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 in 2025?

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Penny stocks are notorious for being risky. And shareholders in Helium One Global (LSE:HE1) have learned that first-hand. The young helium exploration company has seen its valuation tank following its peak in 2021, falling 96% over the last three years.

However, at the start of 2024, the stock popped by 1,400%! While that’s not nearly enough to undo its lost market-cap since 2021, investors who bought in right before were likely quite excited. After all, a £1,000 investment was turned into £14,000 in just a few weeks.

Even after this burst, Helium One’s market-cap is still just shy of £60m. That means there’s still plenty of space left for more quadruple digit returns if it successfully transitions to commercial production of helium. But is that likely to happen in 2025? And could it return to 2021 levels over the next 12 months?

Should you invest £1,000 in Helium One Global 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 Helium One Global made the list?

See the 6 stocks

Revenue incoming

As previously mentioned, Helium One’s still in the exploration phase of development. That means no revenue will be generated in 2024. However, 2025 could change all of that.

In addition to its exploration efforts in Tanzania, the firm owns a 50% stake in the Galactica-Pegasus project in the US. And while there have been a few weather-related delays pushing the commencement of drilling back to next month, the project remains on track to begin production within the first half of 2025.

Meanwhile, over in its flagship Tanazia project, management’s submitted its request for a mining license with drilling equipment already on site and ready to go.

Assuming the license is granted, 2025 looks like the year Helium One will finally be generating some operational cash flow. And while profits might still be a few years away, a successful transition to commercial production could send shares flying on higher expectations. At least that’s what the 3.96p share price forecast from City analysts suggests.

What could go wrong?

As exciting as these operational milestones are, it’s important to keep expectations in check. Commercial production might only be a few months away, but that’s plenty of time for something to go wrong. Continued unfavourable weather could delay progress in Colorado, while the firm’s mining license application could be rejected if regulators aren’t happy.

Even if the license is granted, a fault in machinery or unexpected interruption to drilling could prevent a smooth transition. And with Helium One’s valuation currently driven almost entirely by expectations, the slightest bit of bad news could trigger another share price collapse.

Needless to say, an investment today would likely be exceptionally volatile, either surging higher or imploding. A lot of things have to go right if Helium One wants to see its share price return to 2021 peak levels, especially since management has issued a massive amount of new shares to raise capital since then. For reference, the number of shares outstanding has increased from around 615 million to 5.3 billion over this period.

Personally, the risk’s too high for my portfolio. But compared to other exploration penny stocks, Helium One certainly looks like a promising contender. So investors comfortable with high levels of risk may want to consider taking a closer look.

Like buying £1 for 31p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 10%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full 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.

Zaven Boyrazian 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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