Penny stocks are exceptionally volatile investments. And Batm Advanced Communications’ (LSE:BVC) shareholders have learned this first-hand with its market-cap shrinking more than 75% over the last five years.
However, as we’ve seen with companies like Rolls-Royce, just because a stock takes a tumble doesn’t mean it can’t deliver an explosive recovery. And looking closer at Batm, there’s a lot to be excited about. So much so that its shares could be perfectly positioned for a rebound.
But is this a screaming long-term buy for growth investors to consider?
A bit of context
As a quick crash course, Batm specialises in three critical areas: bio-medical diagnostics, cybersecurity, and network telecommunications. And despite what the group’s five-year share price chart suggests, the business is actually delivering some pretty solid results right now.
Batm’s one of the few companies able to enjoy a massive growth surge during the pandemic, driven by its Covid-19 testing kits. Obviously, demand for these hasn’t persisted, and the gold rush eventually came to an end, taking its share price down with it.
Since then, the business has undergone a bit of restructuring and divested some of its non-core operations to refocus the business. And looking at the group’s latest results, those efforts look like they’re starting to pay off.
Across the first six months of 2025, revenues rose from $58.9m to $60.4m year on year, with gross profit margins expanding from 31.7% to 32.7%. That growth may not look particularly explosive, but digging deeper reveals a much more impressive picture.
Thanks to the launch of new products, management’s successfully secured several multi-million-dollar deals with governments and private enterprises alike. Subsequently, its networking segment has delivered a 156% revenue surge compared to the second half of 2024.
At the same time, after its larger medical diagnostics arm penetrated the Italian market, segmental sales grew by a solid 21% year on year. And while its smallest cyber division is lagging, early demand for its new encryption platform’s proving encouraging.
Combining all this with the progress made in boosting operational efficiency, this penny stock might have already begun its recovery story, with the shares climbing by over 30% since April.
What to watch
While Batm’s showing solid signs of progress, like all penny stocks there remains a lot of risk on the table. Even with niche operations, the company has plenty of competitors to fend off, many of whom have far deeper pockets, limiting the group’s pricing power.
What’s more, while the firm’s restructuring appears to be largely completed, there nonetheless remains significant execution risk. If it’s new products and services fail to meet expectations or macroeconomic forces like inflation dampen demand, the anticipated revenue and earnings expansion could take far longer to materialise than expected.
So with all this in mind, is this a stock worth considering?
Personally, I want to see a bit more progress emerge before throwing my hat into the ring. Batm definitely has exciting long-term growth potential, so I’ll be watching this business carefully. But for now, I’m looking at other, more proven penny stock opportunities for my portfolio.
