Plus, their share prices can swing wildly on a single contract win, drilling result or regulatory headline. That extra volatility can deliver eye‑catching returns when things go right. But only a small minority ever make it to stable cash flow status.

So when shopping for penny stocks, I take an extra cautious approach. Recently, I’ve uncovered two up-and-coming UK companies that show a lot of promise: Made Tech (LSE: MTEC) and Arrow Exploration (LSE: AXL).

The government contractor

Made Tech specialises in digital, data and technology services for the UK public sector, helping departments modernise legacy systems and move services online. This is a structural trend the government has repeatedly signalled it wants to push further.

That focus on government work, including justice and health contracts, gives it a defensible niche, and recent results show revenue growth alongside improving profitability as the broader public‑sector digital market recovers from a slower 2024 procurement environment.

Management has already signalled that 2026 trading should be significantly ahead of expectations. Revenue is already up 27.5% year on year and it has a 12.7% return on equity (ROE). What’s more, the share price rose 45.8% over the past 12 months – unusually strong for a penny stock.

But while the government link may be beneficial, it also means the company is tied to budgets and procurement cycles. Any change in political priorities or cancelled contracts could hit profits hard. Still, when it comes to considering top-performing penny stocks, it’d be hard to find one doing better than Made Tech.

Promising prospects

Arrow Exploration is a dual‑listed Canadian oil and gas prospector. Aside from Canada, it has assets in Colombia, where it’s been ramping up output at fields such as Carrizales Norte and new wells like Mateguafa 10.

The shares are up roughly 180% since listing, while earnings have swung from a 2023 loss of £885,240 to around £10m profit in 2024.

Recent estimates put total production at around 4,900 barrels of oil equivalent per day and audits show strong revenue and cash-flow growth as new wells come onstream. That’s impressive for a small producer, reinforcing the growth story.

But volatile oil prices add risk, along with the political and regulatory environment in Colombia. Brent crude is up now but could dip again, and any change to local tax or licensing laws could cause problems.

As always with oil stocks, it’s risky – but the returns could be spectacular if it strikes (black) gold.

The bottom line

As part of a highly-diversified portfolio, both these names sit firmly in the ‘risky, small allocation’ bucket. Both are laying the groundwork for long-term, meaningful cash generation, but their share prices will almost certainly wobble more than mainstream FTSE payers.

Made Tech benefits from a government‑digitalisation niche and growing returns, while Arrow’s rising production and healthy margins could translate into lucrative dividends down the line.

For investors hunting the next ten-bagger opportunity, I think these two are well worth considering. But only as a small part of a much larger portfolio full of steadier income and defensive shares. For that, check out some of the top FTSE 100 stocks I’ve covered lately.

The post I’m considering 2 explosive UK penny stocks while they’re still cheap! appeared first on The Motley Fool UK.

Looking for a stock with significant potential? This small-cap company that’s helping the UK government with digital transformation may be worth considering.

A tech stock with momentum

The stock in focus today is Made Tech Group (LSE: MTEC). It’s a leading provider of digital, data, and technology services to the UK public sector.

It came to the market back in 2021 (via an IPO) at the height of the Covid tech bubble. It then crashed spectacularly in 2022 as interest rates rose and investors lost interest in growth companies.

It’s now rising though, thanks to strong growth in the business (as the UK government scrambles to get itself fit for the digital age). Over the last two years, it has roughly quadrupled in price.

Currently, it trades for about 40p. That means a £1,000 investment buys approximately 2,500 shares.

Supporting the government in the AI era

In my view, there’s a lot to like about this company from an investment perspective. For a start, the backdrop looks very favorable.

Today, the company is helping the government adopt modern technology and get itself up to speed digitally. Think better, more reliable data along with artificial intelligence (AI) solutions designed to drive efficiency.

In its recent H1 results, it noted that UK government strategy papers and reviews have consistently reinforced the role of digital, data, and technology in generating better outcomes in public services. It added that, against a backdrop of ongoing fiscal pressure, these priorities remain firmly embedded within departmental plans.

So, assuming that the government doesn’t do a U-turn on its digital transformation plans, Made Tech looks well placed for growth. Note that in its H1 results, it said that it looks forward to sharing the details of contract awards over the coming months.

“AI continues to be a significant focus across government and the public sector, with the potential to drive meaningful improvements in public services, from improved healthcare outcomes to more efficient administration. The successful application of AI depends on reliable data, modern platforms, and robust digital infrastructure, areas in which Made Tech has deep expertise.”
Made Tech Group, H1 2026 results

Strong results

Recent performance has also been very strong. For example, for the six months to the end of November, revenue was up 28% year on year to £27.8m while adjusted EBITDA was up 35% to £2.4m.

Looking ahead, the company said that adjusted EBITDA for the full year is likely to be “materially ahead” of market consensus as contractor mix, utilisation, and operational leverage continue to improve. Note that it had a contracted backlog of £74.4m at the end of the period.

Attractive valuation

One other thing to like is the company’s valuation. Currently, the price-to-earnings (P/E) ratio here is under 20.

As for the price-to-sales ratio, that’s close to 1 (which is really low). So, we have growth at a reasonable price.

It’s worth pointing out that contract awards can be lumpy with this company. In other words, growth in the future may not be linear.

All things considered though, I see a lot of investment potential. I believe it’s worthy of further research.

The post £1,000 buys 2,500 shares in this fast-growing FTSE company that’s helping the UK government with AI appeared first on The Motley Fool UK.

Below, I’m going to highlight three stocks that came up on my screen. If analysts are right, these penny shares could be set to soar.

An AI play

First up, we have Made Tech (LSE: MTEC). It’s a small tech company that’s helping the UK government with digital transformation (data, automation, AI, etc)

At present, it trades for around 38p. However, the average analyst price target is 60p – 58% higher.

I think this stock could be worth a closer look. Because it appears to offer a nice combination of growth and value right now.

This financial year (ending 31 May), revenue is expected to grow 19%. The valuation isn’t high though – the forward-looking price-to-earnings (P/E) ratio is only 15.

Of course, a risk is a cutback on tech spending by the UK government. This could see growth slow.

A trading update in December was very encouraging, however. Trading was better than expected and management said that it was “optimistic” and “confident” in relation to the outlook.

A pizza chain trading at a discount

Next, we have DP Poland (LSE: DPP). It operates the Domino’s Pizza chain in Poland and Croatia.

It currently trades for around 7.6p. Yet the average price target is 14p – about 84% higher.

This is another company that could be worthy of further research. Because like Made Tech, it appears to offer both growth and value.

Last year, the company delivered group system sales growth of 11.3%, so it’s growing at a healthy rate. As for the valuation, it currently sports a price-to-sales ratio of just 1.1 – well below the ratio of 2.6 that US-listed Domino’s Pizza has today.

It’s worth noting that DP Poland hasn’t been profitable up to now. So, it’s higher up on the risk spectrum.

I see potential, however. With the company shifting to a franchise-led, capital-light model, there’s plenty of room for profit (and share price) growth.

A takeover target?

Last but not least we have Corero Network Security (LSE: CNS). This is a small UK cybersecurity company that specialises in Distributed Denial of Service (DDoS) protection. A DDoS attack is an attempt to disrupt a server, service, or network by overwhelming it with a flood of internet traffic.

The share price here is 12p. Yet the average analyst price target is 19p – about 58% higher.

This stock has been a poor performer over the last year or so. And at current levels, I think it’s worth checking out.

In January, the company posted a strong trading update in which it advised that it experienced positive trading momentum throughout the second half of 2025. Encouragingly, annualised recurring revenues (ARR) increased 23% to $23.9m, signalling high demand for its cybersecurity solutions.

It’s worth pointing out that competition from larger players in the industry is a risk here. That said, the cybersecurity industry is experiencing a period of consolidation right now and I wouldn’t be surprised if this company was to attract takeover interest.

The post 3 penny shares tipped to soar in 2026 appeared first on The Motley Fool UK.

Looking for penny stocks to buy for 2026? Here are three shares that have caught my eye recently and could be worth considering.

Skillcast

First up, we have Skillcast (LSE: SKL). It’s a software company that specialises in compliance solutions and counts the likes of Tesco, Barclays, and Schroders as customers.

There’s a lot to like about this stock as we kick off 2026. For a start, recent results have been strong.

In September, for example, the company reported 18% revenue growth for the first half of 2025. Subscription revenue for the period was up 23%.

Second, profits are rising rapidly. This year, analysts expect net profit to rise about 40%.

Third, the share price is in a strong uptrend. Note that as I write this, it’s near all-time highs meaning that there are going to be no disgruntled long-term holders waiting to break even and sell shares.

I’ll point out that artificial intelligence is possibly a risk here. This technology could help customers develop their own compliance solutions.

All things considered, however, I see a lot of potential.

Made Tech

Another penny stock in the technology space I like the look of right now is Made Tech (LSE: MTEC). This company helps the UK government and regulated industries with digital transformation.

It has also released some good trading updates recently. In December, it told investors that trading for FY26 (the financial year ending 31 May 2026) would be significantly ahead of expectations.

Note that like Skillcast, the company is seeing good results in terms of profitability. This financial year, analysts expect net profit to soar 85%.

A key risk is a cut in tech spending by the UK government. This scenario is a possibility and could lead to less growth for the company.

I think the stock is worth a look though. Note that the company’s valuation is quite low at present.

Ilika

The third stock I want to highlight, Ilika (LSE: IKA), is far more speculative than the first two. Because it doesn’t have any profits.

It could be worthy of further research though. That’s because the company specialises in solid state battery technology – a huge growth market – and it’s aiming to produce batteries for some high-growth markets including miniature medical implants, industrial wireless sensors, and electric vehicles (EVs) in the years ahead.

One thing that interests me is the fact that Ilika says it has very little competition in the miniature battery sector for active implantable medical devices. This could be a big opportunity for the company.

Now, this is the kind of penny stock that could either soar or crash in 2026. For example, if the company signs some major deals for its battery technology, it could do really well. But if it has to raise a ton of money to stay afloat, its share price could sink.

So, it’s not going to be suitable for those who are averse to risk. If an investor has a high risk tolerance, however, I reckon it’s worth a closer look.

The post 3 potentially explosive penny stocks to consider buying for 2026 appeared first on The Motley Fool UK.

Analysts reckon it can climb much higher though. Currently, the average 12-month price target is well above the current share price.

Strong half-year trading update

The reason the stock is up today is that the company – which helps government organisations and regulated industries with digital transformation – just put out an impressive trading update. For the six-month period ended 30 November, performance was significantly ahead of expectations.

Revenue for the period was approximately £27.7m, up 27% year on year, driven by good sales momentum. Meanwhile, adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) is expected to be around £2.4m, up roughly 33% on the prior-year period.

At the end of the period, the company had a contracted backlog of around £74m, providing “good contractual coverage” for the remainder of FY2026 and into FY2027. Net cash at the end of the period was £11.9m (the company is debt free).

As a result of this bumper performance, the company now expects trading for the full year FY2026 to be “significantly ahead” of current market expectations. Revenue is expected to be up around 10% year on year with adjusted EBITDA margins increasing, reflecting improved operational gearing.

The first half of 2026 has been an exceptionally strong period for both revenue and adjusted EBITDA, building on the momentum seen in FY25. The UK Government has emphasised the significant role technology will play in delivering its priorities, and we believe the Group continues to be well-positioned to capitalise on these opportunities. Consequently, we remain optimistic and confident in our outlook.
CEO Rory MacDonald

Further share price gains ahead?

Can this penny stock keep rising? I think so – it doesn’t look particularly expensive.

Currently, the consensus earnings per share (EPS) forecast for next financial year (FY2027) is 2.1p. That puts the stock on a forward-looking price-to-earnings (P/E) ratio of just 16.

I think that’s good value for a technology company that has a solid track record (over the last five years revenue has climbed from £5.5m to £46m) and looks set to benefit from the powerful long-term trend of digital transformation. At that earnings multiple, I see room for further upward valuation re-ratings if performance continues to be strong.

It’s worth noting that the average share price target within the analyst community is currently 55p. That’s approximately 62% above the current share price, so analysts clearly see a fair bit of investment potential here.

Not the only opportunity in the UK market today

Of course, penny stocks like this are higher up on the risk spectrum. So, it’s not the type of stock to go ‘all in’ on.

Risks here include a slowdown in tech spending from the UK government, higher-than-expected costs, and general weakness in the stock market.

All things considered, however, I think it’s worth a closer look. It’s just one of many opportunities I am seeing in the market right now though.

The post 33p penny stock Made Tech could be set for huge gains in 2026, if City analysts are right appeared first on The Motley Fool UK.

A small UK tech company

The penny stock in focus today is Made Tech (LSE:MTEC). It’s a British technology company that helps government organisations and regulated industries with digital transformation.

Listed on the UK’s Alternative Investment Market, it currently trades for 34.5p. At that share price, its market cap is a little over £50m.

Analysts like it

Now, City analysts seem to believe that this stock can rise significantly in the medium term. Currently, the average price target from the three brokers covering it is 46.50p.

That translates to potential gains of about 35% from here. For reference, the average price target for Lloyds shares is only about 13% above its current share price.

Strong growth and great financials

Taking a closer look at this company, I can see why City analysts like it.

For starters, demand for its services is likely to be high in the years ahead. The UK government is desperate to get up to speed digitally and this company can potentially help. It specialises in helping organisations modernise legacy technology and working practices, accelerate digital services, and drive better decisions through data and artificial intelligence (AI).

Secondly, recent updates have been strong. In late June, Made Tech told investors that it was expecting revenue growth of 20% for the financial year ended 31 May 2025. It also advised that trading for the current financial year would be ahead of expectations at the time.

Third, the financials look great. Over the last five financial years, revenue has climbed from £5.5m to £46m – a really impressive level of growth. Meanwhile, the company is now profitable and the balance sheet is strong with around £10m cash and no debt (as of 31 May).

With a strong balance sheet, significant cash position, tight cost control measures, and future revenue underpinned by a strong contracted backlog, we believe Made Tech is well placed to continue driving organic growth.
Made Tech CEO Rory MacDonald

Finally, the valuation seems reasonable. Currently, the price-to-earnings (P/E) ratio is about 24, which isn’t high relative to the growth being generated.

Worth a look?

Of course, analysts’ forecasts always need to be taken with a grain of salt. There’s no guarantee that this stock will get to 46.5p.

One scenario that could derail the investment thesis is a drop in IT spending from the UK government. This could lead to less revenue growth and a lower valuation for this company.

I like the look of this penny stock, though. In my view, it’s worth considering today.

The post Meet the 35p penny stock that’s forecast to smash Lloyds shares over the next 12 months appeared first on The Motley Fool UK.

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.

The post At 36p, this penny stock could be worth considering appeared first on The Motley Fool UK.

• Top UK tech stock movers included semiconductor and cyber security specialists
• One recent IPO was forced to cut its profit guidance
• A popular consumer brand looks expensive to me

UK tech stocks didn’t escape February’s market sell-off. But there were some big winners too.

February’s top UK tech risers

The share price of semiconductor materials specialist IQE rose by more than 30% in February, making it the top UK tech stock riser with a market cap over £50m. February’s gains continued a rally that started in January, when IQE said its 2021 results should be in line with November’s reduced forecasts.

I’m reassured that IQE hasn’t issued another profit warning. But IQE’s share price is still down by 45% compared to one year ago. However, new chief executive Americo Lemos has now started work and seems determined to return the business to growth. IQE has performed well in the past. I think it might be worth me watching.

Other top tech risers in February included recent IPO Microlise. This transport management software specialist released a solid trading update at the end of January, confirming that the group’s 2021 results should be in line with expectations. I think this could be an interesting business. But the shares look too expensive for me on 45 times forecast earnings.

One other winner that caught my eye was cyber security specialist Darktrace, which gained around 10% in February. Darktrace didn’t release any financial results during the month but did report a new “million-dollar deal” with “a multinational electronics corporation”.

Darktrace also went on the acquisition trail last month. It paid €47.5m for Dutch firm Cybersprint, which is an “attack surface management company”. I reckon Darktrace remains interesting for me to watch, but hard to value.

UK tech stocks that fell in February

The biggest faller in the UK tech sector last month was recent IPO Made Tech, which provides technology services to the public sector. Unfortunately, the shares fell by 55% last month, despite the company reporting a 131% rise in half-year revenue. 

The problem was that these results came with a warning that full-year profits will be lower than expected. Management said this is due to staff recruitment costs rising sharply. As a result, broker earnings forecasts for the current year have been cut by around 25%. I wonder if this business is trying to expand too fast. One for me to watch, perhaps.

Some of the other big fallers in February in the tech sector included consumer review website Trustpilot and LED lighting specialist Luceco. Both were down by around 20% at the end of the month, although neither company issued results during the period.

Luceco warned of tougher market conditions in 2022, but the shares look decent value to me at current levels.

I’m not so sure about Trustpilot. This online business is still loss-making and looks expensive to me. Its market cap of £616m is nearly five times 2021 forecast sales. Admittedly, sales growth has been strong. Trustpilot could grow into its valuation over the next couple of years. But the risk/reward balance doesn’t look attractive to me at current levels.

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