UPDATE: Two lesser-known UK defence stocks are dramatically outperforming BAE Systems, which has seen its share price soar about 40% over the last year. This surge is driven by a global increase in defence spending, but MS International and Filtronic are making headlines for their remarkable gains.
MS International (LSE: MSI), a small British engineering firm, is making waves after securing a $34.5 million contract with the US Navy for stabilised gun mounts. This contract, announced in early October, comes on the heels of significant deliveries of naval weapons systems to the US and Germany, as well as orders from the Middle East for counter-drone technology. With a staggering annual share price increase of 50% and an astonishing 400% rise over three years, MS International’s growth outpaces BAE Systems by nearly three times.
Investors are keenly observing this stock, especially given its trailing price-to-earnings (P/E) ratio of 18, which many analysts consider a reasonable valuation for such robust growth. Revenue has surged from £62 million to £118 million over the last four financial years. However, a potential slowdown in contract wins poses a risk for investors. Nevertheless, with NATO countries poised to ramp up defence spending, experts see significant potential.
Another stock making headlines is Filtronic (LSE: FTC), a technology company known for its wireless communications innovations. After successfully supplying products to SpaceX, Filtronic is now carving out a niche in the defence sector. Recently, it announced a £4 million contract with BAE Maritime Services to develop advanced microwave integrated circuits. Additionally, in July, it secured a £13.4 million contract with a leading European defence company for electronic sensor modules.
Filtronic’s share price has skyrocketed, boasting a remarkable 70% increase over the past year and an unbelievable 970% rise over three years—approximately 7.5 times that of BAE Systems. However, it carries a higher risk with a P/E ratio of 42, indicating a premium valuation that may cause concern among cautious investors.
As these stocks gain momentum, market analysts are urging investors to consider their potential. The defence sector’s growth is expected to continue, fueled by increasing global military budgets.
Stay tuned for further updates on these developing stories, as the implications for investors could be significant. With both MS International and Filtronic capturing attention, the landscape for UK defence investments is rapidly evolving.
