Should I follow Hargreaves Lansdown investors and buy 1.3p penny stock Helium One Global?

Hargreaves Lansdown investors have been piling into a penny stock that currently trades for just over 1p. Should Edward Sheldon follow the crowd?

| 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.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

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.

One penny stock that’s getting a lot of attention from investors right now is Helium One Global (LSE: HE1). Last week, it was the second most purchased stock on Hargreaves Lansdown.

Should I follow the crowd and buy this stock for my own portfolio? Let’s discuss.

Created with Highcharts 11.4.3Helium One Global PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Exploring for helium

First, let’s take a look at what this company does.

Should you invest £1,000 in Scottish Mortgage right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Scottish Mortgage made the list?

See the 6 stocks

Helium One is an AIM-listed company that’s engaged in helium exploration (helium is a colourless, odourless, non-toxic gas that’s used in a wide range of industries). Its aim is to eventually become a producer of the commodity.

The company’s main assets are located in Tanzania where it holds 2,840 square kilometres of prospecting licences. These are divided into three distinct project areas (the Rukwa, Balangida, and Eyasi projects).

At the current share price of 1.3p, Helium One has a market cap of just £80m. So, it’s a very small company.

Exciting growth story

Now, I can see why investors are excited about this one.

For starters, demand for helium looks set to rise going forward. According to the company, global demand is projected to rise to 8.5 billion cubic feet (Bcf) by 2030 from 6 Bcf today.

It’s worth noting here that helium – which is produced by the slow radioactive decay of elements within ancient continental crust – can’t be manufactured artificially. It also can’t be commercially extracted from the atmosphere.

Helium is a vital resource across the technology, science, medicine, and manufacturing industries. It is widely regarded as the unsung commodity of the digital revolution given its importance in a range of high-tech manufacturing applications.

Helium One Global

Additionally, the company recently entered into an agreement to acquire a 50% interest in ASX-listed Blue Star Helium‘s Galactica-Pegasus project in Colorado as well as a similar interest in the leases associated with 246 square kilometres of acreage in the proven helium fairway of Las Animas County, southern Colorado.

Helium One has said that this partnership with Blue Star will allow it to build an expanding global footprint in the helium sector at a pivotal time in the industry.

High-risk

For me though, this stock is a little too risky. Like a lot of small-cap commodity stocks, it’s very speculative in nature.

Now don’t get me wrong – I like to invest in growth stocks. Most of my portfolio is invested in companies that have the potential to generate huge returns for me in the years ahead.

But when I’m investing in growth shares, I nearly always seek out companies with a) revenue growth and b) profits (and profit growth), as I’ve found that these types of companies tend to be far safer investments.

Right now, Helium has no revenues or profits. So, it’s a high-risk investment.

This was illustrated recently when the company had to raise £6.4m and issue 590m new shares (at a price of 1.09p) to fund the Blue Star deal. This move sent its share price down significantly, in a big blow to existing investors.

Given the high level of risk here, I’m going to pass on this stock and focus on other exciting opportunities in the market. All things considered, I think there are better growth stocks to buy for my portfolio today.

But what does the head of The Motley Fool’s investing team think?

Should you invest £1,000 in Scottish Mortgage right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Scottish Mortgage made the list?

See the 6 stocks

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.

Edward Sheldon has no position in any of the shares mentioned. The Motley Fool UK has recommended Hargreaves Lansdown Plc. 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 Micro-Cap Shares

Investing Articles

These penny shares are on my shortlist for my new 2025-26 ISA allowance

I'm looking at some penny shares that suffered falls in the past few years. But I think I see signs…

Read more »

Stack of one pound coins falling over
Investing Articles

How to spot a promising penny stock (and avoid the traps)

Penny stocks can be highly tempting due to their potential for exponential growth. However, it's critical to carefully assess their…

Read more »

Investing Articles

2 penny stocks with growth potential to consider buying in 2025

Positive stock market sentiment in 2025 could help push up prices across the board, including some penny stocks that I…

Read more »

Investing Articles

Should I quit my day job and use AI to predict the stock market?

This Fool put various AI models to the test, checking their stock market prediction skills. The results however were questionable.

Read more »

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

At 3.3p, could penny stock GSTechnologies generate huge gains for investors?

Penny stock GSTechnologies is absolutely on fire at the moment. Could it be worth considering as a high-risk/high-reward investment?

Read more »

Micro-Cap Shares

3 high-risk/high-reward penny stocks to consider buying for 2025

These three penny stocks are risky. But Edward Sheldon believes they have the potential to be excellent long-term investments.

Read more »

Investing Articles

Is this penny stock on track for an explosive recovery in 2025?

This penny stock skyrocketed 1,400% in early 2024! But will the group’s latest operational progress send the shares even higher…

Read more »

Investing Articles

2 precious penny stocks that could offer a golden opportunity!

Like the early gold rush days, penny stocks have a strong allure, offering an opportunity to be a part of…

Read more »