The S&P/ASX 200 Index (ASX: XJO) has jumped 14.5% higher over the past 12 months, but there is one stock strongly outpacing the index. Better still, it’s tipped to keep going.
Codan Ltd (ASX: CDA) shares ended the day 4.5% higher on Tuesday afternoon, at $36.47 a piece. The latest increase brings the ASX 200 stock 26% higher over the year-to-date and nearly 150% higher over the past 12 months.
Here’s why the ASX 200 stock is soaring
Codan develops electronics solutions for government, military, corporate, and consumer markets globally. The company provides products and services in communications, metal detection, and mining technology.
Essentially its business is split into two divisions: communications and metal detection.
Like other defence-related companies, Codan shares have risen higher this year off the back of rising geopolitical tension and an uptick in demand for defence technology systems. Communication systems are one of the first things which the military upgrades because things like radios and communication systems are critical in conflict situations.
Elsewhere, Codan’s metal detection business (Minelab) has been well supported by strong gold detector sales. Its gold detectors are typically used by small-scale miners and are particularly popular in remote parts of Africa. The company also has solid demand across recreational markets globally. A lot of the demand for metal detectors has followed booming gold prices. Gold rush activity typically sees more individuals and smaller players try their hand at hunting for gold.
It’s not just defence and gold sector tailwinds pushing the Codan price higher though.
The ASX 200 stock’s strong earnings growth and robust financial performance has attracted a flurry of interest in its shares over the past 12 months.
Codan’s standout results point to long-term growth
The company revealed a huge surge in earnings when it posted its first-half FY26 results in February.
Codan announced a 29% increase in group revenue, a 55% hike in NPAT and a 52% rise in EBIT. They’re some impressive numbers.
Most importantly, company growth was attributed to strong growth in both of its business segments.
Codan’s communications division experienced revenue growth of 19% and maintained profit margins despite temporary headwinds in the Zetron Americas business.
It’s metal detection (Minelab) business delivered a standout half. Its revenue increased 46% and segment profit up 86% thanks to gold detector demand in West Africa and robust sales globally.
The company also said it will continue to invest in engineering and new product development. This will help to maintain its competitive edge and diversify its earnings base.
What upside do analysts expect from Codan shares?
Market Index data shows that three brokers have a buy rating on Codan shares and another two have a hold rating.
But what they can agree on is that there will be an upside ahead.
The average target price for Codan shares over the next 12 months is $39.68. This implies more than 10% upside for investors.Â
It isn’t the same level of growth we’ve seen over the past year, but it suggests that there is plenty more to come out of the electronics solutions business.
The post This ASX 200 stock has jumped 149% in a year, and brokers tip more upside to come appeared first on The Motley Fool Australia.
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Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.