While today's market selloff is undoubtedly disappointing for investors, shareholders of Audinate Group Ltd (ASX: AD8) won't be too downcast.
After all, the little-known Australian stock remains up 120% since the middle of July despite today's weakness.
This means that if you had invested $20,000 into its shares in July 2023, your investment would now be worth $44,000.
But why has this Australian stock been on fire over the last 12 months? Let's dig deeper into it and also see if there are more gains to come.
Image source: Getty Images
What is Audinate?
Audinate is disrupting the audio-visual (AV) industry with its award-winning Dante IP networking solution.
Dante has become the worldwide leader and is used extensively in the professional live sound, commercial installation, broadcast, public address, and recording industries.
It replaces traditional analogue cables by transmitting perfectly synchronised AV signals across large distances to multiple locations at once, using just an ethernet cable.
At present, there are over 600 manufacturers making Dante-enabled products and over 4000 products that are Dante-enabled. This is many times greater than its rivals, which is helping to cement its leadership position.
Why has this Australian stock doubled in value in one year?
Investors have been bidding Audinate's shares higher and higher over the last 9 months thanks largely to its strong performance in FY 2023 and so far in FY 2024.
In respect to the latter, during the first half of FY 2024, Audinate reported a 47.7% increase in revenue to a record of US$30.4 million. A key driver of this growth was its Chips, Cards and Modules (CCM) business, which grew its revenue by 45.6% to US$22.7 million.
Growing even quicker was the company's EBITDA. It more than doubled during the first half, coming in at a record of A$10.1 million. This was driven by strong sales growth and an improving EBITDA margin despite an increase in its headcount.
And on the bottom line, Audinate reported a net profit after tax of A$4.7 million, which compares favourably to a loss of A$0.4 million a year earlier.
This led to the Australian stock ending the period with a hefty cash balance of A$111.7 million.
Can its shares keep rising?
The good news is that it may not be too late to the party with Audinate.
For example, a note out of UBS earlier this month reveals that its analysts have put a buy rating and $22.80 price target on its shares.
If this recommendation proves accurate, this Australian stock could generate another 20% return over the next 12 months.
