Penny stocks have a lot of allure and it’s easy to see why. With these investments, there’s often potential for massive gains. Here, I’m going to highlight two of the most exciting penny stocks on the London Stock Exchange. These stocks are at the higher end of the risk spectrum, but there’s no denying they have huge potential.
Addressing the world’s biggest challenges
First up is Agronomics (LSE: ANIC), which is currently trading for just under 10p.
This is a £96m-market-cap investment company that is focused on opportunities in the cellular agriculture space. This is a form of biotechnology that produces animal-based products such as beef and chicken directly from their cells, eliminating the need for slaughtering animals.
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In the years ahead, I think we are likely to hear a lot more about cellular agriculture. That’s because it has the potential to address many of the world’s biggest challenges, including future food shortages (the global population is set for huge growth over the next few decades), animal cruelty, and greenhouse gas emissions.
The beauty of Agronomics is that it’s invested in over 20 different companies in the space, so it provides broad exposure to the field. And within its portfolio, there are some really innovative companies. One example is Meatable. It takes samples from unharmed cows and pigs and then replicates the natural process of fat and muscle growth to produce meat.
Now, cellular agriculture is a new technology and new technologies tend to be risky from an investment perspective.
However, with the stock down from 30p in late 2021 to under 10p today, and revenues and profits rising rapidly, the risk/reward proposition is now looking quite attractive. I’m tempted to have a nibble here.
A future $1trn industry
The second penny stock I want to highlight is the Seraphim Space Investment Trust (LSE: SSIT), which is currently trading for around 58p.
It’s a trust that invests in space technology (SpaceTech). It targets early- and growth-stage SpaceTech companies trying to solve challenges associated with communications (satellite broadband), climate change, mobility and global security, and have the potential to dominate globally.
The global space industry looks set for prolific growth over the next few decades. According to Morgan Stanley, it could be generating annual revenues of more than $1trn by 2040, up from around $350bn in 2020.
Given this growth, the industry is likely to create some lucrative opportunities for investors in the years ahead. This trust, which has investments in over 15 SpaceTech companies, offers a way to get exposure.
We believe the largest opportunity comes from providing internet access to under- and unserved parts of the world, but there also is going to be increased demand for bandwidth from autonomous cars, the Internet of things, artificial intelligence, virtual reality, and video.
Morgan Stanley technology analyst Adam Jonas on space revenues
Now, I want to stress that this is a higher-risk investment. The companies it has invested in are all very small.
For a diversified long-term growth portfolio however, I think it could be worth considering. It certainly has a lot of potential.
