At a 52-week low, is this penny stock the bargain of the year?

Penny shares could be interesting investments because of their low share costs and potential for prime returns. Nonetheless, investing in these speculative small-cap shares carries higher threat than shopping for equities listed on the FTSE 100 or FTSE 250 indexes.

Volatility is a key concern. Buyers contemplating these high-risk funding propositions want the abdomen to endure huge share value actions in pursuit of portfolio positive factors. Briefly, they’re not for the faint-hearted.

One firm that’s no stranger to volatility is Creo Medical (LSE:CREO). This AIM-listed healthcare gadget enterprise specialises in minimally invasive surgical endoscopy. Buying and selling at a 52-week low after a extended shedding streak, is immediately the good time to purchase this beaten-down penny stock?

A falling share value

Creo Medical has seen its market cap evaporate lately as its share value has taken a battering. Right this moment, the stock market minnow’s valued for lower than £52m.

There are some worrying indicators in this penny stock for potential buyers to observe carefully. The agency’s FY24 revenues failed to fulfill market expectations. The group whole of £30.4m represented a 1.3% decline in comparison with the prior yr’s determine of £30.8m. Frankly, it’s regarding to see the firm going into reverse gear on such a essential metric.

Creo Medical has additionally but to show a revenue. The board expects FY25 will probably be one other loss-making yr. I’m nervous more money will must be raised earlier than the enterprise turns into a worthwhile enterprise, which is probably not simple on condition that it has traditionally skilled fundraising difficulties.

That stated, in February, the firm secured £25m in internet inflows from divesting a majority stake in its European consumables enterprise to a Chinese language medical gadget producer. Coupled with a £12.1m fairness elevate final yr, Creo Medical has some monetary headroom for the close to future not less than.

Restoration potential

On the vivid facet, this month marked the business launch of a new product — the SpydrBlade Flex — in the UK and EU. This might present a much-needed enhance for the firm’s backside line. The multi-modal endoscopic gadget has promising functions for minimally invasive therapy of colorectal most cancers.

As well as, the potential of Creo Medical’s core providing can’t be understated. Its flagship Speedboat product suite makes use of outstanding expertise. These tiny surgical devices supply surgeons a one-stop store to hold out incision, dissection, and coagulation procedures with no need to vary gadgets.

The market alternative is appreciable. Some analysts imagine the gastrointestinal endoscopic applied sciences market could possibly be price between £2.32bn and £2.48bn. If Creo Medical can efficiently realise the business potential of its merchandise, the shares might finally show to be a profitable funding at this early stage.

A penny stock to contemplate?

Like all penny shares, Creo Medical faces vital dangers. The truth that the shares had been as soon as altering palms for almost £2.30, in comparison with 12.5p immediately, proves as a lot.

Nonetheless, the firm’s threat/reward profile appears engaging to me proper now at this low valuation. Enchancment will probably be wanted throughout a vary of core monetary yardsticks, however the agency’s distinctive patented applied sciences present vital promise.

So, is Creo Medical a bargain stock? Fairly probably! Bargain of the yr? That’s in all probability a stretch. However for buyers with ample threat appetites, I believe this penny share deserves consideration.