The best penny stocks in the UK to watch
UK penny stocks are often seen as a risky investment—and for good reason. Due to their small size, these so-called “micro” equities can skyrocket or plummet in an instant.
This volatility presents numerous opportunities for lucrative investments but also the potential for significant losses.
Before diving in, remember that penny stocks are speculative investments, and you should only invest what you can afford to lose. With that in mind, we’ve identified five of the best UK penny stocks to consider buying now.
We’ll cover each in detail below:
- Armadale Capital
- Bushveld Minerals
- ITV plc
- Powerhouse Energy Group
- Vodafone
Top UK penny stocks for the end of 2024
| Penny Stocks UK | YTD Performance Through October 24 |
| Armadale Capital PLC | -90.00% |
| Bushveld Minerals | -80.10% |
| ITV PLC | 20.71% |
| Powerhouse Energy Group | 167.12% |
| Vodafone | 5.50% |
As you can see from the penny stock list today, these equities are often on a bit of a rollercoaster.
This presents opportunities for exceptional gains, but it also comes with a lot of risk—as evident in the losses of some of our top picks.
So, does that mean they should be avoided? Not at all—and we’ll explain why shortly.
Best UK penny stocks for investors
Armadale Capital PLC (ACP)
Armadale Capital had a tough 2024, with its stock plummeting nearly 90% year to date.
In the first half of the year, the Africa-focused natural resource projects investor reported a pretax loss of £662,000, a stark contrast to the £291,000 profit from the previous year.
This loss was driven by a lack of revenue and a £510,000 decline in the fair value of investments.
However, it’s worth noting that Armadale strengthened its financial position during this period, raising £500,000 through share issuance.
Key growth drivers
Armadale Capital’s flagship project is Mahenge Graphite, located in a key coarse flake graphite area in Tanzania, which boasts one of the largest high-grade graphite reserves in the nation.
Thanks to improving market fundamentals for graphite concentrates, investors have a strong appetite for projects like this in the long term.
One report suggests that the graphite market is projected to grow by 3.7% annually through the end of the decade, which could boost the revenue potential for the project.
In addition, during the first half of 2024, Armadale diversified its portfolio by investing in a high-grade silver project in Idaho, securing an option for a 51% interest in the Canyon Silver Project over three separate stages.
This move into silver could become a promising revenue source once the project gains traction, especially considering the precious metal has appreciated nearly 45% in price this year.
Industry position and challenges
Armadale primarily invests in natural resource and mining projects.
Although its initial focus was on Africa, the company has expanded its horizons, as demonstrated by its investment in Idaho.
Like many in the industry, Armadale faces the challenge of generating profit quickly enough to avoid cash flow issues.
Mining projects can be profitable, but they often require years of investment before yielding returns. That’s why securing funding remains Armadale’s key priority in these ventures.
The bottom line
There’s no denying that 2024 has been a tough year for Armadale.
The company’s shift from profit to loss, along with the significant decline in its share price, underscores the challenges of operating in the natural resources sector.
However, this low share price could present a unique opportunity to invest in Armadale at a substantial discount.
The company aims to enhance its growth prospects by diversifying into silver while keeping a strong focus on its existing projects.
Despite financial obstacles, Armadale is operating in lucrative and expanding sectors that offer promising opportunities.
The catch is that the company has to secure the necessary funding to keep its operations running.
The catch is that the company has to secure the necessary funding to keep its operations running.
Bushveld Minerals (BMN)
Bushveld Minerals is another mining stock caught in this year’s bloodbath, slipping an alarming 80% year to date.
In the first half of 2024, Bushveld’s revenues plummeted 54% to $25.6 million, largely due to a 30% decline in vanadium prices.
Overall, the company reported an adjusted EBITDA loss of $14.3 million, a significant reversal from the $12.6 million profit achieved in H1 2023.
Net losses also widened in H1 2024, reaching $45.0 million compared to $12.5 million the previous year.
However, the outlook for the second half of 2024 appears much more promising.
Bushveld is concentrating on operational optimization at its core asset, Vametco. Efforts such as reducing headcount aim to save upwards of $10 million by 2025.
As of the end of August, the company reported an improved cash balance of $4.1 million.
Key growth drivers
Moving forward, Bushveld's key growth drivers will revolve around enhancing operational efficiency.
The company is also banking on on the anticipated rise in vanadium demand, particularly for applications in steel production and energy storage.
Vanadium is poised for increased demand, especially in vanadium redox flow batteries (VRFBs), a rechargeable flow battery gaining traction for grid-scale energy storage in renewable power applications.
Additionally, the company is divesting non-core assets, including the Vanchem vanadium processing plant and Lemur Holdings.
The sale of Vanchem alone could generate up to $40 million, significantly bolstering Bushveld’s financial standing.
Industry position and challenges
As one of the world's three primary vanadium producers, Bushveld holds a significant market position.
With the growing emphasis on renewable energy, its strategy to supply vanadium for VRFBs positions it for a crucial competitive advantage.
However, the road ahead isn't without challenges.
The company is in dire need of funding, with vanadium prices at multi-year lows. This year, the vanadium price fell by 30%, which dealt a direct blow to Bushveld Minerals’s bottom line.
The bottom line
Despite a significant revenue drop in H1 2024, Bushveld's prospects for H2 appear much more promising.
By focusing on operational efficiency at its core asset, Vametco could realize impressive savings of around $10 million by next year.
With vanadium demand expected to rise—and its price likely to follow—Bushveld's outlook could undergo a substantial transformation in the coming year.
These factors, combined with its currently discounted share price, position Bushveld as one of the best penny stocks (UK).
ITV plc (ITV)
ITV plc is a British media company best known as one of the main television broadcasters in the UK.
It operates several TV channels, including the popular ITV channel, which features a mix of entertainment shows, dramas, news, and sports.
In the first half of 2024, ITV generated £1.90 billion in revenue, with the bulk coming from ITV Studios and advertising.
This marks a 3% drop from the previous year, largely due to a 13% decline in ITV Studios revenue.
On a positive note, ITV cut costs by £23 million during the first half and reduced net debt to £515 million from £724 million in 2023.
Statutory operating profit more than doubled to £136 million.
Key growth drivers
Despite the dip in revenue for ITV Studios, it remains a key growth driver. The company still anticipates record profits for the full year, fueled by higher-margin catalog sales and cost reductions.
ITV is also poised to benefit from the growth of its streaming platform, ITVX. By 2026, the company aims to achieve an impressive £750 million in digital revenue alone.
Industry position and challenges
As the largest commercial broadcaster in the UK, ITV holds roughly a third of the commercial viewing market and over 90% of the top 1,000 broadcast programs.
However, like others in the industry, ITV faces declining TV viewership as audiences shift to digital platforms.
This trend has prompted the company to pivot towards offering streaming services.
Moving forward, ITV’s biggest challenges are likely to come from major players in the streaming arena, such as Netflix and Amazon.
While it is well-positioned to lead in both traditional broadcasting and digital streaming, ITV must navigate evolving viewer habits and intense competition.
The bottom line
Although ITV experienced a modest 3% revenue drop in H1 2024 compared to H1 2023, it successfully reduced costs by cutting £23 million in expenses and lowering its net debt to £515 million.
While challenges persist for this established media company, ITV remains a key player in UK broadcasting and is demonstrating promising signs of growth in its digital arm.
Ultimately, ITV is poised to transition from a primarily broadcast TV-oriented organization to an increasingly digital media service provider.
Powerhouse Energy Group (PHE)
Powerhouse Energy Group (PHE) is a UK-based company focused on developing technology that converts waste materials, such as plastics, into clean energy, specifically hydrogen and electricity.
Its innovative approach aims to reduce landfill waste and greenhouse gas emissions while supporting the transition to renewable energy sources.
In the first half of 2024, Powerhouse Energy Group generated £385.7k and achieved a gross profit of £98.2k, both significant increases from zero the year prior.
However, cash reserves dropped to £2.7 million at the end of June, down from £4.7 million in 2023.
This reduction was primarily driven by integration and expansion efforts related to its engineering consulting division, Engsolve.
Key growth drivers
Powerhouse plans to focus more on licensing fees, royalties, and engineering services to drive recurring revenue with lower operational risk.
The company is also expanding its geographic footprint, collaborating with partners like Australia-based National Hydrogen Limited and Altec Energy in Thailand to introduce its waste conversion technology to new markets.
Additionally, Powerhouse is exploring gasification technology for sustainable aviation fuel (SAF) production, positioning itself to benefit from this high-growth segment, which may be its most promising initiative.
Industry position and challenges
Powerhouse holds multiple waste-to-energy patents, providing a solid competitive advantage.
For instance, its proprietary Distributed Modular Generation (DMG) technology can convert various types of waste into synthetic gas (syngas) and hydrogen, resulting in waste reduction while simultaneously generating clean energy.
While the outlook for Powerhouse is promising, it faces some challenges.
Some projects have taken longer than initially anticipated, and the company must navigate complex and often slow-moving energy and waste regulatory environments, which can vary significantly by market.
Moreover, Powerhouse must collaborate with external partners, such as national energy bodies, to initiate growth.
The bottom line
New revenue streams through licensing and services, strategic partnerships, and innovations in sustainable aviation fuel technology highlight Powerhouse Energy Group’s attractive growth potential.
Although it faces challenges from strict regulatory environments and reliance on third parties, the company’s proprietary waste-to-energy patents ensure a solid competitive advantage.
Vodafone Group (VOD)
Vodafone Group plc (VOD) is a telecommunications company that provides mobile and internet services in many countries.
As a penny stock, it offers a low-cost investment option for those looking to tap into the growing demand for connectivity and digital services.
In fiscal year 2024, Vodafone saw organic service revenue climb 6.3%, with B2B organic service revenue growing 5.0%.
The company generated £2.6 billion in adjusted free cash flow and recorded an impressive 7.5% pre-tax return on capital employed.
Notably, Vodafone delivered 9.0 euro cents per share in dividends for the full year.
Key growth drivers
Vodafone is focusing on gaining traction in key markets like Germany and the UK.
It's also increasing its presence in Africa, where there's a lot of growth potential—while stepping back from some markets like Italy and Spain to refocus its efforts.
The company's 5G rollout has already boosted service revenue, with growth expected to continue.
Additionally, Vodafone is likely to see increased revenue from cloud services, the Internet of Things (IoT), and cybersecurity solutions.
Industry position and challenges
Vodafone holds a strong position in the telecom sector across much of Europe and Africa.
Its reputable infrastructure network provides a solid competitive advantage as a high-speed internet provider.
However, the company faces pricing pressure from competitors.
The withdrawal from the Italian and Spanish markets may limit growth potential there, but it could streamline operations across the board in the long run.
The bottom line
Vodafone is expanding where it matters and cutting ties where it doesn’t.
This realignment allows the established brand to focus on critical markets and capitalize on attractive opportunities in Africa and beyond.
IoT, 5G, and cloud services will continue to drive promising revenue growth for Vodafone.
Despite competitive pressures and regulatory hurdles, its robust infrastructure and streamlined operations position it well for the challenges ahead.
What are penny stocks?
Penny stocks are shares in companies trading at low prices.
In the UK, they refes to stocks priced under £1 with a market cap below £100 million. In the US, penny stocks are those under $5 per share and with market caps below $300 million.
These stocks often trade on less prominent exchanges that don’t have the same strict standards as major markets like the NYSE.
Consequently, companies in these markets are usually early-stage or potentially distressed.
Investing in penny stocks is considered more speculative. While this approach comes with increased risk, it can also lead to substantial returns when you buy the right companies at the right time.
Moreover, penny stocks are riskier due to their volatility. You can expect more significant price swings—both up and down—compared to larger, publicly traded equities.
How to invest in top-rated penny stocks in the UK?
You can buy and sell penny stocks in the UK on the London Stock Exchange’s Alternative Investment Market (AIM). Here, we’ll break down two approaches: trading and investing.
Trading penny stocks
Though trading and investing overlap, trading is generally short-term, aimed at capturing quick returns by buying and selling stocks.
- Find a reputable trading platform that supports AIM stocks and sign up.
- Open a trading account and add funds.
- Research stocks to buy now (UK), looking for recent news or volatility that could signal a profitable opportunity.
- Set a trading strategy with specific entry and exit points to manage risk.
- Monitor the market closely and begin trading (i.e., buying and selling shares).
Investing in penny Stocks
Investing in penny stocks, while also involving buying and selling, typically means holding positions for the long term.
For example, you might allocate most funds in your retirement account to stable, long-term positions and use a smaller amount in a trading account for higher turnover.
Generally, investing is seen as less risky than trading.
- Open an investment account with a broker offering AIM-listed stocks, either the same platform you use for trading or a separate one.
- Select suitable companies to invest in. With a long-term outlook, you’ll likely focus more on financial health, business model, and growth prospects, versus trading, where you might seek short-term gains from events like product launches.
- Build a diversified portfolio across multiple companies to spread risk and reduce exposure to any one stock.
- Regularly review and adjust holdings. For instance, if a stock has grown substantially and no longer offers growth potential, consider trimming exposure and reallocating funds.
| Consideration | Trading | Investing |
| Time Horizon | Short-term (hours, days, weeks) | Long-term (months, years) |
| Approach | Often looking for rapid price fluctuations from current events. | Concerned with company fundamentals and long-term growth prospects. |
| Risk | Higher than investing due to the potential for rapid price changes. | Still high but lower in risk since the time horizon is longer. |
| Research | Often technical analysis and news. | Fundamental analysis (balance sheet review, etc.). |
| Goal | Quick profits from price movements. | Slower and more predictable capital appreciation over time. |
Investing in UK penny stocks - the pros and cons
Do I have to pay tax on penny stocks in the UK?
Whether you’ll pay tax on penny stocks depends on the type of account you use. If you sell UK stocks at a loss, no tax is due, regardless of the account.
Capital Gains Tax (CGT)When you sell shares, you’ll pay CGT on profits over £6,000, with rates of 10% or 20% depending on your income. CGT doesn’t apply if the shares are held in tax-efficient accounts like an ISA or SIPP.
Stamp Duty Reserve Tax (SDRT)SDRT is a 0.5% tax on UK share purchases, but it generally doesn’t apply to many AIM-listed penny stocks. It also doesn’t apply to overseas shares or to assets held in tax-efficient accounts.
FAQ
How can beginners invest in penny stocks in the UK?
To invest in penny stocks in the UK, open a brokerage account that supports AIM-listed shares. Then, research potential companies with strong growth potential.
Renewable energy stocks are especially popular as the economy shifts away from traditional fossil fuels.
Which penny stocks offer the highest returns?
There’s no one-size-fits-all formula for penny stocks. The best options depend on internal and external factors, like interest rates, as well as your personal risk profile.
Can you trade penny stocks in the UK?
Yes, you can trade penny stocks in the UK through brokerage platforms that provide access to the London Stock Exchange’s AIM.
Are penny stocks very risky?
Yes, penny stocks are usually highly volatile and have low liquidity, making them risky and speculative investments.