Fevertree Drinks (LSE: FEVR), AFC Energy (LSE: AFC) and OptiBiotix Health (LSE: OPTI) have posted stunning gains so far this year. But is there more to come from these three big winners?
Fevertree Drinks
Fevertree is a relatively young company, having been founded in 2005, but is already able to describe itself as “the world’s leading supplier of premium carbonated mixers for alcoholic spirits by retail sales value, with distribution to over 50 countries worldwide”.
Fevertree listed on London’s junior AIM market this time last year at 134p a share, and is currently trading at a new high of 530p, valuing the company at over £600m. The share price rise for the year to date is +205%.
In a trading update last week, Fevertree said both UK and international sales have been encouraging during the second half of the year, “driven by distribution gains which have come through earlier than anticipated in our existing markets”. In light of this performance, “the Board anticipates that the results for the full year will be materially ahead of Board expectations”.
Analysts have been busy upgrading their forecasts. However, even optimistic earnings of 12p a share would put Fevertree on a fizzy price-to-earnings ratio of 44.
The global trend to greater premiumisation undoubtedly plays into Fevertree’s hands, but the current rating of the company appears well up with events. Furthermore, I’m mindful that young “on-trend” companies are prone to the occasional stumble as they grow, which can really hammer their highly-rated shares.
AFC Energy
AIM-listed AFC Energy last month completed milestone 10 of its 11-step journey to prove its low-cost alkaline fuel cell system on an industrial scale at a gas plant in Stade, Germany. A successful demonstration next month would open the way for global commercial deployment.
AFC’s shares, currently trading at 36p, are up 251% for the year to date. However, they were even higher during the summer; in fact, as high as 58p. I’d say the market had got a little over-excited by AFC’s potential, and gave insufficient weight to the risks and what is a still-long road to successful commercialisation and profitability.
However, with the froth having come off the shares and the market value down to around £100m, AFC could be worth a closer look by investors who like to include a speculative stock or two in their portfolios.
OptiBiotix Health
OptiBiotix is the biggest winner of the three companies for the year to date, its shares having gained 280%. At a price of 77p, the market capitalisation is about £57m, almost half that of AFC Energy and less than a tenth of the size of Fevertree.
Like AFC Energy, OptiBiotix — a life sciences business developing compounds to tackle obesity, high cholesterol and diabetes — is a speculative stock that risk-tolerant investors may want to have a closer look at.
The areas of healthcare that OptiBiotix is focused on certainly look highly attractive, given these are chronic problems in “decadent” Western societies and will likely become more widespread as western-style consumption grows in developing countries.
OptiBiotix last week announced it had filed two new patents covering its cholesterol-reducing product, increasing its total patents to 11, and creating further valuable assets on the route to commercialisation.