Picture supply: Getty Photographs
FTSE small-cap share Filtronic (LSE: FTC) is on hearth for the time being. It’s because it’s a solution to play the house theme – which is sizzling proper now. I believe 2026 may very well be a giant 12 months for this AIM-listed inventory.
Listed below are three the explanation why I’m bullish.
House: a giant funding theme?
House may probably be a significant funding theme in 2026. With the preliminary public providing (IPO) of Elon Musk’s house firm SpaceX more likely to happen at some stage in the course of the 12 months (this may very well be one of many largest IPOs of all time), this theme’s more likely to get vital consideration from traders.
This might result in curiosity in Filtronic shares. As a result of this firm – which specialises in wi-fi communication options – has been having an enormous quantity of success offering E-band Stable State Energy Amplifiers (SSPAs) and E-band GaN merchandise to SpaceX.
It’s additionally been profitable offers with different house firms. In November, for instance, it introduced a €7m contract with a number one European aerospace producer to produce merchandise for a significant Low Earth Orbit satellite tv for pc constellation programme.
On account of these offers, the corporate’s revenues are surging. For the 12 months ending 31 Might 2026, income’s anticipated to be about £55m versus £16m three years earlier.
It’s value noting that whereas the house theme’s slightly speculative (it’s nonetheless in its infancy), it has quite a lot of potential. In response to analysts at McKinsey, the house trade may very well be value $1.8trn by 2035.
Filtronic’s profitable defence offers
One more reason I’m bullish on Filtronic is that the corporate is having success within the fast-growing defence trade. In December, for instance, it introduced a contract with a significant European defence prime for the availability of high-performance parts for an digital sensor programme.
The full worth of this contract is anticipated to be £11m. “This latest win deepens our engagement with a key European defence customer and strengthens Filtronic’s position in the defence sector, a growing market for the group,” CEO Nat Edington stated on the time.
Robust financials
One different cause I just like the look of Filtronic is that, not like quite a lot of different house shares, it has sturdy financials. Not solely are revenues rising quickly, however earnings are surging too.
This monetary 12 months, web revenue’s anticipated to quantity to $7.3m. That compares to a web revenue of round £0.5m three years earlier.
The corporate additionally has a powerful stability sheet. On the finish of November, it had £10.5m money on its books. As for the valuation, it’s excessive however not loopy given the long-term progress potential. At present, the forward-looking price-to-earnings (P/E) ratio is round 48.
Given its financials, this inventory may enchantment to extra danger averse institutional traders seeking to acquire publicity to the house and defence markets.
A progress funding to think about
In fact, there are many dangers with a inventory like this. A slowdown in offers is one that may’t be ignored – if these don’t come by in 2026 the share worth may fall.
Total although, I’m bullish on this small-cap UK house inventory. I consider it’s value contemplating as a progress funding.
