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.
Learn more about penny stocks
Source: IG charts
Source: IG charts
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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. This list shouldn’t be construed as financial advice.
Many of these penny stocks have been hit by the wider market downturn since the start of 2022. However, while their share prices may have fallen in recent months, this is not necessarily a reflection of their true value.
However, with interest rates elevated, 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.
- Shoe Zone
- Kodal Minerals
- DG Innovate
- Abingdon Health
- Poolbeg Pharma
- Golden Metal Resources
- Ondo InsurTech
- Blencower Resources
- OptiBiotix
Shoe Zone
Shoe Zone saw significant growth by dint of its value offering during the pandemic. To date, it’s sold nearly 17 million pairs of shoes at an average of just £12 per pair.
In its October full year trading update, the small cap announced that group revenue had risen by 6.1% year-over-year to £165.7 million, while product margin had risen by one percentage point to 62.1%. Accordingly, adjusted profit before tax is expected to be at least a record £16 million — up by £4.8 million compared to FY22.
CEO Anthony Smith notes that ‘Shoe Zone has had a strong year, continuing the momentum gained from the positive year we had in 2022. We continue our strategy to expand our Hybrid and Big Box formats via refits and relocations and new stores. Shoe Zone continues to show how resilient it is, with a proven track record of delivering robust results during times of economic uncertainty.’
Kodal Minerals
Kodal Minerals agreed a $117.5 million contract with Hainan Mining in January 2023 to develop the former’s flagship Bougouni lithium mine in Mali. After a near year-long delay, the company has now acquired the funding and plans to start production by the end of the calendar year.
Of course, lithium prices remain depressed. But over the longer term, the stock could deliver handsome returns to investors with a reasonable risk appetite.
Harland and Wolff
In late 2022, was awarded ‘preferred bidder’ status as part of a team effort for a £1.6 billion shipbuilding defence contract. With the contract now set in stone, PM Rishi Sunak publicly visited the company on-site in Northern Ireland in 2023, and 2024 could be HARL's transformational year.
The company is also developing gas storage at Islandmagee which has shot up the political agenda –
and the worrying judicial review concerning the project has ended in its favour.
On the other hand, HARL shares have fallen sharply due to its cash and debt position. The company is currently in negotiations with lenders including UK Export Finance over long-term debt restructuring and further funding.
DG Innovate
DG Innovate more than doubled in December when it announced a board restructuring involving the appointment of three new directors; all of whom are former Tesla executives.
Peter Bardenfleth-Hansen has been instated as CEO, while Christian Eidem and Jochen Rudat have come on board as executive directors. The business, which specialises in electric mobility and energy storage, also secured £2.4 million in new funding through convertible notes.
Abingdon Health
Abingdon Health is becoming a popular penny share after launching its patented Salistick pregnancy test in partnership with Salignostics last quarter. The test is the first to use saliva rather than urine and there could be strong growth potential; 12.5 million pregnancy tests are used in the UK every year, while the global pregnancy test kits market is expected to reach $2.28 billion by 2028.
The company is selling the test directly and also through Superdrug and Tesco physical sites and online. In half-year results, revenues rose by 118% to £2.4 million, and the company is focused on developing a cash flow positive position.
Poolbeg Pharma
Poolbeg Pharma is working towards its first partnering transaction for flagship POLB001 after a recent successful human challenge study, alongside further positive trial results in January. It’s also developing two more promising treatments — POLB0002 for respiratory infections, and POLB003 for melioidosis.
Encouragingly, the company recently appointed Brendan Buckley as an Independent Non-Executive Director. Buckley has been an advisor since its founding and was a member of the Board of Directors of the Irish Medicines Board, chairing its Advisory Committee for Human Medicines.
Golden Metal Resources
Golden Metal Resources' flagship Pilot Mountain project is the largest undeveloped Tungsten deposit on US soil — ideally situated for power, water, skilled labour, transport, and pro-mining politics. And the asset is 100%-owned.
The US is currently entirely dependent on third countries for tungsten, and its largest import partner remains China, which controls 86% of global tungsten exports. From January 2026, the US Department of Defense is banning imports of the metal from China — and China recently banned the export of several critical minerals including some forms of graphite.
GMET has been pursuing non-dilutive US government funding for months, which could yield fruit should China choose to impose a Tungsten export ban.
Ondo InsurTech
Ondo InsurTech has developed the ‘LeakBot,’ a patented tech designed to dramatically reduce water damage, which should in turn significantly decrease insurance premiums and payouts.
It’s signed a go-to-market channel partnership to accelerate LeakBot deployment in North America with titan WNS, as well as deals with leading companies in Denmark, Sweden, and New Zealand.
More recently, ONDO has signed an affiliate partnership agreement with Waterwise, giving it much wider UK exposure — alongside a new partnership with US-based PURE Insurance.
Blencowe Resources
Blencowe Resources' Orom-Cross project in Uganda is widely regarded as a potentially world-class graphite deposit. The company has been awarded a £5 million grant from the US International Development Finance Corporation as a first step towards a larger contribution that would be needed as part of the £62 million required to build a production plant.
Some of this funding has already hit the miner’s accounts, and recent SPG test work has come back with exceptionally positive graphite purity results. The company could soon benefit from further US funding as China has tightened graphite exports.
OptiBiotix
OptiBiotix Health operates in the progressive domain of biotechnological research, with a focus on the modulation of the human microbiome.
The company’s R&D approach leverages pharma-grade platforms specially targeted at the food and dietary supplement markets. Its extensive portfolio includes 65 patents across 17 families, 8 strain deposits, and more than 28 trademarks.
The current flagship is SweetBiotix — a patented sugar substitute which is classed as a dietary fibre and attached to several health benefits. The company signed a significant manufacturing agreement with a US partner in September 2020, guaranteeing annual milestones and royalties on sales with blue chip companies including Kellogg’s, Nestle, and Coca Cola.
Past performance is not an indicator of future returns.
How to trade or invest in penny stocks
With us, you can get exposure to penny stocks via trading or investing. See the differences below, and find out how to get started,
How to trade penny stocks
- Create an account or log in and go to our platform
- Choose between spread bets and CFDs and search for your opportunity
- Select ‘buy’ to go long, or ‘sell’ to go short
- Set your position size and take steps to manage your risk
- Open and monitor your position
How to invest in penny stocks
- Create an account or log in and go to our platform
- Search for the penny stock you’d like to invest in
- Choose the number of shares you want to buy
- Take steps to manage your risk
- Open and monitor your position
| Trading penny stocks | Investing in penny stocks |
|---|---|
| Speculate on the price of penny stocks rising or falling | Buy and sell underlying penny stocks |
| Leverage your exposure – you’ll only pay a 20-25% deposit to get exposure to the full position size2 | Pay the full value of the shares you buy upfront |
| Leverage means both profit and loss will still be magnified to value of the full trade – so you could gain or lose money faster than you’d expect | You may get back less than you put in because the value of shares can rise or fall |
| Trade tax-free with spread bets and offset losses with CFDs3 | Invest tax-free with a stocks and shares ISA3 |
| Take shorter-term positions | Focus on longer-term growth |
| You can look to hedge your portfolio when trading | Build a diversified portfolio |
| Trade without owning the underlying asset | Take ownership of the underlying asset |
| No shareholder privileges | Gain voting rights and dividends (if paid) |
| Trade via both a spread betting account and CFD account | Invest via a share dealing account |
Note that leverage will amplify both your profits and your losses, and you could lose more than your deposit. Manage your risk carefully.
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 circ*mstances. Tax law may differ in a jurisdiction other than the UK.
