What are the best penny stocks for UK traders and investors to watch?

What is a penny stock?

A penny stock is a unit of common stock that trades with a low share price: below £1 in the UK and below $5 in the US. They’re also referred to as penny shares. The companies will also have a lower market cap: under £100 million in the UK and under $300 million in the US.

These stocks are regarded as a more speculative investment because they’re geared for growth, with many penny companies yet to generate noteworthy income.

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Best UK penny stocks to watch

These are not necessarily the best performing penny stocks, with several having seen their share prices decline over the past year. However, while their share prices may have fallen in recent months, this is not necessarily a reflection of their true value. This list shouldn’t be construed as financial advice.

And with interest rates remaining high, it is true that growth is becoming more expensive, increasing the risk of investing in many penny stocks. Those on this list could well see further falls.

*Data collected on 1 September

Remember past performance is no indicator of future returns

Armadale Capital

Armadale Capital is an investment company, primarily involved in allocating capital to companies who focus on natural resource projects in Africa. The UK based company own the Mahenge Graphite Project in Tanzania, a high-quality source of graphite used in batteries.

Although there were challenges within the graphite market in 2023, Armadale Capital continued to find ways to optimise production and explore new financing options. They also secured interest in the Canyon Silver project based in America, which has diversified their portfolio. Going into 2024, this research and environmental work has continued, and the company have worked to strengthen their team and manage risk to achieve sustainable development.

The company’s share price return is up 23.33% in the past month. It’ll be interesting to see if this upward trend continues.

Bushveld Minerals

Bushveld Minerals is a South African based company which produces vanadium, a metal used in energy storage and steel production. Each year, it produces around 3,714 metric tonnes of vanadium which is managed across two branches. Bushfield Vanadium, the branch responsible for mining and processing, and Bushveld energy, the branch responsible for energy storage solutions.

Higher operating costs and lower vanadium prices in 2023 resulted in $7.5 billion drop in EBITDA year-on-year. As a way to re-finance this debt, the company converted $4.7 million worth into new shares and took out a couple of new loans.

Throughout 2024, Bushveld Minerals aim to reduce debt and cut cost. Vanadium prices remain low but its focus on high value markets will hopefully pay off.

The company’s share price return has increased 16.83% in the past month. Our analysts have given the stock a strong buy rating, suggesting this upward trend could continue.

Vast Resources

Vast Resources is a UK-based mining company with operations in Eastern Europe and Africa. In these places, the company mines for zinc, silver, gold, diamond and copper. Its key assets include the Takob mine in Tajikistan, the Blueberry Gold Project in Zimbabwe and the Baita Plai Polymetalic Mine in Romania.

Although sales increased throughout 2023, their revenue of $3.7 million was stable year-on-year. This was due to lower copper prices. The company also reported a 14% drop in overhead expenses mostly as payroll costs were down.

In the past month the company’s share price return has increased by 15.79%.

Sunda Energy

Sunda Energy is an oil and gas company with assets in the UK and Southeast Asia. The company has a major stake in the Chuditch Production Sharing Contract in Timor-Leste as well as the Dunrobin project in the North Sea.

Although in 2023 revenues were flat, the company’s net income decreased an extra 23.43% from a loss of 1.39 million to one of 1.71 million. Higher expenses in Timor-Leste meant administrative costs increased.

Throughout 2023 the company focused on finding new assets which will generate profit in the future. In February this year, Sunda Energy released £2,993,000 worth of new shares to help with ongoing projects and operations.

The company’s share price has increased by 15.38% in the past month, and it’ll be interesting to see if this upward trend continues.

Versarien

Versarien is a UK based engineering materials company that works across multiple industries in the US, South America and South Korea.

The company’s H1 results reported a revenue drop of 4.8% year-on-year. Its graphene revenues however increased by 211%.

Going forward, the company aim to prioritise its core graphene technology where they’ve already seen interest from a number of parties looking to integrate their technology into their business.

CEO Stephen Hodge has spoken out about this strategy claiming to ‘remain optimistic about the future as we continue to streamline our operations, capitalise on our strategic partnerships and drive technological advancements.’

This past month its share price is up 13.91%. If the company’s strategic plans pay off it could increase further in the coming months.

Wishbone Gold

Wishbone Gold is an exploration company focusing on copper, silver and gold. The company has three exploration sites in Australia. One in Queensland and the other two in Western Australia.

At the end of 2023, the company reported a revenue of 1.27 million, up from 1.08 million the year before. Profit before tax also increased.

On 2 February this year Wishbone Gold announced it has raised £300,000 through shares and issues another 25,000,000 shares on the London Stock Exchange at 0.1p per share. It’s share price return over the past month has increased by 10%.

Quantum Blockchain Technologies

Quantum Blockchain Technologies is a UK based tech company which focuses on blockchain, quantum computing, artificial intelligence and cryptocurrency. The company has begun a research and development (R&D) program exploring different Bitcoin mining strategies.

At the end of 2023 the company reported a comprehensive loss of just over €4 million, down from their loss of over €5 million the year before.

Going forward, the company aims to continue with its R&D program which they claim is providing promising results and look to invest in the technology sector as a whole.

At the time of writing, share price return increased by 10% over the past month.

Woodbois

Woodbois Ltd is a forestry and timber company that specialises in production and supply of sustainable hardwood and softwood products. The company manages several acres of forest concessions throughout Gabon and Mozambique.

Despite falling revenues, in 2023 Woodbois loss of -8.13 million is down from a loss of -111.19 million the previous year.

The company’s share price return has risen by 8.29% over the past month.

Inspirit Energy

Inspirit Energy focuses on the development of micro-Combined Heat and Power boilers which generate both heat and electricity. The UK based company are working on products for both residential and commercial use, exploring heat waste technology for marine engines.

Last year, the company reported a loss of 260k, an 11.59% drop in net income compared to loss of 233k the year before. Revenues for this time period remained flat and earnings per share was stable year-on-year.

Over the past month, the company’s share price return has risen by 8.24% and it’ll be interesting to see if this upward trend continues.

Oriole Resources

Oriole Resources focuses on the exploration and development of high value metals such as gold in Turkey and Africa. Their main projects include the Central License Package and other early-stage gold projects like Wapouze and Bibemi in Cameroon.

In 2023, cash saving measures resulted in a 59% drop in cash outflow from operations year-on-year. Administrative expenses were also down 4%. Despite this, the company reported a loss of £2.27 million, up from a loss of £1.57 million the year before. This was partly due to changes in exchange rates.

The company’s share price return has risen by 6.20% over the past month.

How to trade or invest in penny stocks

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Risks and rewards of penny stocks

• The share prices of penny stocks can be volatile, either as a result of lower liquidity or because they are sensitive to news and market developments
• Penny stocks can turn into a huge success or an utter failure overnight: winning or losing one contract or the level of success of a new product, for example, can decide their future
• Many penny stocks have no track record and it is not uncommon for them to have no assets, operations or revenue
• Products and service offerings are often still in development and yet to be tested in the actual market
• News coverage and analysis of penny stocks is harder to come by compared to gaining insight into larger, more popular stocks
• Penny stock companies are more likely to raise equity from investors on an ongoing basis, as it gives the business a way of securing vital funds for growth if traditional lenders refuse to provide it
• When trading on penny stocks with us using spread bets or CFDs (but not with share dealing), you’ll do so using leverage. Leveraged trading comes with a high risk, as both profits and losses will be amplified. Always take steps to mitigate your trading risk.

Footnotes

¹ As at 5 October 2022
² Trade in your share dealing account three or more times in the previous month to qualify for our best commission rates. Please note published rates are valid up to £25,000 notional value. See our full list of share dealing charges and fees.
³ Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.