While penny stocks are high-risk investments, they can actually be good portfolio diversifiers. Often, they perform very differently to stocks in major indexes like the FTSE 100 and the S&P 500.
Here, I’m going to highlight a penny stock that’s flying right now, despite the fact that the broader market is moving lower. Could this name be worth considering for an ISA or SIPP?
A 58p penny stock in the defence space
The stock in focus today is MTI Wireless Edge (LSE: MWE). It’s a small Israel-based company that designs and manufactures state-of-the-art antennas.
This company makes antennas for a broad range of markets (its products include commercial, RFID antennas, 5G back-up, and military antennas). It also has operations in the areas of water control and management and consulting.
Where it’s having a lot of success at present, however, is on the military antenna front. Last year, sales here rose 50%.
Its share price is currently 58.4p. That means £1,000 buys 1,712 shares (ignoring commissions).
Strong financials
Looking at the set-up here, there’s a lot to like, in my view. For a start, the company has strong operational momentum.
Last year, group revenues increased 13% to $51.5m. Meanwhile, earnings per share (EPS) surged 29% to $5.81.
Driving this growth was high demand for antennas from the defence industry. Looking ahead, the company expects defence demand to remain strong.
“The dominant market driver in 2025 was defence spending and this is likely to be true in 2026 too. The defence market, which was already expanding, is now poised for even greater growth due to actions taken by the US government and the decision of European governments to significantly increase defence spending, and MTI is well-positioned to benefit.”
MTI Wireless Edge 2025 results
One thing worth highlighting here is that the company is profitable, has plenty of cash on its books ($9.4m at the end of the year), and pays a dividend (the yield is about 4.5%). This means the stock isn’t as risky as some other penny stocks in the market.
Low valuation and upward share price trend
We also have a low valuation. Taking that EPS figure above, we get a trailing price-to-earnings (P/E) ratio of just 13.2.
That seems low relative to the growth being generated. Note that the one broker covering the stock has a price target of $1.34 (£1.02) – that’s about 75% above the current share price.
On top of all this, the share price is in a nice upward trend right now. Year to date, it’s up about 30%.
An opportunity?
Now, there are risks here, of course. One issue to be aware of is that the company’s founder, Zvi Borovitz, sadly passed away last year.
Borovitz founded the company back in 1970 and was an expert in the field. So, his presence could be missed.
I should also point out that penny stocks like this can lack liquidity. In other words, there can be large spreads between buy and sell prices.
Overall though, I see a lot of appeal. I believe this stock is worth a closer look right now.
