The potential reward of investing in the best penny stocks in the UK is high. The small price tag – under £1 in the UK, or below $5 in the US – lures investors to these stocks. Even so, typically issued by companies that are unprofitable, small or new and unproven, penny stocks are a bit like lottery tickets in the stock market – risky by nature. If the company becomes successful, though, the returns could be substantial.
Microsoft, Amazon, or UK retailer ShoeZone have all once traded as penny stocks. Are you trying to spot the next penny stock that will make it big? We’ve picked seven UK penny shares trading on the London Stock Exchange that have the potential to generate significant returns to those willing to take a risk.
The 7 top penny stocks to watch in the UK
Here’s a quick look at the top British penny stocks that have promising revenue and earnings growth potential:
- Serabi Gold: The London and Toronto-listed gold miner operates exclusively in Brazil. Serabi Gold is benefitting from rising gold prices and has been working to improve its operations, increasing production and efficiency.
- Integrated Diagnostics Holdings: Based on the British Channel Island of Jersey, the company provides diagnostic services, from basic tests to advanced molecular diagnostics. It sees significant demand growth in the Middle East and the rest of Africa.
- Stelrad Group: The England-based company manufactures and distributes radiators, which provide it with a steady source of income. The stock also comes with above-average dividend.
- Luceco: The England-based supplier of lighting, wiring and charging systems for electric vehicles (EVs), and accessories for home repairs is seen improving its earnings by 5% this year and 10% next year, according to analysts’ consensus estimate.
- ITV Plc: The UK commercial broadcaster and producer has strong brand recognition. It owns and operates several popular television channels and produces popular TV programs, both for its own channels and for other broadcasters.
- Vodafone Group: The UK telecoms firm, which operates in various countries, is expected to benefit from the continued growth of 5G. Its diversified revenue streams enable it to adapt to changing market conditions.
- Powerhouse Energy Group: The global shift towards renewable energy sources have made the firm’s hydrogen production technology more attractive to investors and increased its partnerships with various organisations.
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An in-depth look at these top-ranked UK penny stocks
To help mitigate the risk that penny stocks carry, investors need to do their due diligence and conduct thorough research of the stocks they are considering. All seven of these UK penny stocks have the potential to break out due to factors that currently support their business. However, their share price is low by their own historical standards, making for a potentially attractive entry point.
1. Serabi Gold: Penny share with rising revenue and profit, driven by production
The Surrey-based junior gold miner owns mines in Brazil and it sees record production driving revenue and profits. It runs the Palito Complex, comprising the Palito and São Chico underground gold mines in the Tapajós Mineral Province in the Pará State in the north of Brazil. Despite its shares rising 138% so far this year, it’s hard to say, at around £1.12 per share, that it’s overpriced as it’s trading below six times earnings.
In the first nine months of the year, it had revenue of $70.3 million, up 46.7% from the same period a year earlier. Profit after tax was $17.8 million, up 386% on the year before, and EPS totaled $25.33, compared to $6.10 a year earlier. Mike Hodgson, the chief executive, said the third quarter was the company’s best ever in production with nearly 9,500 gold ounces produced.
Many gold mining companies, including this stock, have a higher level of risk with this stock compared to say, a utility. However, the extended rise in the price of gold has helped it lower its debt to EBITDA level significantly, and the $20 million in cash balance it has will help it further develop its Coringa classification plant, which is what the company sees as its next growth driver. The company has said it expects to double its gold output by 2026.
2. Integrated Diagnostics Holdings: Rising demand for tests, improved margins boost profit
The consumer healthcare company provides high-quality medical diagnostic services with operations in Egypt, Jordan, Nigeria, Sudan, and Saudi Arabia. Its brands, such as Al Borg, Al Mokhtabar, and Biolab are well-established and trusted in their respective markets.
Its products include everything from blood glucose tests for diabetes to advanced molecular testing for genetic disorders. It also provides radiology services, such as X-rays and CT scans, through Al Borg Scan in Egypt and Echo-Lab in Nigeria. IDH’s chief executive, Dr. Hend El-Sherbini, one of the few women to lead an international company in the Middle East, was named as one of the Middle East’s 100 Most Powerful Businesswomen of 2023 by Forbes Middle East.
Integrated Diagnostics performed 36.1 million tests in 2023 and operates under multiple brands. It has recently lifted its stake in Biolab KSA, buying an additional 49% for $3.2 million, improving its market share in Saudi Arabia. The move brings Integrated Diagnostics’ total ownership in the Saudi-based lab to 79%.
In the first nine months of the year, Integrated Diagnostics said it had revenue of EGP 4.1 million, rising 34% year over year. It attributed this to rising test prices and higher test and patient volumes, which grew 9% and 6% from the same period a year earlier. Net income rose 87% year over year to EGP 724 million, including a net profit margin of 18%.
3. Stelrad Group: Earnings growth is heating up at this Scottish penny stock
Stelrad, based in Newcastle in Scotland, is the leading radiator maker in Europe. It makes hydronic, hybrid, dual fuel and electrical heat emitters and sells them to more than 40 countries. Stelrad is in a good position to grow, thanks to regulations that are promoting its decarbonised, energy-efficient systems as well as the need to replace aging radiators across Europe.
Its shares are up a little more than 4% this year and they are trading for less than 12 times earnings, making the stock potentially good value. It also has a dividend that yields more than 5.5% after a raise of 2% for its interim dividend to 2.98 pence per share, which makes it a penny stock worth looking at for income investors.
The radiator maker is showing solid, if not spectacular growth. Half-year earnings per share (EPS) increased by 0.5% year over year to £6.30, though revenue fell 8.9% compared to the same period last year, to £143.1 million. It did improve net profit margin by 10.22% compared to the first half of 2023.
My only concern with Stelrad is it has a relatively high debt to earnings before interest, taxes, depreciation and amortisation (EBITDA) ratio of 2.27, and its low market cap of £175 million, which makes its stock more volatile and more difficult to quickly unload if needed.
4. Luceco: Spread of EVs, home improvements market propel revenue growth
Luceco makes LED lighting, wiring accessories such as switches, sockets, circuit protectors and junction boxes, and portable power products, including electric vehicle (EV) chargers. The UK company, which launched the EV Wall Charger 2 last March, is looking to grow its EV charger sales after purchasing Sync Energy in 2022 for £8 million.
Earlier this year, it also acquired D-Line, a leading supplier of cable management products, for £12.4 million, with the deal expected to quickly be accretive to Luceco’s bottom line. D-Line has substantial sales in the UK, as well as in the US, and Luceco is hoping to use D-Line’s sales network to expand.
The stock is trading at around 130 pence, up 2.85% so far this year. It has an above-average dividend that yields around 3.79%, thanks to a 6.3% raise this year in its interim dividend. The payout ratio on the yield is only 24%, which should be easily sustainable.
Its shares are trading for around 11 times earnings despite posting strong first-half financials. Revenue rose £109.6 million, up 8.4% over the prior year, driven by organic and acquisition-led growth, Luceco said. EPS grew 34.2% year over year to 4.5 pence, while adjusted operating profit gained 16.7% on the same period a year ago to £12.6 million, thanks to improved margins.
5. ITV: Takeover rumours turbocharge this broadcaster penny stock
ITV is responsible for 13 of the 15 regional television licences that make up the ITV network, the oldest and largest commercial television network in the UK. It has been investing heavily in digital platforms to reach a wider audience and generate new revenue.
Thanks to improved profitability, the stock had already been doing well, but recent rumours of a buyout bid have escalated its shares further. Private equity company CVC Partners, based in Luxembourg, and Groupe TF1 of France are said to be among the potential bidders that are showing interest in ITV. Even with the recent uptick, ITV is trading at less than seven times earnings at around 73.49 pence per share, still an attractive price valuation.
In the broadcaster’s third-quarter report, the board said it expects ITV Studios to show record adjusted EBITDA growth of between 13% and 15% this year, as well as total organic revenue growth that will average 5% between 2021 and 2026. However, through nine months, revenue was £2.72 billion, down 8%, compared to the same period last year, which ITV attributed to the effect of the 2023 writers’ and actors’ strike in the US. However, the strike’s impact is lessening as ITV said it expects at least £750 million of digital revenues in 2026.
ITV Studios, the programme production unit, is on track to deliver a high number of shows in the fourth quarter. Hit productions in the US included The Better Sister for Amazon Prime Video and Hell’s Kitchen for Fox. In the UK ITV Studios made Shetland for the BBC, Grace S5 for ITV, Destination X for the BBC and NBC, and The Forsytes for PBS Masterpiece. Internationally, it produced Petra for Sky Italia and Gladiators for TF1.
In March, the company sold its 50% interest in streaming service BritBox International to joint venture partner, BBC Studios Ltd, for £255 million. ITV is using that money to fund a £235 million share buyback. On top of that, ITV has a dividend yield of nearly 7%, with a payout ratio of 45.5%, a boon for income investors.
6. Vodafone: Overhaul could lift telco giant’s share price back above £1
The Newbury, England company has more than 330 million mobile customers, 18 billion TV customers and 22 million broadband customers globally. It has just signed a 10-year agreement with satellite operator AST SpaceMobile that will allow Vodafone’s operators to use AST direct-to-device service in key African and Asian markets.
The company appears to be turning around its sagging earnings. In the first half of fiscal 2025, it had revenue of €18.3 billion, up 1.6% year over year, with service revenue of €15.1 billion, which rose 1.7% over the same period last year.
Service revenue climbed thanks to gains in European, African, and Turkish markets, despite a decline in Germany linked to the recent MDU TV law change, a recent legal amendment that stops landlords from bundling TV services into rental agreements for tenants in multi-dwelling units (MDUs). That has allowed tenants to shop for their own provider and previously, bulk MDU contracts were a key form of revenue for Vodafone in Germany.
Vodafone said its operating profit rose 28.3% year over year to €2.4 billion, helped by a €0.7 billion gain from the partial sale of its stake in Indus Towers.
For investors, the company’s high-yielding dividend (above 8%) makes it easier to be patient. It has paid out a total of €9 yearly in dividends every year since 2020.
7. Powerhouse Energy Group: Huge potential for growth at waste-to-energy pioneer micro stock
Powerhouse Energy Group’s shares have risen more than 216% so far this year, thanks in big part to Engsolve, its engineering consulting division and the ability to withstand a patent challenge. The company develops products that convert non-recyclable waste into low carbon energy.
In October, the Bingley, England-based company reported that its patent for the method and apparatus for the treatment of waste material was fully granted by the European Patent Office, ending its dispute with Onunda Ltd. In addition, the company said on Dec. 16 that it had reached the “mechanical completion” of its feedstock testing unit.
The company is just beginning to take off and produce revenue. It reported first-half revenue of £385,700 after having no revenue in the first half of 2023. It also said it had £98,200 in gross profit after having none in the same period a year ago.
The driver, the company said, was the acquisition (and consolidation) of the remaining stake in Engsolve. It’s worth noting that on a net basis, it lost 3 pence per share, compared to a loss of 1 pence per share a year ago.
While not profitable yet, it appears the company’s decision to focus on outsourcing its technological expertise through licensing fees, royalties and engineering services, is enabling it to see a path to profitability. It’s still a very small company, with a market cap of £48.7 million, it’s really just a micro stock. For this reason, the share price is bound to remain volatile.
Comparing the top penny stocks in the UK
The seven penny shares that we’ve picked and their year-to-date performance at a glance:
| Ticker on LSE | Company | Performance YTD | Price to earnings (P/E) ratio |
| SRB | Serabi Gold | +138.89% | 5.93 |
| IDHC | Integrated Diagnostics Holdings | +30.56% | 16.84 |
| SRAD | Stelrad Group | +4.33 | 12.15 |
| LUCE | Luceco | +2.22 | 10.68 |
| ITV | ITV plc. | +16.74% | 6.67 |
| VOD | Vodafone Group | -1.81% | 8.56 |
| PHE | Powerhouse Energy Group | +216.22% | — |
What are penny stocks?
Penny stocks are shares of public companies, usually small-cap stocks, that trade for a low price per share. Typically, this is less than $5 per share, though the exact definition can vary by market. They can appear attractive to inexperienced investors because of their low price tag, but penny stocks are also associated with a greater degree of risk than the stocks of more established companies.
While we’ve focused on penny stocks that trade on the London Stock Exchange, many penny stocks trade on smaller exchanges, or outside an exchange, on the over-the-counter (OTC) market. OTC stocks aren’t subject to the same listing requirements as exchange-traded stocks, which can mean there’s less information about such companies. Even with the penny stocks on the LSE, there is generally less coverage on the stocks by the media or analysts. Therefore, investors need to do more of their homework before plunging into buying penny stocks.
It’s also important to realise that penny stocks, because of their low share prices, can be more volatile than other stocks. The prices of their shares can swing a great deal in a short period of time. While that can create an opportunity for investors, it can also mean big losses in some cases.
Many successful companies once traded at very low prices, but eventually found their true level. The trick with finding good penny stocks is spotting companies that are improving revenue and if not in the black, at least showing a path toward being profitable. Investors must bear in mind, though, that penny stocks carry high risk and only those with significant tolerance for risk should touch them.
Pros and cons of investing in UK penny stocks
Here are some of the pros of investing in penny stocks:
Accessibility: Their low share prices make them affordable for beginner investors, allowing for diversification with a smaller investment.
High-Potential Returns: The potential for explosive growth is a major draw. Small companies on the brink of success or larger companies undergoing a turnaround can experience significant stock price increases.
Undervalued Gems: Sometimes, promising companies with bright futures fly under the radar, trading as penny stocks before gaining wider recognition.
Hedging Potential: Penny stocks in specific sectors can act as a hedge against broader market declines, such as natural resources stocks during a tech downturn.
There are, however, considerable risks in investing in penny stocks:
Extreme Volatility: Penny stocks are notorious for their wild price swings, making it difficult to predict their future value and increasing the risk of substantial losses.
Fraudulent Schemes: These stocks are often targets for pump-and-dump schemes, where fraudsters manipulate prices to profit at the expense of unsuspecting investors.
Limited Information: Penny stocks are often issued by small companies with limited public information, making it challenging to conduct thorough research.
Financial Instability: Many penny stocks represent companies with a limited track record or ongoing financial struggles, increasing the risk of failure.
How to invest in penny stocks in the UK?
First, check to see if your brokerage account will allow you to trade in penny stocks. Some brokers put limits on penny stocks or charge extra fees for penny share trades. Make sure the stock is registered with the proper regulators to avoid unregistered scams.
As with any stock, but even more so with penny shares, you need to do your own research. Look at a company’s earnings reports going back a few years. Make sure the company is on solid financial footing and appears to be headed in the right direction.
Be especially cautious at first. It’s tempting to buy large blocks of shares of penny stocks because they’re inexpensive, but it makes sense to proceed slowly with smaller buys at first because of the volatility around penny stocks.
Do I need to pay tax on penny stocks in the UK?
Generally yes. Consult a tax professional regarding your specific situation. There are two types of taxes affecting penny stocks in the UK, Capital Gains Tax (CGT) and Stamp Duty Reserve Tax (SDRT).
The CGT applies to profits made when selling stocks outside of tax-efficient accounts like ISAs or SIPPs. The amount of tax owed depends on your income tax bracket.
The SDRT is a 0.5% tax paid when buying UK-listed stocks, which is not applicable for most overseas shares or exchange-traded funds (ETFs).
Tax-efficient accounts like ISAs and SIPPs shelter your investments from taxes like CGT. However, SDRT might still apply to non-UK holdings within these accounts.
There are plenty of UK penny stocks, but not many of them have a clear path to profitability. We focused on UK stocks that were around £1 per share, so all qualified as penny stocks. We made sure that all seven traded on the London Stock Exchange.
Then we focused first on more established companies in the midst of a potential turnaround such as ITV plc or Vodafone. The thinking was that these had more managerial experience and more economic wherewithal to return to profitability.
Lastly, we included one promising startup, Powerhouse Energy Group, because its waste to hydrogen technology is expected to be in demand as countries strive to achieve zero net emissions goals.
Here’s what steps we took to find the best penny shares to buy:
Used a stock screener to find low-priced stocks: A stock screener can help investors find stocks below £1 and then can be used to compare those stocks to others in their industries. There are also stock predictor services that can help you find quality stocks under £1.
We focused on growth: Penny stocks usually are smaller, newer companies with higher volatility and risk compared to larger, more established stocks. We looked for penny stocks that were not new and were larger companies that are showing growth. If they were new, such as Powerhouse Energy Group, we looked for stocks that would benefit from growing trends.
We looked for companies with a competitive advantage: We sought companies with a unique business model or competitive advantage that sets them apart from competitors. This could be a proprietary technology, a strong market position, or a unique customer base. Luceco is in this category as it is a supplier of companies making electric vehicles.
We did our homework: We examined the companies’ earnings reports to assess their financial health, profitability and debt levels. We also looked at valuation ratios, such as price-to-earnings (P/E) that might show if a stock is undervalued compared to its peers.
Best place to buy UK penny stocks in 2025
FP Markets is a global broker offering forex and CFD trading on UK penny stocks, currencies, indices, metals, and cryptos. The platform is regulated by top authorities like ASIC and CySEC. With low fees at 0.1% commission per side, FP Markets offers affordable trading.
Traders can get up to 1:5 leverage, though beginners in certain regions may have lower maximum leverage due to regulations.
FP Markets supports popular platforms like MetaTrader 4, MetaTrader 5, cTrader, and even TradingView for charting. Beginners can also practice with a free demo account. You can also access FP Markets through their mobile app and WebTrader service.
Customer service is available 24/7 in multiple languages, and the deposit and withdrawal options include credit cards, e-wallets, and bank transfers.
