Why This AIM Stock Should Be Considered Buying Now

One OBJECTIVE OF FTSE The stocks I’ve been watching have a fast-growing business and trade more overseas than in the UK.

Earnings have been increasing rapidly. But the icing on the cake is the position the company has in the North American market.

If momentum picks up in the U.S. in the coming months and years, it’s possible that stocks could perform well from where they are now.

Strong future growth potential

The business is already well established, profitable and expanding like crazy. Just the way I like it, with jam today and the potential for boxes of this stuff in the future!

That’s it Sadtel (LSE: TSTL), the global infection prevention company that manufactures and supplies products using its own chlorine dioxide (ClO₂) chemical.

The company’s products go to hospitals and around 87% of sales come from its Sadtel brand for the decontamination of medical devices. Another best seller is yours Cache brand of sporicidal disinfection of environmental surfaces, which represents around 8% of total sales.

There has been widespread acceptance of the company’s offering and this is evident in the multi-year trading figures. Double-digit annual percentage increases in income have become normal. City analysts predict further ahead for the current business year, until June 2025, with an increase of around 20%.

Today’s (21 October) annual report for the year to June 2024 is robust and “above expectations“. The directors also included a statement of optimistic outlook. This is not surprising because the business is making great strides abroad.

Overseas sales and modest profits

For example, today’s figures show that the company made more revenue overseas than in the UK. Just under 48% of revenue came from the UK and the rest from overseas markets.

However, these UK sales generated around 86% of pre-tax profit, much of it coming from the company’s biggest customer, the NHS. This result suggests that selling products to places like Australia, Germany and the rest of the world may involve higher costs. It is also possible that profit margins will be lower.

Therefore, a risk here is that the company’s focus on international expansion may not be as profitable as expected. For example, the US market is a well-known graveyard for the hopes and dreams of many former UK companies. Tesco is the one who tried and failed to conquer the market.

Tristel said today that he found “more purchasing bureaucracy” in the US than expected. Therefore, it is taking longer than expected for some customers to adopt the products. However, “momentum is growing” across the pond, and the American healthcare market is the largest in the world.

I think the setbacks and uncertainties are reflected in the share price chart.

However, the weakness accentuated the assessment somewhat. With the share close to 388p, the forward-looking price-to-earnings (P/E) rating for the current trading year is just below 25. This is still a growth rating, but not overly excessive.

The US market is just one international region where the company is making progress. So, on balance and despite the risks, I would conduct deeper investigation now with a view to possibly purchasing some of the shares to hold for the long term.