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Rolls-Royce and BAE Techniques are the 2 hottest FTSE defence shares. And for good purpose – each are seeing sturdy income progress as nations internationally ramp up their spending on defence options.
Nevertheless, over the past six months, one other FTSE defence inventory has outperformed these two names by an monumental margin. May it’s value a more in-depth look proper now?
A UK defence inventory nobody has heard of
The inventory I need to spotlight right here is Kromek (LSE: KMK). It’s a small British firm that gives nuclear radiation detection options to the worldwide homeland defence and safety markets.
It’s identified for its compact, handheld, high-performance radiation detectors. These are used to guard city environments and important infrastructure from the specter of ‘dirty bombs’.
An AIM-listed penny inventory (it’s a member of the FTSE AIM All Share index), Kromek at the moment trades for simply 9.3p. That implies that a £1,000 funding would purchase round 10,750 shares.
By way of efficiency, the inventory has skilled a pullback in current weeks. Nevertheless, over the past six months, it has surged round 80%, leaving Rolls-Royce and BAE Techniques shares in its mud.
Lengthy-term progress potential
Now, penny shares like this are dangerous investments. Typically, their share costs swing round wildly.
Nevertheless, taking a long-term view, I see a good bit of potential right here. Given the corporate’s defence and nationwide safety publicity, there’s loads of scope for income progress.
This aspect of the enterprise has actually been performing effectively just lately. Within the six-month interval to the tip of October 2025, gross sales within the firm’s chemical, organic, radiological, and nuclear defence (CBRN) division greater than doubled to £4.3m, reflecting the rising international deal with nationwide safety.
Word that within the firm’s H1 outcomes, revealed in January, it mentioned that within the present yr so far, it had acquired new CBRN detection orders value £4.8m. These had been from clients throughout the UK, Europe, the US, Japan, Canada, and Australasia.
Medical revenues too
I’ll level out this firm is not only a play on defence. It additionally offers superior imaging options for the healthcare and industrial industries.
Just lately, revenues within the firm’s superior imaging division have been boosted by a serious take care of Siemens Healthineers. This deal will see Kromek present cadmium zinc telluride (CZT) detectors for SPECT (single-photon emission computed tomography) imaging.
Tipped to rise 170%
Whereas that is all thrilling, I need to stress that it is a high-risk inventory. Wanting forward, main contracts may very well be sporadic in nature that means that progress gained’t be linear.
Profitability is one other threat to think about. This can be a small firm (market cap of £63m) so I’d count on its earnings to be risky.
I believe it’s worthy of additional analysis, nonetheless. Word that the common dealer worth goal is 26p – about 180% above the present share worth.
