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I don’t allocate lots of capital to penny shares. As a result of they are usually dangerous investments.
Nevertheless, sometimes I spot a chance that’s actually tempting. And MTI Wi-fi Edge (LSE: MWE) is a type of alternatives.
Profitable defence offers
MTI Wi-fi Edge is a small Israel-based firm that designs and manufactures state-of-the-art antennas and associated techniques. It makes merchandise for a broad vary of markets however the place it’s having lots of success in the meanwhile is on the army entrance.
We are able to see this in a buying and selling replace posted this morning (7 April). Right here, it suggested that it has lately gained a bunch of latest defence orders (all from current prospects) together with:
- A $2.2m contract to provide communications infrastructure to the Israeli Ministry of Defence
- A $1.9m contract to provide army antennas to a world defence firm
- A $0.5m contract for army antennas from an area defence firm
- Further orders totaling roughly $1.3m to provide elements primarily to a defence firm
Put all these collectively and we now have $6m value of contracts. Not unhealthy for a corporation with a market cap of simply over £50m.
The market is clearly impressed – the corporate’s share worth is up about 8% as I write. That takes the inventory’s year-to-date acquire to round 33% – miles forward of the returns from some greater defence shares resembling Rolls-Royce Holdings (3%) and Rheinmetall (0%).
An funding alternative?
Is that this penny inventory value a glance as we speak? I believe so – it seems to supply a successful mixture of development, worth, momentum, and earnings.
We are able to see the expansion within the offers above. These ought to increase the corporate’s prime line.
“The volume of orders significantly enhances our order book for FY2026 and FY2027 and supports our ability to continue to grow our business.”
MTI Wi-fi Edge CEO Moni Borovitz
As for worth, the forward-looking price-to-earnings (P/E) ratio is simply about 14. That earnings a number of suggests to me that this inventory is flying below the radar of lots of buyers.
Turning to momentum, the share worth is in a robust upward development. And ‘the trend is your friend’ as they are saying.
We even have earnings. For 2025, this firm paid out 3.4 cents in dividends per share – that interprets to a dividend yield of about 4.2% as we speak.
After all, we have to keep in mind that this can be a penny inventory. And that signifies that there are many dangers. It’s additionally in a sector by which many buyers wouldn’t wish to make investments.
On the operational entrance, dangers embrace offers drying up and income development stalling and better provide chain prices consuming into earnings. In the meantime, on the buying and selling/funding entrance, a threat is a scarcity of liquidity (not having the ability to promote the shares at worth).
Total although, I like the danger/reward set-up on the present share worth valuation and valuation. I imagine this inventory is worthy of additional analysis.
