I noticed that penny stock Angle (LSE: AGL) saw its shares soar at the beginning of the month. The update that caused the share price spike has me wondering if I should buy some shares now or hold off and see how things play out. Let’s dig deeper!
Medical diagnostics
Angle is a medical diagnostic business. It specialises in products to help cancer diagnostics. Its patented Parsortix technology seems to be making waves in the medical industry, and this is the reason for its recent share price spike.
On 4 January, the share price soared from 13p to 31p. It has since come down to 19p, as I write (16 January). Over a 12-month period, the shares are down 36% from 30p at this time last year, to current levels. It’s not uncommon for small-caps to experience such fluctuations.
Promising update, future outlook, and risks
The update that caused Angle’s share price spike seems hugely positive, if you ask me. A clinical breakthrough in recent trials announced by the business seems to have boosted investor sentiment. It’s also worth noting that its patented tech is currently the only one of its type cleared by the US Food and Drug Administration (FDA), which could be positive news for the firm’s future prospects.
So what about these prospects then? Based on recent positive news, and the sad fact that cancer numbers are set to rise exponentially in the coming decades, there could be an opportunity for Angle to boost growth, performance, and investor sentiment.
From a bearish perspective, the fact the business hasn’t yet turned a profit is something to be wary of. I’ve seen many small caps in the past fluctuate up and down during times of trials or product testing with lots of promise but eventually fall by the wayside.
Next, I’ve noticed that Angle has had funding issues in the past. Similar to share price volatility, this is not uncommon for smaller businesses just starting out. A natural worry of mine is that the business may need to borrow to keep the lights on, or is at risk of being bought out by a larger business in the sector. Based on the most recent financial update, Angle seems to have enough money in the bank to remain operational until the second quarter of 2025, according to its balance sheet.
What I’m doing now
I must admit Angle’s recent news was promising and caught my eye. However, I currently have more questions than answers. Where will the cash and funding come from for product development? When will the business turn a profit? Is there a chance of a takeover if the firm runs into difficulties? Could borrowing damage the long-term profitability of the firm?
When there are more questions than answers, I tend to steer clear of most stocks, whether that’s a blue-chip or a penny stock.
I won’t be buying any Angle shares today. I must admit Angle has some hallmarks to be a potential growth stock. However, I’ll place the shares on my watch list and keep a keen eye out for updates and developments.
