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In terms of penny shares, there’s all the time that blend of pleasure and hazard. The rewards might be big if an early wager pays off, however the dangers are equally vital. Many such firms commerce at low valuations for a motive — fragile stability sheets, inconsistent revenues or just working in extremely aggressive sectors.
Nonetheless, I believe there are moments when a penny inventory deserves a more in-depth look.
This September I’ve been conserving tabs on two names which have made promising progress not too long ago. Positive, they arrive with dangers, however for traders looking for development alternatives, I believe they’re each value contemplating.
Pharos Power
Pharos Power (LSE: PHAR) has been quietly constructing momentum. The share value is up 66.7% prior to now 5 years and the corporate has managed to take care of reliable revenues alongside the best way.
Plus, with a dividend yield of 5.6% supported by a modest 27.5% payout ratio, earnings traders can also discover this engaging.
Valuation-wise, Pharos seems low cost. A price-to-earnings (P/E) ratio of 4.9 suggests the market isn’t inserting a excessive premium on earnings, which may make this an undervalued vitality inventory to contemplate. Importantly, earnings development has been sturdy, pushing web margins as much as 17.3%.
One of the crucial encouraging updates got here with the extension of its licences for Vietnam oil and gasoline fields by to 2032. That gives much-needed certainty over future manufacturing and income streams. In the meantime, the enterprise has nearly eradicated its debt, chopping borrowings from £62m three years in the past to shut to zero immediately.
The principle danger, although, comes from liquidity and the stability sheet. Brief-term liabilities of £108m outweigh present belongings of simply £59m, giving it a bloated fast ratio of three.66. If money movement dried up, the agency may shortly discover itself below strain. For that motive, traders ought to nonetheless tread rigorously.
However given the enhancements to profitability and debt discount, it’s a inventory value watching extra carefully.
hVIVO
Scientific analysis specialist hVIVO (LSE: HVO) is one other penny inventory making waves. Recognized for its human problem trials, it not too long ago posted a robust buying and selling replace for the primary half of 2025. Income got here in at £24.2m, conserving it on observe for full-year expectations of £47m. The group additionally had a wholesome £23.3m in money as of 30 June 2025.
Progress has been supported by a wholesome gross sales pipeline, with a number of giant human problem trial alternatives in superior discussions. The corporate has additionally been increasing its providing, with scientific website and hLAB companies gaining traction. Latest acquisitions of CRS and Cryostore added one other £5.5m to group income within the first half alone.
However as with many biotech shares, there are dangers. Financing throughout the biotech sector stays below strain, which may cut back shopper spending on trials. Excessive fastened working prices imply hVIVO wants sturdy contract movement to cowl bills. Extra critically, its income is closely depending on changing contracts and avoiding delays. A single cancellation can have a huge impact, making forecasting troublesome.
Nonetheless, with comparatively low debt to fairness, sturdy money reserves and an increasing portfolio of companies, I believe it’s an intriguing inventory for traders to contemplate – in the event that they’re comfy with potential volatility.
