As UK share prices fall, I think of two opportunities for penny stocks

Here are two interesting penny stocks that are trading at their lowest prices in nearly five years. If the companies achieve their target growth, I think the current cheap prices could be a decent return.

However, there are also risks to consider. I rate their chances.

Oxford Metrics

Oxford Metrics (LSE: OMG) is an £83.6m small company that makes smart sensor technology and motion capture systems. Its main product, Viconit is used in sports, education, film production, virtual reality and biomedical research. Despite the limited market share, the business serves 10,000 customers in 70 countries around the world, with customers including Boeing, FordHarvard University and EA Sports.

Now close to a five-year low of 63p, the price has spent much of the past five years fluctuating between 80p and 120p. But its most successful period was between 2010 and 2020 when it rose 543%, from 35p to 125p.

Can it remember the good old days?

Despite revenue rising 10.5%, the price fell 43% from its first half 2024 results in June. Shareholders were disappointed when earnings per share (EPS) fell by 10.5% and cash flow by 13.9%. Supply chain issues have been cited as a major challenge and continue to pose risks to stocks. The recent acquisition of Industrial Vision Systems is another risk, as profits may suffer if the business fails to perform as expected.

Still, the board says it’s making clear progress on its five-year plan.

With a price-to-earnings (P/E) ratio of 17.3, it is well below the industry average and trades 92.6% below fair value based on future cash flow estimates. That suggests that the current price would be an excellent entry point – but only if earnings grow from here.

If the price continues to recover in 2025, I think it would be worth considering. Definitely, one to watch.

Helium One Global

Unlike Oxford Metrics, Helium One Global (LSE: HE1) has been in the news a lot this year after its price surged 1,400% in February. This spike came after it discovered significant areas of helium at its Itumbula West-1 well in Tanzania.

But since then, the price has fallen from 2.85p to less than 1p last month.

Then on November 4, it announced the completion of Farm-In with Blue Star Helium’s The Galactica-Pegasus Project Colorado, US. It acquired a 50% interest in the project in exchange for drilling six wells at the site. Shares are up 24% since then.

Helium is used to make semiconductor chips, an industry that has exploded this year in the US. Other uses include arc welding, nuclear cooling, medical imaging, cryogenics and aerospace engineering. Notable customers include NASA, Intel again Samsung.

The global helium market is expected to grow from $3.76m in 2023 to $5.4m in 2030, at a compound annual growth rate (CAGR) of 5.2%. So it’s safe to say, the demand is there.

However, Helium One faces tough competition, especially from Renergen South Africa, Zephyr Power in the UK, too Good Helium in Tanzania. Furthermore, since helium cannot be traded on the open market, it is difficult to measure its value accurately. This lack of transparency, combined with country risk and high transportation costs, adds risk to investment.

But given its recent growth and US partnerships, Helium One is a penny stock worth considering.