The fluctuation in penny stocks is significant, with small-cap shares experiencing drastic price changes. Despite this, there are opportunities for investors to purchase stocks at a low cost after a substantial drop in price. One potential value buy currently is Invinity Energy Systems (LSE:IES), whose stock has decreased by 50% in the last year, resulting in a market cap of £94m and a share price of 21p.
Unfortunately, the company is still operating at a loss, with a £18.54m loss reported in the last full-year results, despite generating revenue of only £2.94m. The high operating costs have led to concerns among investors about the company’s ability to become profitable, especially since it has been losing money for the past five years.
However, there are reasons for optimism, such as the significant revenue growth to £14.8m in the latest half-year results, a tenfold increase from the previous year. This growth was driven by successful product deliveries to major clients in Canada, Australia, and the US. Additionally, the company is launching a new system called Mistral, with large orders already secured, including funding from the US Department of Energy.
Although operating costs will remain high in the short term to accommodate the increase in orders, the surge in revenue indicates strong demand and a potentially bright future. While investors may be hesitant to invest until the company proves its ability to turn a profit, the increase in revenue is a positive step towards profitability.
Investing in Invinity Energy Systems carries risks due to its volatile nature as a penny stock, but there is potential for a rally in the coming year if revenue growth continues. Considering these factors, adding a small amount of this stock to a portfolio for potential future gains may be worth considering.