The rise of smart manufacturing

Oxford Metrics (LSE:OMG) made its debut in creating precision motion capture technology for the life sciences sector and later the visual effects industry. And today, it remains the biggest generator of revenue for the business.

But having noticed the fickle and cyclical nature of the entertainment sector, management’s spent the last few years recalibrating its technology for other adjacent applications. And what’s emerged is a new structural growth engine.

By leveraging its sensor technology, Oxford Metrics is now directly enabling industrial automation and AI-powered quality control in the manufacturing sector.

In its 2024 fiscal year (ended in September), its Smart Manufacturing division generated just £2.9m of revenue, or roughly 7% of the total top line.

In 2025, not only did Smart Manufacturing turn profitable, but it also achieved 341% growth through both acquisitions and organic expansion, generating 29% of total revenue. And with more explosive growth and earnings expansion expected, consensus analyst forecasts are projecting a massive 72% underlying profit surge in 2026.

Inspecting the 7.3% yield

Given the trajectory of this industry-leading penny stock, it begs the question as to why the dividend yield is so high and the shares so deeply undervalued versus forecasts.

The answer is, of course, risk. As already highlighted, smart manufacturing is a massive growth opportunity for Oxford Metrics. But the core of the business is still driven by the world of entertainment motion capture. And right now, demand for such technologies remains exceptionally weak. In fact, motion capture revenues in 2025 actually fell 17%.

At the same time, even with Smart Manufacturing becoming profitable, when throwing in all the additional administrative and operating costs of the whole business, Oxford Metrics’ bottom line is still in the red.

In other words, dividends aren’t currently backed by earnings. And the company’s using its cash reserves to maintain shareholder payouts.

In the short-term that isn’t necessarily a problem. The company still has around £37.3m of cash and fixed-term deposits on its balance sheet, which provides a few years of unprofitable runway. But these cash reserves won’t last forever. And if free cash flow generation doesn’t improve, today’s dividends could end up on the chopping block.

What’s the verdict?

Oxford Metrics has an unusually strong balance sheet for a UK penny stock. But if weakness in its currently core motion capture business persists, while the expansion into smart manufacturing hits delays, that could quickly change in a few short years.

But if management continues scaling the business and free cash flow generation expands, then this penny stock might be able to offer the rare combination of impressive growth and chunky passive income. And that’s definitely something worth investigating further.

The post 7.3% dividend yield! A penny stock to buy for 2026? appeared first on The Motley Fool UK.

Enthusiasts look at big winners and think how rich they could be if only they can get in on one before everyone else. And let’s be honest, I bet most of us have thought that at some time.

Growth share investing can be a profitable strategy. Look at investors who did their careful research into Nvidia or Rolls-Royce Holdings and made big profits. I congratulate them for putting up their cash in the face of significant risk.

It’s not the price

But wait, those aren’t penny shares. And that’s a key point. Investing is about the company, not about the share price.

If company A has a share price of £10, with company B’s shares at 10p, which is better value? Starting at just 10p, a share must have far greater growth potential than one already up at £10, yes? That’s a big mistake that hopeful investors often make.

The truth is, it’s impossible to identify value from the share price alone. Company A could do a 10-for-one share split, and B could do a 1-for-10 consolidation… and each would then have a share price of £1. But there’s no change whatsoever to the growth potential for either company.

And most penny shares are down there because things went bad, not because they have great futures. Aston Martin, for example, is down at around 41p. The reason is very much not a good one.

Can we win?

Penny shares can also fall victims to fraud. With typically low trading volumes, they’re open to media hype, ‘pump-and-dump’ schemes, and all the rest. Any company with very cheap shares and a market cap under £100m is especially prone to such things.

So does this mean we should always avoid penny shares? No, not at all. As long as we concentrate on the company fundamentals and not the share price itself.

Oxford Metrics (LSE: OMG), for example, was recently highlighted by my Motley Fool colleague Edward Sheldon. Oxford Metrics does analytics for motion measurement and smart manufacturing.

Making profit

I haven’t done anywhere near enough research to make a decision for myself. And I’m always wary of a company valued at only a bit above £50m — especially after a five-year share price fall of almost 50%.

But I immediately like Oxford Metrics’ profit. The company recorded positive EBIT for 2025 — albeit adjusted. And forecasts have positive earnings per share on the cards, suggesting a price-to-earnings (P/E) of 22 in 2026, dropping to 18 by 2027.

Liquidity seems strong, and there’s even a dividend of around 6%. And it’s returned cash via a share buyback. It’s not an unprofitable jam-tomorrow growth hopeful.

Still risky

My main immediate concern is that earnings have been all over the place in the past few years. There’s no steady trend apparent yet, so I fear volatility ahead.

But when it comes to penny shares, this is the kind of company I think is worth further research — instead of those ones running only on dreams of future riches.

The post OK, who’s dreaming of making a million from red-hot penny shares? appeared first on The Motley Fool UK.

Take Oxford Metrics (LSE:OMG) as a prime example to consider. The penny stock trades at around 56p, and offers a market-average-beating 5.9% dividend yield. And at this price, anyone who puts just over £17,300 to work to buy 30,769 shares can instantly start earning £1,000 passive income each year while the group continues along its growth journey.

In fact, if the team of expert analysts at Canaccord Genuity Group is correct, the share price could soon rise to 85p over the next 12 months.

So with a near-6% dividend yield on offer and a 52% potential capital gain, is this a no-brainer for UK growth investors comfortable with a bit of volatility?

The bull case

Let’s start with a quick introduction. Oxford Metrics is a global leader in the niche field of motion sensing. It’s hardware and software tracks motion and analyses the data through its own suite of software tools.

For the most part, this technology has historically been used in creative industries including video games and visual effects.

However, more recently, the group’s delivering solutions for smarter manufacturing, offering high-precision machine vision to help automate factory production across the aerospace, automotive, pharmaceutical, and medical device industries. And this broad range of industrial applications is translating into impressive growth.

In its 2025 fiscal year (ending in September), revenue from smart manufacturing projects skyrocketed 341%, from £2.9m to £12.8m, supported by increased interest from customers such as Boeing, NASA, and BMW.

This surge helped offset the lower sales from its entertainment motion capture segment, which has been caught in the crossfire of recent headwinds within creative industries.

With manufacturers investing heavily in automation in the pursuit of greater efficiency and wider margins, Oxford Metrics’ long-term growth potential looks quite exciting. And with that in mind, it isn’t so surprising to see experts become optimistic about what’s on the horizon.

The bear case

As impressive as Oxford Metrics’ technology is, the business still has some critical weak spots. The cyclicality of the entertainment sector has demonstrated the challenges it can create for the company. And while the smart manufacturing segment has helped offset this impact, it too is exposed to cycles in demand.

A simultaneous downturn across its key markets could spell disaster, especially for dividends, which are already operating under very tight coverage margins.

The team at Canaccord’s betting on a rebound in motion capture revenues this year. And to be fair, the 21% jump in order intake does suggest that the entertainment cycle’s heating back up again. But should any new spanners be thrown into the works, or if this recovery is delayed, the firm’s forecast could prove far too optimistic.

The bottom line

With earnings in the red, Oxford Metrics doesn’t have the strongest of financials. But with good execution and some more favourable market conditions, that could quickly change. That’s why I think this penny stock deserves a closer look. But it’s not the only opportunity I’ve got my eye on right now.

The post 30,769 shares of this penny stock generate £1,000 a year in passive income appeared first on The Motley Fool UK.

If an investor’s comfortable with share price volatility however, they can be worth considering as in this area of the market there’s scope for explosive gains. With that in mind, here’s a penny stock that looks interesting to me right now.

An innovative UK company with an unbelievable customer list

The stock I want to highlight is Oxford Metrics (LSE: OMG). It’s a tiny British company that specialises in smart sensors and related software for motion measurement and smart manufacturing.

Founded in 1984, it has over 10,000 customers across 70 countries today. Its customer list is impressive and includes the likes of Boeing, Airbus, Ford, BMW, Jaguar Land Rover, and Johnson & Johnson.

At present, the stock trades for 53.5p. That means that £1,000 buys around 1,869 shares. Surprisingly, there’s a dividend yield of around 6% on offer. That kind of yield’s pretty rare for a penny stock – most pay small/zero dividends.

Lots going for it

Looking beyond the yield, this stock looks interesting to me for a few reasons. For a start, the company looks well placed to benefit from the manufacturing automation trend.

The way I see it, the company’s Smart Manufacturing division – which serves blue-chip manufacturers in the automotive, aerospace, medical, and electronics sectors and contributed 29% of group revenue last financial year – has significant growth potential.

Note that in the company’s full-year results for the year ended 30 September, it said: “With a healthy pipeline and growing demand for high-precision, AI-enabled quality control, Smart Manufacturing is well placed to contribute more meaningfully to the group’s future growth”.

Secondly, the financials look pretty solid. This financial year, revenue’s expected to climb 10% to £49.1m. Meanwhile, earnings per share are forecast to be 2.6p, up from 1.55p last financial year. This is just a forecast, of course, but that represents growth of 68%.

Third, the share price trend is up at the moment. The stock did pull back recently when it went ex-dividend (meaning that anyone buying now isn’t entitled to the next payout in March) but that’s very normal.

Finally, the valuation seems very reasonable relative to the revenue and earnings growth. Currently, the forward-looking price-to-earnings (P/E) ratio is 21.

It’s worth noting that the average analyst price target is 87.5p. That’s roughly 64% above the current share price.

An investment opportunity?

Of course, while this all sounds positive, we need to remember that this is a penny stock, so it’s high-risk. Some risks include weakness in its Motion Capture segment (where business has been a little soft recently), botched acquisitions, and competition from rivals.

Overall though, I see a lot of potential. I believe the stock’s worthy of further research.

The post £1,000 buys 1,869 shares in this red-hot penny stock that’s tipped to rise 64% and has a 6% yield appeared first on The Motley Fool UK.

It’s a small but complex business, designing and manufacturing advanced sensing devices and intelligent software solutions to measure movement and manage infrastructure. It caters to international customers in sectors like life sciences, entertainment, engineering and smart manufacturing.

At the time of writing, it offers a whopping 7.5% dividend yield, with the shares changing hands for just 44p apiece. It’s probably the cheapest high-yielding dividend stock on the UK market right now.

So, if an investor were to snap up 50,000 shares for £22,000, they’d be pocketing £1,650 in dividends each year. Of course, that’s assuming the yield doesn’t vanish overnight. Penny stocks aren’t exactly renowned for predictable returns. If the share price tanks, the dividends won’t be much consolation.

That begs an obvious question – is Oxford Metrics a genuine opportunity for passive income hunters, or is it just another value trap waiting for the next unsuspecting investor?

Crunching the numbers

Oxford Metrics pays out 3p per share in dividends, which certainly grabs attention for any investor weighing up income options in the penny stock universe.

In its latest results, though, the story took a darker turn: the company reported a £1.94m loss, despite reeling in £38m in revenue. Worryingly, cash flow covered only 67% of the dividend payouts, meaning Oxford Metrics actually lacks both the earnings and cash needed to pay these juicy dividends. It might have to borrow or rely on extra financing to keep up the payments.

Still, its track record is impressive. It’s coughed up dividends consistently for 19 years and managed to hike payouts for four years running. That reliability makes me think it’s probably got a back-up plan for tough times.

The share price bounced up 10% this month, but zoom out and it’s still 40% lower over the past five years. Even after the drop, it doesn’t look much of a bargain, sporting a forward price-to-earnings (P/E) ratio of 16.5.

The facts paint a mixed picture: a generous yield and strong dividend record, but actual earnings have crashed by 151% year on year. That’s enough to make me cautious about relying on future payouts. When dividend cover gets this thin, a cut can’t be ruled out, which means it’s one for my watchlist rather than thinking about buying at the moment.

Another example to consider

For those keen on small-cap dividend stocks, it may be worth considering the construction materials supplier Brickability Group instead. This £180m stock offers a 6.3% yield with a six-year dividend record. Its payout ratio is a bit risky at 172%, but cash covers the dividends three times over. 

Plus, the company is profitable and looks attractively priced, trading on a forward P/E ratio of just 6.5. 

When investors scout out dividend stocks, it’s critical to weigh up every angle – not just the yield on display. Otherwise, there’s always a risk of getting stuck with overvalued shares in a company that’s just slashed its dividend.

The post 50,000 shares of this 44p penny stock could deliver £1,650 in passive income appeared first on The Motley Fool UK.

That might very well be the case for Oxford Metrics (LSE:OMG). The fledgling technology business specialises in motion intelligence used within a variety of industries. That includes motion capture systems in the entertainment sector, as well as machine vision for industrial manufacturing and automation. And it’s already being used by some of the biggest businesses in the world, including Johnson & Johnson, Ubisoft, Boeing, Airbus, and even NASA.

So how much money could investors potentially make with just a £100 investment today?

Analyst projections

Demand for machine vision solutions has been steadily rising, particularly within the manufacturing sector. This comes as a result of increased AI-powered quality control investments and the general digitalisation of factories in the pursuit of efficiency and fewer production errors.

That’s a key tailwind Oxford Metrics’ management team intends to capitalise on with its recent expansion into the sector. And according to analysts, this could prove to be an explosive catalyst that may significantly accelerate revenue growth in 2025 and beyond.

With that in mind, it’s not so surprising to see some lofty share price forecasts for this penny stock. Canaccord Genuity currently has a 100p share price target, while Numis Securities has set its forecast at 140p.

Compared to where the shares currently trade, that suggests a potential 70-140% potential gain, transforming a £100 investment into anywhere between £170 and £240 over the next 12 months. In other words, Oxford Metrics might not be a penny stock for much longer. And if it can continue to expand its market share and top line, a 140% potential gain could be just the tip of the iceberg.

What could go wrong?

Despite having promising technology and future growth potential, like most penny stocks Oxford Metrics has several risks investors must consider.

Currently, over a third of its revenues stem from the notoriously cyclical entertainment sector. Expanding into manufacturing will help address this sector’s concentration risk. However, penetrating a new market’s going to be a challenge and certainly won’t happen overnight.

There’s also the competitive landscape to consider. Despite being a niche technology business, the machine vision market is already flooded with rival firms pursuing the same target customers. That puts a lot of pressure on the firm to continuously innovate and stand out from the crowd with superior technology. If it falls behind, clients may start venturing elsewhere.

The bottom line

As with all penny stocks, Oxford Metrics is a risky investment. But with an established customer base, rising sales, and positive albeit choppy profits, the company’s certainly in a stronger position than most stocks in this segment of the stock market.

That’s why, despite the risks, Oxford Metrics may be worth a closer look for long-term investors.

The post Investing £100 in this penny stock could explode to… appeared first on The Motley Fool UK.

Medical devices

Creo Medical Group (LSE: CREO) makes medical instruments for surgical endoscopy, using microwave and radio frequencies. Minimally-invasive surgery can expose patients to less danger, and reduce costs.

But after an impressive start to stock market life, the Creo share price collapsed. In the past five years, it’s crashed 89%. The shares are down to 18p for a market capitalisation of £73m.

Creo‘s been one of those promising growth stock candidates we see so often. But it’s yet to make an annual profit. And forecasts suggest that’s still unlikely to happen by 2026. But at least they show the losses falling steadily.

Balance sheet boost

I see signs that 2025 could be the year that things change. In September, a new share issue raised £12m, so we’ve already had some dilution. With interim results the same month, CEO Craig Gulliford said: “The launch of Speedboat UltraSlim in late 2023, our smallest device to date, was a significant milestone and helped us to achieve record core product sales for H1-2024.”

That seems key to me. Will this new technology lead to profits in the nick of time? Or will the company need to go back to the market to raise more cash? It could all hinge on that. For investors who can handle the fear of cash running low again, I think Creo’s worth considering for its growth potential.

Smart sensing

Oxford Metrics (LSE: OMG) is profitable, with a strong balance sheet. The 2024 full year looks like it was a tough one, with adjusted earnings per share falling 44% to 5.29p. Net cash at 30 September, though healthy at £50.7m, declined 22%.

The company makes smart sensing and motion-capture technology. Its Vicon product is used in sports, education, film production, virtual reality and biomedical research. And it has an impressive list of customers, including Boeing and Ford.

But the share price is down 55% over five years, with most of that in the past 12 months. It’s down to 51p at the time of writing, for a market-cap of £65m. After a poor performance like that, why am I optimistic about Oxford Metrics?

Looking ahead

With those disappointing 2024 results, CEO Imogen O’Connor pointed out that they should be seen “against an exceptionally strong prior year comparator where our teams delivered more camera systems than ever before.”

And when it comes to the 2025 outlook, the full-year update spoke of “a good spread of opportunities across all main markets and a pipeline of new products”.

There’s clearly a risk of another painful year. But forecasts (though only from a couple of brokers) indicate a return to earnings growth and put a 97p target price on the stock. That has to make it worth further research.

The post 2 penny stocks with growth potential to consider buying in 2025 appeared first on The Motley Fool UK.

But I don’t believe it’s ready yet to fully replace human analysis.

With everybody jumping on the AI bandwagon lately, I decided to give it a go. After using the same prompt on several platforms, I found ChatGPT to provide the most comprehensive response.

Rather than simply answering the question, it took the time to consider several investment themes. It highlighted an increased focus on renewable energy transition, along with ageing populations. Green energy, healthcare and pharmaceuticals were noted as potential winners in the years to come.

Naturally, it was also enthusiastic about AI and automation.

The picks

Overall, it made some fairly obvious choices and appeared to err on the side of caution. Top S&P 500 leaders such as Meta, Citigroup and Nvidia were key recommendations. In the UK, Diageo, AstraZeneca and BAE Systems were unsurprising picks.

However, among the ever-popular leaders were some interesting outliers, such as Rocket Pharmaceuticals and DXP Enterprises. One I found particularly notable was Oxford Metrics (LSE: OMG). Unlike the other FTSE 100 stalwarts, it’s a tiny £72.6m UK company selling shares at 56p a pop.

Specialising in AI-enhanced motion sensor technology, its clients include big names in aerospace, entertainment, pharmaceuticals, research and sports. 

Sounds impressive — but does it convert to profits?

A long road to recovery

Oxford Metrics rode a wave of success from 2017 to 2019 but performance lately’s been anything but impressive. After two slow years, it issued a profit warning in September.

Earnings fell to a five-year low, with net profit margins slipping below 8%. The shares are down 47.5% in five years but still don’t look undervalued, with a forward price-to-earnings (P/E) ratio of 30.

So I had to wonder why ChatGPT would think this struggling penny stock has any future.

Despite a volatile share price, revenue in 2023 hit a new high of 44.24m. In 2024, it introduced a new division, Smart Manufacturing, bolstered by the acquisition of Sempre Group. The group’s known for providing highly specific micro-measuring solutions to aerospace and biomedical companies.

Spending on expansion is a necessary but risky part of business. If it pays off, the firm could turn around. But with barely any cash flow and £3.7m in debt, it needs to tread carefully. Pushing itself too far could be catastrophic.

One attractive value proposition that may help turn the tide is the 5.7% dividend yield. Payments are reliable and growth’s been steady for the past five years. Unfortunately, volatile small-cap stocks don’t make great additions to a passive income portfolio. There are too many chances of cuts or big price swings. 

For that reason, I’ll have to disagree with ChatGPT on this recommendation. It seems like a decent stock with potential, and it may well be the next big thing. But right now, I think it’s too soon to tell.

AI may know a thing or two, but I’ll stick to my slow and diligent research methods.

The post Should I quit my day job and use AI to predict the stock market? appeared first on The Motley Fool UK.

However, there are also risks to consider. I’m weighing up their chances.

Oxford Metrics

Oxford Metrics (LSE: OMG) is a small £83.6m company that makes smart sensing technology and motion capture systems. Its key product, Vicon, is used in sports, education, film production, virtual reality and biomedical research. Despite the small-market cap, the business serves 10,000 customers in 70 countries worldwide, with clients including Boeing, Ford, Harvard University and EA Sports.

Now near a five-year low at 63p, the price has spent much of the past five years fluctuating between 80p and 120p. But its most successful period was between 2010 and 2020 when it rose 543%, from 35p to 125p. 

Can it relive the good old days?

Despite revenue up 10.5%, the price has slipped 43% since its first-half 2024 results in June. Shareholders were disappointed when earnings per share (EPS) dropped 10.5% and net cash decreased 13.9%. Supply chain issues were cited a key challenge and continue to present risks to the stock. The recent acquisition of Industrial Vision Systems is another risk, as profits could suffer if the business fails to perform as expected.

Still, the board says it’s making clear progress in its five-year plan.

With a price-to-earnings (P/E) ratio of 17.3, it’s far below the industry average and trading at 92.6% below fair value based on future cash flow estimates. That suggests the current price could be an excellent entry point — but only if earnings grow from here.

If the price continues to recover into 2025, I think it could be worth considering. Certainly, it’s one to watch.

Helium One Global

Unlike Oxford Metrics, Helium One Global (LSE: HE1) was extensively covered in the news this year after its price spiked 1,400% in February. This spike came after it discovered significant helium reserves at its Itumbula West-1 well in Tanzania.

But since then, the price fell from 2.85p to below 1p last month.

Then, on 4 November, it announced the completion of a Farm-In with Blue Star Helium’s Galactica-Pegasus Project in Colorado, US. It secured a 50% interest in the project in exchange for drilling six wells on the site. The shares have climbed 24% since. 

Helium’s used in semiconductor chip manufacturing, an industry that’s exploded this year in the US. Other uses include arc welding, nuclear cooling, medical imaging, cryogenics and aerospace engineering. Notable buyers include NASA, Intel and Samsung.

The global helium market’s expected to grow from $3.76m in 2023 to $5.4m by 2030, with a compound annual growth rate (CAGR) of 5.2%. So it’s safe to say, the demand exists. 

Still, Helium One faces tough competition, notably from Renergen in South Africa, Zephyr Energy in the UK, and Noble Helium in Tanzania. Furthermore, since helium isn’t traded on open markets, it’s difficult to gauge its price accurately. This lack of transparency, combined with geopolitical risk and high transport costs, adds risk to the investment.

But given its recent growth and US partnership, Helium One’s a penny stock worth considering.

The post With UK share prices dipping, I’m considering two opportunities in penny stocks appeared first on The Motley Fool UK.

Should I consider buying either of these shares today? Let’s take a look.

OMG: a bargain buy?

Tech group Oxford Metrics (LSE: OMG) currently has a market cap of £77m and a share price of about 60p.

However, the group also has net cash of about £45m. This bumper cash pile is the result of the sale of the group’s Yotta business for £52m in 2022.

What this means for shareholders is that the remaining Vicon business is effectively being valued at around £32m. The remainder of the market cap is covered by net cash.

Vicon makes motion capture systems used in television and video game production. It looks a decent business to me.

Broker forecasts show Oxford Metrics’ earnings rising by 36% to 2.9p for the 24/25 financial year. That puts the stock on a forward price-to-earnings (P/E) multiple of 20.

However, if I strip out the group’s net cash, this multiple drops to just 8.3.

In addition to this, the shares also offer a useful 5% dividend yield.

For me, the risk is that management will spend the company’s cash badly. They may pay too much for acquisitions. Or they may buy businesses that subsequently fail to perform.

I reckon these risks help to explain why Oxford Metric’s current 60p share price is a long way below City brokers’ average price target of 147p.

Even so, I’m interested. I plan to do some further research on this business.

Turnaround time

Last year’s Hollywood strikes may have seemed a long way from the UK. But the disruption they caused had a significant impact on UK companies involved in television production.

One such business is Facilities by ADF (LSE: ADF), which provides mobile production facilities to the UK film and TV industry.

This AIM-listed small-cap floated in January 2022. It currently has a market cap of £55m and a share price of 51p.

When I looked at ADF after its IPO, I was impressed. The company was generating double-digit profit margins and strong rates of growth.

Unfortunately, things have gone off track. ADF’s recent half-year results revealed a 30% drop in revenue during the first half of 2024, compared to the same period last year.

Another concern for me is ADF’s decision to expand through acquisitions. A recent deal for a portable roadway business looks fine in itself, but it will cost up to £21m. That’s nearly half the current market cap.

The good news is ADF’s core markets seem to be returning to normal:

Trading at the end of H1-FY24 finished strongly, with the order book for the second half of the year building well across the summer months as momentum returns across the market following the Strikes.

– Facilities by ADF

At around 51p, ADF is trading on a 2024 forecast P/E of nine, falling to a P/E of just five for 2025. Brokers have an average price target of 93p on the stock.

I certainly think the shares could be worth more if the business can return to growth. However, it’s a recent listing and has just made a big acquisition. I’m going to stay on the sidelines for a little longer yet.

The post City experts think these penny stocks could rise by at least 80% appeared first on The Motley Fool UK.