Image source: Getty Images
FTSE small-cap share Filtronic (LSE: FTC) is on fire at the moment. This is because it’s a way to play the space theme – which is hot right now. I think 2026 could be a big year for this AIM-listed stock.
Here are three reasons why I’m bullish.
Space: a big investment theme?
Space could potentially be a major investment theme in 2026. With the initial public offering (IPO) of Elon Musk’s space company SpaceX likely to take place at some stage during the year (this could be one of the biggest IPOs of all time), this theme’s likely to get significant attention from investors.
This could lead to interest in Filtronic shares. Because this company – which specialises in wireless communication solutions – has been having a huge amount of success providing E-band Solid State Power Amplifiers (SSPAs) and E-band GaN products to SpaceX.
It’s also been winning deals with other space companies. In November, for example, it announced a €7m contract with a leading European aerospace manufacturer to supply products for a major Low Earth Orbit satellite constellation programme.
As a result of these deals, the company’s revenues are surging. For the year ending 31 May 2026, revenue’s expected to be about £55m versus £16m three years earlier.
It’s worth noting that while the space theme’s a little speculative (it’s still in its infancy), it has a lot of potential. According to analysts at McKinsey, the space industry could be worth $1.8trn by 2035.
Filtronic’s winning defence deals
Another reason I’m bullish on Filtronic is that the company is having success in the fast-growing defence industry. In December, for example, it announced a contract with a major European defence prime for the supply of high-performance components for an electronic sensor programme.
The total value of this contract is expected 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 said at the time.
Strong financials
One other reason I like the look of Filtronic is that, unlike a lot of other space stocks, it has strong financials. Not only are revenues rising rapidly, but profits are surging too.
This financial year, net profit’s expected to amount to $7.3m. That compares to a net profit of around £0.5m three years earlier.
The company also has a strong balance sheet. At the end of November, it had £10.5m cash on its books. As for the valuation, it’s high but not crazy given the long-term growth potential. Currently, the forward-looking price-to-earnings (P/E) ratio is around 48.
Given its financials, this stock could appeal to more risk averse institutional investors looking to gain exposure to the space and defence markets.
A growth investment to consider
Of course, there are plenty of risks with a stock like this. A slowdown in deals is one that can’t be ignored – if these don’t come through in 2026 the share price could fall.
Overall though, I’m bullish on this small-cap UK space stock. I believe it’s worth considering as a growth investment.
