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Here are two interesting penny stocks selling at their lowest prices in almost five years. If the companies achieve the growth they’re aiming for, I think the current cheap valuations could amount to decent returns.
However, there are also risks to consider. I’m weighing up their chances.
Oxford Metrics
Oxford Metrics (LSE: OMG) is a small £83.6m company that makes smart sensing technology and motion capture systems. Its key product, Vicon, is used in sports, education, film production, virtual reality and biomedical research. Despite the small-market cap, the business serves 10,000 customers in 70 countries worldwide, with clients including Boeing, Ford, Harvard University and EA Sports.
Now near a five-year low at 63p, the price has spent much of the past five years fluctuating between 80p and 120p. But its most successful period was between 2010 and 2020 when it rose 543%, from 35p to 125p.
Can it relive the good old days?
Despite revenue up 10.5%, the price has slipped 43% since its first-half 2024 results in June. Shareholders were disappointed when earnings per share (EPS) dropped 10.5% and net cash decreased 13.9%. Supply chain issues were cited a key challenge and continue to present risks to the stock. The recent acquisition of Industrial Vision Systems is another risk, as profits could suffer if the business fails to perform as expected.
Still, the board says it’s making clear progress in its five-year plan.
With a price-to-earnings (P/E) ratio of 17.3, it’s far below the industry average and trading at 92.6% below fair value based on future cash flow estimates. That suggests the current price could be an excellent entry point — but only if earnings grow from here.
If the price continues to recover into 2025, I think it could be worth considering. Certainly, it’s one to watch.
Helium One Global
Unlike Oxford Metrics, Helium One Global (LSE: HE1) was extensively covered in the news this year after its price spiked 1,400% in February. This spike came after it discovered significant helium reserves at its Itumbula West-1 well in Tanzania.
But since then, the price fell from 2.85p to below 1p last month.
Then, on 4 November, it announced the completion of a Farm-In with Blue Star Helium’s Galactica-Pegasus Project in Colorado, US. It secured a 50% interest in the project in exchange for drilling six wells on the site. The shares have climbed 24% since.
Helium’s used in semiconductor chip manufacturing, an industry that’s exploded this year in the US. Other uses include arc welding, nuclear cooling, medical imaging, cryogenics and aerospace engineering. Notable buyers include NASA, Intel and Samsung.
The global helium market’s expected to grow from $3.76m in 2023 to $5.4m by 2030, with a compound annual growth rate (CAGR) of 5.2%. So it’s safe to say, the demand exists.
Still, Helium One faces tough competition, notably from Renergen in South Africa, Zephyr Energy in the UK, and Noble Helium in Tanzania. Furthermore, since helium isn’t traded on open markets, it’s difficult to gauge its price accurately. This lack of transparency, combined with geopolitical risk and high transport costs, adds risk to the investment.
But given its recent growth and US partnership, Helium One’s a penny stock worth considering.
