With UK share costs dipping, I'm contemplating two alternatives in penny shares

Listed here are two fascinating penny shares promoting at their lowest costs in nearly 5 years. If the businesses obtain the expansion they’re aiming for, I believe the present low cost valuations may quantity to first rate returns.

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

Oxford Metrics

Oxford Metrics (LSE: OMG) is a small £83.6m firm that makes sensible sensing expertise and movement seize programs. Its key product, Vicon, is utilized in sports activities, schooling, movie manufacturing, digital actuality and biomedical analysis. Regardless of the small-market cap, the enterprise serves 10,000 prospects in 70 international locations worldwide, with purchasers 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 nice previous days?

Regardless of income up 10.5%, the value has slipped 43% since its first-half 2024 leads to June. Shareholders have been upset when earnings per share (EPS) dropped 10.5% and web money decreased 13.9%. Provide chain points have 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 threat, as earnings may endure 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 beneath the trade common and buying and selling at 92.6% beneath truthful worth based mostly on future money move estimates. That implies the present value could possibly be a superb entry level — however provided that earnings develop from right here.

If the value continues to recuperate into 2025, I believe it could possibly be value contemplating. Definitely, it’s one to observe.

Helium One World

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

However since then, the value fell from 2.85p to beneath 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 undertaking in change 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 embody arc welding, nuclear cooling, medical imaging, cryogenics and aerospace engineering. Notable consumers embody 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 price (CAGR) of 5.2%. So it’s protected to say, the demand exists. 

Nonetheless, Helium One faces robust 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 tough to gauge its value precisely. This lack of transparency, mixed with geopolitical threat and excessive transport prices, provides threat to the funding.

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