With UK share prices dipping, I’m considering two opportunities in penny stocks

Listed here are two attention-grabbing penny shares promoting at their lowest costs in virtually 5 years. If the businesses obtain the expansion they’re aiming for, I feel the present low-cost valuations might quantity to first rate returns.

Nonetheless, there are additionally dangers to contemplate. I’m weighing up their possibilities.

Oxford Metrics

Oxford Metrics (LSE: OMG) is a small £83.6m firm that makes good sensing expertise and movement seize programs. Its key product, Vicon, is utilized in sports activities, training, movie manufacturing, digital actuality and biomedical analysis. Regardless of the small-market cap, the enterprise serves 10,000 clients in 70 international locations worldwide, with shoppers together with Boeing, Ford, Harvard College and EA Sports activities.

Now close to a five-year low at 63p, the value has spent a lot of the previous 5 years fluctuating between 80p and 120p. However its most profitable interval was between 2010 and 2020 when it rose 543%, from 35p to 125p. 

Can it relive the great previous days?

Regardless of income up 10.5%, the value has slipped 43% since its first-half 2024 leads to June. Shareholders had been upset when earnings per share (EPS) dropped 10.5% and internet money decreased 13.9%. Provide chain points had been cited a key problem and proceed to current dangers to the inventory. The latest acquisition of Industrial Imaginative and prescient Techniques is one other danger, as earnings might undergo if the enterprise fails to carry out as anticipated.

Nonetheless, 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 under the trade common and buying and selling at 92.6% under truthful worth primarily based on future money stream estimates. That implies the present worth might be a wonderful entry level — however provided that earnings develop from right here.

If the value continues to get well into 2025, I feel it might be price contemplating. Actually, it’s one to look at.

Helium One World

In contrast to Oxford Metrics, Helium One World (LSE: HE1) was extensively lined within the information this yr after its worth spiked 1,400% in February. This spike got here after it found important helium reserves at its Itumbula West-1 properly in Tanzania.

However since then, the value fell from 2.85p to under 1p final month.

Then, on 4 November, it introduced the completion of a Farm-In with Blue Star Helium’s Galactica-Pegasus Mission in Colorado, US. It secured a 50% curiosity within the mission in trade for drilling six wells on the positioning. The shares have climbed 24% since. 

Helium’s utilized in semiconductor chip manufacturing, an trade that’s exploded this yr within the US. Different makes use of embrace arc welding, nuclear cooling, medical imaging, cryogenics and aerospace engineering. Notable patrons embrace NASA, Intel and Samsung.

The worldwide helium market’s anticipated to develop from $3.76m in 2023 to $5.4m by 2030, with a compound annual development charge (CAGR) of 5.2%. So it’s protected to say, the demand exists. 

Nonetheless, Helium One faces powerful competitors, notably from Renergen in South Africa, Zephyr Vitality within the UK, and Noble Helium in Tanzania. Moreover, since helium isn’t traded on open markets, it’s troublesome to gauge its worth precisely. This lack of transparency, mixed with geopolitical danger and excessive transport prices, provides danger to the funding.

However given its latest development and US partnership, Helium One’s a penny inventory price contemplating.