Recently, we asked our free-site writers to propose the US companies they think will be next to exceed $1trn in market cap. Now, it’s the turn of UK stocks — which will be next to cross the £1bn line?
Advanced Medical Solutions
What it does: AMS designs, develops, and manufactures innovative tissue-healing technology and wound-care. Previous highest market cap: c.£900m.
By Dr James Fox. Advanced Medical Solutions Group (LSE:AMS) develops and sells wound treatment products that help repair and close up damaged and cut tissue during and after surgery. These products are distributed in 80 countries around the world.
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The Cheshire firm is a well-run, cash generative business with strong positioning in end markets. These positions will likely be enhanced by some exciting launches including LiquiBandFix8 – a cyanoacrylate adhesive designed to fix mesh to tissue inside the body.
I’m also anticipating increasing demand. With large elective procedure backlogs around the world, wound treatment products will likely experience a tailwind in the coming years.
Inflation is an issue, but in its full-year review the company said it had adjusted pricing accordingly. More adjustment may be required.
With a market cap just over £501m, it’s got some way to go to reach £1bn. But I’m channelling my inner Warren Buffett, It’s a quality company, and I believe it’s discounted at just 20x earnings.
Dr James Fox does not own shares in Advanced Medical Solutions Group
Yellow Cake
What it does: Yellow Cake holds and trades uranium which it acquires from Kazatomprom, one of the world’s biggest producers. Previous highest market cap: £914m
By Royston Wild. Nuclear energy remains an unpopular sector for many share pickers. But as the world moves away from fossil fuels, stocks that supply radioactive fuel might have as much investment potential as renewable energy shares.
This is where Yellow Cake (LSE:YCA) comes in. It holds and trades uranium, a commodity for which demand is tipped to soar as construction of new nuclear reactors booms.
There are currently 440 reactors in operation today, according to the World Nuclear Association, and another 60 in construction. The International Energy Agency reckons global nuclear capacity will soar 42% between 2020 and 2050.
Buying shares in this UK stock has one clear advantage over investing in a uranium producer. This is because it doesn’t expose shareholders to exploration, mine development, or production risks that can be devastating for returns.
On the other hand, war in Ukraine poses an ongoing threat to Yellow Cake. This is because the material it acquires from Kazakhstan is shipped through Russia, leaving it vulnerable to potential supply problems.
But the nuclear industry has so far been unaffected, and on balance I think the potential rewards of owning this UK share outweigh the dangers.
Royston Wild does not own shares in Yellow Cake.
Yellow Cake
What it does: Yellow Cake buys and stores physical uranium and looks to exploit opportunities arising from this.
By Paul Summers: I’ve been watching the rise of Yellow Cake (LSE: YCA) with interest. The share price has now doubled in five years.
Recent gains can be linked to Russia’s invasion of Ukraine. The concern is that the former – a leader in uranium conversion and enrichment – will now stop trading with Western nations. This could make the metal more expensive at a time when attitudes toward nuclear energy are improving thanks to the relatively small amount of waste it produces.
To be clear, this is not a stock for widows and orphans. Investors steered clear of uranium for a decade following the Fukushima nuclear plant accident in 2012.
Yellow Cake doesn’t pay a dividend either.
Considering that the UK stock’s marlet cap now stands at £835m, however, I think there’s a good chance the company’s valuation eventually passes the £1bn threshold if, as expected, demand begins to outstrip supply.
Paul Summers has no position in Yellow Cake
