The tree shake in global financial markets due to the potential trade war between the US and other nations has been hard to ignore in recent weeks. Volatility in penny stocks has risen, with some companies getting hit hard. Yet some of this can be put down to investor sentiment rather than company-specific factors. Here are a couple of stocks that I think could be due for a rebound in the coming months.
Cybertech to the rescue
Earlier in April, the Corero Network Security (LSE:CNS) share price was down almost 30% for the year. However, it has rallied over the past week or so, with the stock now up 44% over a broader one-year period.
The cybersecurity firm specialises in real-time protection against online attacks. Its flagship product, SmartWall, offers automated defence solutions tailored for businesses. It makes money primarily through charging a regular subscription fee to companies that use the software products.
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I think the company could do well in the coming year for a few reasons. To begin with, it’s not really exposed to tariffs with the US, so I have no real worries here. Next, there’s a clear rise in the frequency and sophistication of attacks, exacerbated by the use of AI and high-performance bots. This means that there’s a heightened need for robust protection solutions.
Finally, the business ended last year with no debt and £4.01m in cash. This puts it in a strong position financially. Of course, one risk is that Corero has to keep evolving to the changing threats online constantly. If it doesn’t, the platform will go out of date very fast and see customer demand evaporate.
Rebuilding a reputation
Another idea is Tribal Group (LSE:TRB). The stock is down 6% in the past month, meaning it’s down 25% over a year. The penny stock provides software and services tailored for the global education sector, operating in over 55 countries.
The share price has weakened partly due to the legacy impact of a soured contract with Nanyang Technological University (NTU) in Singapore back in 2023. Implementing Tribal’s student management system for NTU faced substantial delays and increased complexity, with the university claiming damages. Last May Tribal agreed to pay £3.1m in settlement fees, payable over the next year-and-a-half.
Even though this isn’t ideal, the saga is almost over. From a financial and reputational perspective, it can use 2025 to move on and start fresh. The company has achieved success with plenty of other educational sites. The recurring subscription model means that cash flow is consistent and easy to scale up as the firm grows. Further, the shift towards digital learning environments has accelerated, increasing the need for robust student information systems and related services. Tribal is well-placed to take advantage of this.
The main risk I see to a material stock jump is the overhang of the NTU situation. Restoring market trust could take longer than I expect.
Ultimately, I think both penny shares could erase the falls from the past month, with further potential gains possible later this year. Investors who are comfortable with the risks of these types of stocks could consider adding them to their portfolios.
