Penny stocks aren’t for everyone. Typically, these shares are high-risk investments. However, for those with higher risk tolerances, they can be worth considering as part of a diversified portfolio. With that in mind, here’s one that I feel is worth checking out right now.
An under-the-radar tech company
The stock in focus today is Made Tech (LSE: MTEC). It’s listed on the UK’s Alternative Investment Market (AIM) and is currently trading for 36p.
Sporting a market cap of £54m, Made Tech is a technology company that provides digital services to government organisations and regulated industries. Its goal is to help with digital transformation (a huge trend).
More specifically, it aims to help customers:
- Modernise legacy technology and working practices
- Accelerate digital service and technology delivery
- Drive better decisions through data and automation
- Enable technology and delivery skills to build better systems
So, you could say that it’s a ‘picks-and shovels’ play on the digital revolution.
Why I like it
Now, this stock has caught my attention for several reasons.
One is that revenue is climbing at an impressive rate. Recently, the company advised that for the year ended 31 May 2025, it expects to deliver revenue of around £46.4m. That would represent growth of 20% year on year and growth of approximately 750% from the figure five years earlier. Note that this figure was ahead of expectations (the company also said that revenue for this financial year would be ahead of expectations).
It’s worth pointing out here that Made Tech is benefitting from the UK government’s drive to get up to speed digitally. In the most recent trading update, CEO Rory MacDonald said that the government’s renewed focus on digital transformation and data as a growth asset has reinforced a growing long-term market opportunity with “clear demand for modern digital technology and the potential for sustained returns.”
Another thing I like is that the company is now profitable (this reduces risk a little). For the most recent financial year, adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) are expected to be £3.4m, up 42% on the prior year.
The balance sheet also looks solid. At the end of May, the company had £10.4m in cash and no debt on its books.
Finally – and this shouldn’t be overlooked – the stock is in a really nice uptrend at the moment. Over the last year, it has risen about 120%.
Worth a look?
Of course, there are plenty of risks to consider.
One is that a lot of Made Tech’s revenue comes from the UK government. If it decided to spend less on digital transformation, the company’s growth could slow.
Another risk factor is selling of shares by insiders. Recently, it was announced that a director who has been with the company for 13 years (and owns a ton of stock) is stepping down.
Overall though, I see quite a bit of potential. If one is comfortable with risk, I think this penny stock is worth considering.
