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The Investment Column: Filtronic is wired up for growth

Need reminding about the excitement of investing in technology stocks? Have a look at Filtronic Comtek's share price graph. The company, which specialises in the sophisticated microwave technology used in mobile- phone base stations, has taken investors on the proverbial roller-coaster ride since joining the market in 1994 at 105p.

After racing to a 512p high, the shares crashed back to 200p when US customers delayed orders after running into technical hitches. But, helped by a profits bounce to pounds 5.07m in the six months to last November (from pounds 15,000 in the same period of 1996) the shares yesterday rose 10p to a two-year high of 469p.

Few British investors understand what Filtronic does. The technology is complex, but the important point is that Filtronic is one of just a handful of companies capable of supplying the mobile network equipment manufacturers. With the number of mobile-phone users set to treble to 520 million in the next five years, sales will remain buoyant. Crucially, demand for network equipment is steady compared to volatile handset sales.

Professor David Rhodes, Filtronic's chairman, is also bullish about longer- term prospects. He expects demand for "third-generation digital systems" - sophisticated mobile networks which can provide video and data as well as high-speed internet access - to start picking up in three years' time. The acquisition of two of his privately held companies for pounds 11.5m, subject to shareholder approval, will give Filtronic access to the advanced technology he has developed for military applications.

House broker Panmure Gordonforecasts full-year profits of pounds 11m, with pounds 16.5m next year, putting the shares on a forward earnings multiple of 30, falling to just 21. That's modest given Filtronic's growth prospects. The shares are worth a look - if your stomach can stand it.