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.

Remember past performance is no indicator of future returns

Surface Transforms

Surface Transforms is a UK—based manufacturing company that produces carbon ceramic brake disks for cars. These disks are created by weaving carbon fibers into a 3D structure to form a lightweight, durable disk strong breaking performance and heat management. They can be used in petrol, diesel and electric cars and the company sells to both major car dealerships and specialty car makers alike.

In 2023, the company performed well with revenues growing by 81% and sales reaching £8.3 million. Demand for its products was higher than expected and the company faced challenges producing such a large amount and made resolving this issue a priority for 2024.

These efforts have proved successful and in 2024, Surface Transforms expects to see significant sales growth of up to 165%, which would bring in £22 million for the year.

Corcel

Corcel is an energy and natural resources company which focuses on battery metals, oil and gas. Its key projects extract minerals like lithium, nickel and rare earth elements and are based in Western Australia. On top of this, the company has oil interests in Angola and a 41% stake in a mineral license in Papua New Guinea.

In 2024, the company reported a loss of just over £3 million, up from £1.26 million the year before. This was largely driven by higher administrative costs from business expansion. Although this could appear negative in the short term, these investments could lead to long—term growth.

Looking ahead, Corcel aim to develop a wide portfolio of projects that produce immediate and long—term growth, creating lasting value for shareholders. Its plans include growing its operations in Brazil by assets there and working to get the most value from its Rare Earth and Battery Metals projects.

The Revel Collective

The Revel Collective owns 22 gastro pubs and 43 premium bars across the UK. It owns several well—known brands including Revolution, Peach Pubs, Revolucion de Cuba and Founders & Co. Each brand targets a different part of the market from a casual pub to cocktails and nightlife.

Despite challenges facing the UK nightlife scene, the company performed well throughout H1 of this year. During this period, it completed its restructuring and has become financially stronger as a result.

All brands performed well throughout the Christmas period with Founders & Co and Peach pubs being particularly strong. Revolution’s results were less positive as the younger audience it caters for continue to be disproportionately impacted by the cost—of—living crisis. The company plan to address this issues in the coming months.

Cloudcoco

Cloudcoco is a computer services company based in the UK that provides ongoing IT support to customers as well as selling a range of hardware and software applications. Its services include cybersecurity, connectivity and communications, IT consulting and data center and cloud solutions.

In 2024, the company sold its IT services business for £7.75 million to help pay off its debts and is now focusing on its IT product and e—commerce sales. Although the company is smaller, it has a now has a clearer plan for growth and is looking to move into areas like investing and consulting to help generate income. If these plans are successful, its share price could see further gains.

Rome Resources

Rome Resources is a mineral exploration company based in the UK with a 51% stake in two properties in the Walikale District in the Democratic Republic of Congo. It contains mostly tin, but there’s potential for zinc, lead, silver and copper to be mined as well.

Looking forward, the company plans to develop a high—grade tin project, as it anticipates strong demand for the metal from tech and AI companies as that industry continues to develop. In the past month, its share price has increased by 35% and if this project goes well, it could see further gains.

Belluscura

Belluscura is a medical device company based in the UK that produces portable, lightweight oxygen technology. Its main product X—PLOR, has been created to replace more bulky oxygen tanks and is used by people with chronic lung and respiratory issues. The company is also working to produce oxygen technologies for industrial, healthcare and recreational uses.

Throughout 2023 Belluscura was working to develop its new portable oxygen generator DISCOV—R and in its initial launch in June 2024, it was well received getting over 6,500 pre orders.

Looking ahead, the company anticipates it’ll perform well over the next couple of years due to an increased demand for oxygen therapy across the globe. In the past month it’s share price has increased 33% and this could go up further if the company’s strong performance continues.

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.

Jangada Mines

Jangada Mines is a natural resource company based in the UK that owns 100% of the Pitombeiras vanadium titanomagnetite in Brazil and extracts titanium, iron ore and high—grade vanadium. The project is conveniently located near popular seaports in a free trade zone which helps with both international and domestic sales. Jangada Mines also has interest in KEFI Gold and Copper, ValOre Metals, Blencowe Resources and Federe Titanium.

Looking ahead, the company plans to advance its current projects sourcing battery metals whilst also identifying new opportunities. Over the past month its share price has increased by 28%, and if its strategy proves successful, it could see further gains.

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.

The company had a challenging 2024 as shifted its focus from software development and esports to digital media. Revenues decreased 14% as a result. This restructuring has allowed Gfinity to cut costs and adopt what it hopes to be a more efficient business model.

Despite having a difficult year, Gfinity a stronger performance over the next couple of years due to potential opportunities in the growing gaming industry.

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 on the business in the coming months.

How to trade or invest in penny stocks

1. Learn more about penny stocks
2. Choose whether you want to trade or invest
3. Open an account
4. Search for penny stocks on our web platform or app
5. Make your trade or investment
6. Monitor your position

Investing in a stock involves buying it outright and holding it for a long period of time with the view it’ll increase in value.

Trading takes a shorter term approach and uses leverage. This means that market movements are magnified and you can take a position much larger than your initial deposit.

For instance, using 5:1 leverage allows you to control a £5000 position with a £1000 initial margin. If the market shifts by 10% it could result in a 50% profit or loss on your deposited margin.

Whilst negative balance protection means you can’t lose more than you initially put in, market movements can be fast and unpredictable meaning you could still lose your full deposit.

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

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.