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 11 November 2024

Remember past performance is no indicator of future returns

Emmerson

Emmerson is a potash development company based on the Isle of Man. The company is responsible for the Khemisset Potash Project located near Rabat in Northern Morocco. The project has an estimated 537 million tons of potash resource, which is enough to meet the rising demand for fertilisers throughout Africa.

2024 has seen the company make good progress with the Khemisset Potash Project. An updated environmental and social impact assessment (ESIA) is expected to be approved sometime in Q4. By implementing these new processes, which help to minimise water use and eliminate waste brine, Emerson has doubled the project's net value to $2.2B. Its loss of $1.6M remains stable year-on-year and the company is hoping that its ESIA approval help will attract investors.

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. It also secured interest in the Canyon Silver project based in America, which has diversified its portfolio.

Throughout 2024, the company have continued its research and environmental work as well as focusing on strengthening its team and managinge risk to achieve sustainable development.

The company’s share price return is up 33.33% in the past month. It’ll be interesting to see if this upward trend continues.

United Oil & Gas

United Oil & Gas is a UK based oil and gas company with operations across the UK, Egypt and Jamacia. Its main projects include the Abu Sennan concession in Egypt, the Walton-Morant license in Jamacia and projects in the North Sea.

The company had a mixed start to the year with foreign exchange issues in Egypt leading to United’s withdrawal from the Abu Sennan concession, which will take place once all the paperwork is signed. Net loss increased by 7% to 1.4M as a result.

January 2024 also saw United extent its license in Jamacia by 2 more years. Going forward the company claim ‘our primary focus remains on Jamaica, which we believe offers transformative potential for United. The planning and permitting processes for the piston core sampling is advancing, with permits expected in early 2025.’

Nostra Terra Oil & Gas

Nostra Terra Oil & Gas is a UK-based oil and gas company which operates in Texas. Its key assets are in the Permian Basin where it holds 100% interest in the Mesquite asset, Cypress farmount and the Pine Mills oilfield.

The beginning of the year saw the company undergo significant change, with new leadership and shift in strategy to focus on its Pine Mills asset. Although H1 results were down year-on-year, with revenue dropping by 44% to $938K, the company hopes its new strategy, alongside cost cutting measures will help to increase cash flow by the end of the year and positively impact its full-year results.

In the past month, the company’s share price has increased by 38.46% and it’ll be interesting to see if this upward trend continues.

ECR Minerals

ECR Minerals is a mineral exploration company based in the UK, which focuses on gold projects in Australia. The company fully owns the Bailieston and Creswick projects through its subsidiary Mercator Gold Australia (MGA).

No revenue was reported for the 6 months ending 31 March 2024, but net loss was down 38% to £451k due to a reduction in the impairment expense for intangible assets. Administrative costs were also down by 12%.

Throughout H1, ECR Minerals have made several important discoveries across Australia which has helped support the company's ongoing exploration efforts and its application for new exploration licenses.

ECR Minerals have recently announced an agreement for the potential sale of MGA which has around AUD 75M in tax losses. If this goes ahead, it’s likely MGA will need restructuring to separate its non-core assets.

The company’s share price has increased by 36.95% over the past month. It’ll be interesting to see if this upward trend continues with these changes.

Harvest Minerals

Harvest Minerals is an Australian based fertiliser company focused on developing agricultural projects throughout South America. Its main projects are in Brazil and include the Mandacaru Phosphate Project, the Miriri Phosphate Project, a potash project in Sergipe Alagoas and the Arapua Fertilizer Project.

Difficult macroeconomic events and local market factors have resulted in a challenging H1 where the company reported a loss of $1,780,082. Sales reached 17,007 tonnes but full year forecasts were reduced to 35,000 tonnes.

The company also conducts a series of Rare Earth Elements projects, and this side of the business appears promising. Initial results from its Arapua project seem hopeful, with room for further exploration.

Aptamer Group

Aptamer Group is a UK-based company that develops custom affinity binders which are used in therapeutics, diagnostics and research through its Optimer platform. These binders have various applications including protein purification, therapeutic modulation and drug delivery.

Aptamer had a challenging FY24 due to difficult market conditions and delivered mixed results. Revenues were down 66% year-on-year to 0.9M but its EBITDA loss of £2.8M was down from 4.7M in 2023.

The company has just extended its contract with Unilever to use Optimer binders in its deodorants with live testing expected to take place soon following successful lab results.

Reabold Resources

Reabold Resources is an oil and gas investment company based in the UK, with projects in the UK, US, Italy and Romania. The company invests in both onshore and offshore oil fields, with exploration licenses in the North Sea and a 42% stake in Daybreak Oil & Gas in California.

Reabold Resources H1 results ending 30 June 2024 were positive. Net loss decreased by 46% to £2M, and cash and cash equivalents were up 41% reaching £7.6M up from £5.4M the year before.

Looking ahead, Reabold Resources are optimistic about its upcoming projects. Early production plans at West Newton appear both valuable and cost effective. Its strong partnership with trading company Gunvor as well as an effective regulatory process makes The Colle Santo gas project also seem promising and could positively impact the business in the coming months.

Gfinity

Gfinity is a digital media company based in the UK which focuses on gaming content. Its Gfinity Digital Media (GMD) network reaches up to 40 million gamers through its 50 social media channels, and around 10 million gamers through its 12 websites each month. Through these platforms, the company offers services which include esports updates, gaming news and live streams.

In the 6 months ending 31 December 2023, the company saw revenues drop by 80% as challenging market conditions caused a reduced demand for Gfinity’s products. Despite this, the launch of new websites and its collaboration with national publishers on gaming content are likely to bring in revenue in the coming months.

The company have also introduced a series of measures which have cut monthly costs by 70%. Its hoping this more disciplined approach to its budget will result in then being profitable.

Red Rock Resources

Red Rock Resources is a UK-based mining company which focuses on the exploration and development of natural resources such as copper, gold, lithium and energy assets. Its main projects include the Migori Gold Project in Kenya, petroleum projects in Benin and Naminia and lithium projects in Africa.

For the 6 months ending 31 December 2023, the company reported a net loss of £1.4M, up 15% year-on-year due to higher project development costs.

Going forward, the company is looking to strengthen its gold portfolio as the precious metal is performing well. Its also working to expand its lithium operations in Zimbabwe.

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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.