2 potentially exciting penny stocks this Fool likes!

Sumayya Mansoor explains why she’s bullish on these two penny stocks and feels they may not remain small caps in the longer term.

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Two penny stocks I plan to buy when I next have some spare cash are DP Poland (LSE: DPP) and Revolution Beauty Group (LSE: REVB).

Here’s why!

DP Poland

The business franchises the famous Domino’s Pizza brand in emerging markets Poland and Croatia.

DP Poland shares are up 50% over a 12-month period from 8p at this time last year, to current levels of 12p.

From a bullish view, demand for fast food in Poland and Croatia is soaring. Emerging markets present an opportunity for the firm to capitalise on rising personal income levels, as well as current low market penetration.

The business has recorded excellent performance in recent times. In fact, it recorded its best ever quarter, the final quarter for 2023. Like-for-like sales in this period increased a whopping 27.5%.

For the year as a whole, the business posted an update in January. Like-for-like sales in Poland and Croatia rose by an impressive 19.4% and 16.4%.

From a bearish view, the fast food industry is intensely competitive. I’m sure others will be looking to capitalise on this potentially lucrative emerging territory. Plus, current inflationary pressures are an ongoing risk as they could take a bite out of profit margins.

Overall, the DP Poland continues to open new locations. Furthermore, it’s investing heavily in marketing and technology to zero in on a dominant market position. A healthy looking balance sheet should stand it in good stead. One of my biggest worries with small cap shares is a lack of cash, which can often lead to trouble.

Revolution Beauty Group

Personal care and beauty business Revolution Beauty Group has been on a great growth journey, and went public back in 2021. The business sells a number of brands direct to consumers via e-commerce, as well as in retail stores.

The shares are up just over 12% during a 12-month period from 24p at this time last year, to current levels of 27p.

According to data published by Statista, the beauty and personal care market is only set to continue to grow at a rapid rate. This could be good news for the business.

Revolution has a lofty aim of hitting £1bn worth of sales by 2030. A new management team, brought in due to an accounting and reporting scandal, are looking to deliver fresh impetus to the business to hit this target.

Last month’s trading update shed further light on recent trading, and full-year expectations. The business said EBITDA growth should come in at low double-digit figures, which is an upgrade on the previous forecast. It looks like the firm’s strategic review to drive efficiencies, margins, and profitability is already working.

From a bearish view, I’m going to keep an eye on beleaguered fast fashion firm boohoo‘s growing influence on the business. It currently holds close to 30% worth of shares in the business. boohoo’s well documented struggles are something I’m hoping that Revolution can avoid in the future.

Overall, a positive journey to date, fresh impetus, and strategic review looking like it’s bearing fruit. These, along with a burgeoning market place help build my investment case.

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.

Sumayya Mansoor 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.

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