tests at a time when there weren’t many alternatives.

Today there are considerably more companies providing their own versions of these tests. So NCYT no longer has a monopoly on this market space. I believe demand will continue to rise in 2021 and possibly even 2022. And thus, the firm will continue to benefit from these sales. But over the long term, I think its success will ultimately be determined by how it invests its newly found wealth.

The bottom line

Without knowing how the firm intends to sustain its current level of revenue generation, I think it’s tricky to determine whether NCYT is a good investment even at its seemingly low share price. Personally, I’m waiting for more information, as there are simply too many unknowns about its longevity.

But suppose the management team can identify new ways to expand sales of its existing products unrelated to Covid-19. In that case, I may have to reconsider adding the stock to my portfolio.

The post The NCYT share price exploded by 6,450% in 2020. Can it do it again? appeared first on The Twelfth Magpie.

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Zaven Boyrazian does not own shares in Novacyt. 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.