One soaring penny stock I’d buy today under 45p

This penny stock is a pioneer in developing solid state batteries, which could have the potential to surpass lithium-ion technology.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Penny stocks often have unproven business models and add considerable risk to an investor’s portfolio. But, some have huge growth potential too. AIM-listed company Ilika (LSE:IKA) has all of these characteristics, in my view.

The firm was founded in 2004 as the brainchild of the School of Chemistry at Southampton University. It develops solid state batteries for a variety of industries, from electric vehicles to healthcare.

Lithium-ion batteries have attracted significant attention in recent years, but Ilika’s rival technology could potentially offer solutions to many of their problems. I think this penny stock might make a nice addition to my portfolio. Here’s why.

Battery pioneer

Solid state battery technology isn’t new, but widespread application has proved challenging. Ilika’s trying to address this through its choice of materials and manufacturing process.

Technological advancements have allowed the company to lower production costs. In addition, its batteries can be charged more times and withstand higher temperatures than previous solid state designs.

Solid state batteries have potential advantages over liquid lithium-ion batteries. Taking electric vehicles as an example, according to Ilika, its batteries offer “a higher cell to pack ratio, lighter vehicles, higher energy and power density, extended range and fast charging“.

That all sounds promising, but the company isn’t profitable yet. Ilika’s EBITDA loss widened to £4.1m in H1 2023 from £2.7m in H1 2022. There’s still a long way to go before the firm becomes a fully-fledged commercial success.

Hero products

Ilika has two major product lines. The first is its Stereax miniature battery range. They’re particularly useful for medical devices, minimally invasive implants, and industrial applications.

Promisingly, the company recently signed a 10-year agreement with US-based medical device provider Cirtec Medical focussing on technology transfers and the supply of Stereax products.

Demonstrating the partnership’s potential, the Ilika share price surged 10% on the news and it’s climbed 82% in 2023 so far. However, the stock’s still down 83% from its 2021 peak. Potential investors should note the volatility risk they would be taking on if they bought shares.

The second product line is the company’s large-format Goliath batteries. Designed for electric vehicles, Ilika’s focused on enhancing their capabilities in enabling longer ranges for transportation and easy recyclability.

But, they aren’t cheap. Accordingly, the firm aims to target the luxury automotive sector where cost sensitivity is less of a concern and manufacturers might be prepared to pay a premium for the batteries’ unique qualities. Time will tell how successful this strategy is.


Although there’s a compelling case to be made for Ilika’s differentiated technologies, the business is still largely unproven. It only generated £200k in revenue during H1 2023, which suggests the technology still needs to mature before the company can reap the potential rewards.

Additionally, the cash balance slumped to £18.6m from £27.7m in H1 2022. Funding could potentially become an issue if Ilika fails to demonstrate a clear route to commercialisation.

Why I’d buy this stock

This penny stock is a speculative investment proposition, but there’s considerable potential in the company’s technology.

I wouldn’t want to invest too much as the risk/reward profile is high, but if I had spare cash, I’d be happy to allocate some to Ilika shares.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Charlie Carman has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Middle-aged black male working at home desk
Investing Articles

Are these top-traded FTSE 100 shares the best to buy for 2024?

The market has disagreed with me pretty much all year on the best buys among FTSE 100 shares. But, are…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

My five favourite forms of passive income

I've been looking for ways to pump up my passive income, so I can retire richer. But which of these…

Read more »

Silhouette of a bull standing on top of a landscape with the sun setting behind it
Investing Articles

What’s the FTSE 100’s best 10% dividend yield?

Depressed prices have thrown up some golden opportunities on the FTSE 100. Which of these 10%-yielding Footsie stocks should I…

Read more »

Two white male workmen working on site at an oil rig
Investing Articles

BP shares look dirt cheap

Are BP shares a brilliant bargain? The financials look excellent and it’s hard not to call them anything other than…

Read more »

Mindful young woman breathing out with closed eyes, calming down in stressful situation, working on computer in modern kitchen.
Investing Articles

My 12 fears for the stock market in 2024

After a terrific year for global stock markets in 2023, what can I look forward to in 2024? As a…

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

2 income shares for bumper dividends in 2024

I own these two income shares for their outstanding ability to deliver billions of pounds of cash dividends each year…

Read more »

Investing Articles

Could the IAG share price hit £2.11 in 2024?

According to analysts, the IAG share price could be headed for £2.11. But Stephen Wright wonders whether the stock is…

Read more »

Businessman use electronic pen writing rising colorful graph from 2023 to 2024 year of business planning and stock investment growth concept.
Investing Articles

1 hot UK growth stock I’m buying right now

I've more than doubled my money on this UK growth stock. But with a 948% boost to earnings, I think…

Read more »