Investing in stocks in the gloomy, frigid days of early January can feel like the stocks may already be tripled at the end of August is a heartwarming thought! But that’s what happened with Filtronic (LSE:FTC). From a penny stock just a few months ago, the stock is up 252% so far in 2024. What a return!

Another thing that has returned is a large customer. Filtronic announced today (August 30) that rocket company SpaceX has placed another production order for its E-band solid-state power amplifier modules. They will be used to support SpaceX scale up its Starlink satellite internet service.

Filtronic says the order, valued at around £6.4m, means the company expects to achieve higher-than-targeted turnover in its 2025 financial year.

As an investor, did I miss out on this one-time penny stock? Or are its share price, and its products, still headed for the stars?

Diverse financial history

With revenues of £25m last year, this £6.4m contract is significant for Filtronic. I also think the fact that a customer with a high technical need in SpaceX is coming back with a huge repeat order is a robust endorsement of Filtronic’s offer. This could support attract other customers, opening the door to revenue growth not only from SpaceX but also from other companies.

But when it comes to the numbers, revenue has historically not been as large a challenge for Filtronic as profit. Last year’s post-tax profit of £3.1m was respectable. But the year before that, the figure was less than a sixth of that.

That helps explain the wild ride he’s had. But what now?

Could the prospect of steady revenue growth mean that fixed costs could be spread thinly, increasing the bottom line even further? Or could servicing huge contracts strain the modest company and incur expenses that will drag it back into the red, as it was a few years ago?

I feel like buying it

Time will tell, and it could go either way. But I’m positive. Just last month, Filtronic announced a multi-million dollar order from SpaceX – and now it’s announced another.

If sales can be increased significantly, I think the company could escalate its profit margins. It is an expert in a specialized field. Customers are willing to pay well – no intelligent customer wants to risk losing a very pricey satellite because they skimp on the right components.

This year’s share price gains have been incredible. But in five years, the stock is up 944%!

The price-to-earnings (P/E) ratio of 53 is too high for me, but if I’m right about the prospects for rapid earnings growth, the potential P/E could be lower.

I am impressed with this investment and will consider buying Filtronic shares in September.