MIDAS SHARE TIPS UPDATE: Chip-maker EnSilica is ringing the changes

Remember when the BlackBerry seemed like a minor miracle? Today the fruit of choice is Apple and devices include endless variations of the desktop, laptop, phone and watch.

Now there is a new kid on the block – the smart ring, which allows users to pay for goods and monitor their health on a minute-by-minute basis.

Smart rings are all the rage in certain American circles and they are fast gaining ground over here, particularly among those with conditions such as high blood pressure, heart arrhythmia – or simply a fear of missing out on the latest gadget.

Today, these rings are often a bit clunky, a little basic and have a tendency to run out of power at inopportune moments. But specialist chip-maker EnSilica is developing components that will make these devices slimmer and more effective, allowing customers to check fertility rates, blood oxygen levels and an ever-greater range of bodily functions.

EnSilica joined the London Stock Exchange’s junior AIM market in May 2022 at 50p. Midas recommended the shares six months later at 49p and today they are 69p. The increase is encouraging but the shares were almost double that level in January of this year, since when they have fallen steadily on broader market worries, even as chairman Mark Hodgkins and chief executive Ian Lankshear have unveiled new contracts, rising sales and increasingly robust prospects.

EnSilica designs customised chips, used in four key sectors – automotive, general industry, satellite communication and healthcare. Carmakers use its chips to make vehicles handle the road more smoothly, manufacturers install them in factory robots, health firms deploy them for diabetic patches.

Lankshear is also developing a chip to make internet connections more resilient across the country, funded by the UK Space Agency.

Figures last week revealed a 34 per cent increase in turnover to £20.5 million and a 50 per cent surge in underlying profits to £1.6 million. Brokers expect continued strong growth in 2024 and beyond, with the business slated to pick up contracts worth in excess of £200 million over the coming years.

Midas verdict: Small technology firms can be accident-prone, but EnSilica seems to be more adept than most. Hodgkins, a former accountant, runs a tight ship and Lankshear is a technology expert who co-founded the business more than 20 years ago. Investors who bought at 49p have seen a 40 per cent gain in less than a year but, at 69p, the stock has fallen from earlier highs on general market malaise and should bounce back. Nervous shareholders may opt to sell now. Others should hold on to this stock, while new investors could also find value at current levels.

Traded on: AIM Ticker: ENSI Contact: ensilica.com or 0118 321 7310