The penny stocks I’ve been watching included a few in the home construction and improvement business.
But the list is shrinking, as ones like Michelmersh Brick Holdings have broken through either the £100m market cap limit, or a 100p share price.
In the case of Michelmersh, at 105p the shares are only just out of range now, but it’s still a candidate buy for me.
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Penny stock dividend
At least Topps Tiles (LSE: TPT) is still within range with a 46p share price. But its market cap of £93m only just qualifies.
We often have to choose between a low share price that we think will rise, or a high dividend. In this case, we can hope for both.
Forecasts put the dividend yield at a whopping 7.5% this year. And though forecasts are probably at their least reliable when it comes to very-small-cap stocks, they do at least suggest dividend growth in the next few years.
A Q3 trading update showed conditions still tough, as we’d expect from the current state of the economy.
But the firm said: “Positive macroeconomic data on inflation, real wage growth, improving consumer confidence and increased activity in the housing market provides some confidence in a cyclical recovery.“
Big risk
Sometimes, a really hammered penny stocks swings into view. And it has all the hallmarks of either going bust, or making a possibly spectacular recovery. That’s the question I’m pondering over Petrofac (LSE: PFC).
Shares in the oil and gas services business were up over £15 in 2012. Today, they’re just 15p.
There was a bribery scandal a few years ago, and then Covid hammered the business.
And earlier in 2024, we saw major concerns over the firm’s liquidity, with $250m in debt set to mature in October. At the time, the threat of a significant shareholder dilution was real.
More recently, creditors have agreed to hold off for a while with Petrofac having a restructuring plan in place. And the order book looks strong, with some notable renewable energy wins.
If the board can pull it off, it might just be worth a small investment. The next few months could be crucial.
Lithium rebound?
The AIM-listed Atlantic Lithium (LSE: ALL) share price is down to just 13p per share. In early 2022, it was up over 60p.
At that time, the price of the elusive metal was soaring on the back of electric vehicle hype. But in the past couple of years, it’s slumped. Today, lithium fetches no more than it did in mid-2019.
The company itself looks to be in good financial health though. And its developments in Ghana are progressing nicely.
The future price of lithium must be the key here. And other technologies, like sodium batteries, pose a threat. There’s a lot more sodium around, and it’s far more easily accessible.
But if lithium demand stays strong and Atlantic Lithium can turn a profit in 2026 as forecasts suggest, I think it could move on out of penny stock territory.
