AIM-traded SDI (SDI:AIM) represents a multi-year growth story with the potential to add substantial value to retail investor portfolios.

It is a collection of multiple subsidiaries that design and manufacture digital imaging, sensing and control equipment used in life sciences, healthcare, astronomy, manufacturing, precision optics and art conservation applications.

SDI operates a model closely resembling that of health, safety and environmental kit maker Halma (HLMA), a constituent of the FTSE 100, buying good value businesses that add consistent cash flow and profits to the overall group.

Some readers may have become aware of SDI under its former guise – it used to be called Scientific Digital Imaging until changing its name about 18 months ago.

SDI has built a loyal investor fanbase over the years, much like its larger contemporary Judges Scientific (JDG:AIM), the £380 million company that pursues a comparable acquisition-led strategy in the science and technology field.

Its share price jumped 33% on 10 February after telling the market that it would smash forecasts. The company secured material follow-on orders for its Atik cameras business, proving kit for real-time PCR DNA amplifiers, clever medical kit that allows us to test for Covid infection by studying genetic code.

Given that the Covid-19 strain is stubbornly sticking around, and may do for some time, there could be plenty more PCR test-based orders over the coming months, but SDI has plenty of other opportunities beyond the pandemic.

For example, the near-£7 million acquisition of Monmouth Scientific last year provides a range of clean air solutions to healthcare and science customers, such as clean rooms, which could take SDI into the booming semiconductors space.

SDI had previously admitted that the pandemic had hurt many of its businesses, due to enforced shutdowns and sales teams not getting out on the road. But industries in the UK and elsewhere are starting to reopen, which should ensure that business opportunities closed to SDI over the past year or so start coming back.

The company guides for £7.4 million pre-tax profit for the year to 30 April 2021, rising to £8.7 million in 2022. The stock trades on approximately 25 times forecast earnings for the current year, a rough 16% discount to Judges Scientific. We see this gap narrowing and mid-teens earnings growth to keep pushing SDI’s share price higher.

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