It’s easy to lose money with a penny stock, as anyone who invested in IG Design Group (LSE: IGR) five years knows too well. It’s down 85% over that period.
But at the same time, I’ve seen some impressive penny stock recoveries over the years. And I’m thinking this might be another one. Since the start of 2026, the shares have climbed 67%. On a price of 86p at the time of writing, can it be long before IG Design breaks out of penny share territory?
Popularity growing
Through May and into June, IG Group has been rising up the list of popular penny stocks. And a growing number of brokers have been tipping it as one of the ones to watch.
The biggest problem shareholders have faced has been a few years of losses. The gift and celebration packaging company has suffered from buyers cutting back on non-essential spending. But it just might have the resilience to see it through the tough times. Some signs include…
- Positive net cash, with analysts expecting around £53m for the full year.
- 2026 revenue guidance recently upgraded to approximately $292m.
- Regular solid operating cash flow.
Of the brokers I can find offering recommendations on the stock, 100% have it as a Buy. There are only two of them, mind. So maybe we shouldn’t put too much store on that.
Results time
The next instalment in what might be an impressive turnaround will be Tuesday (16 June), with full-year results. And analysts have one key event pencilled in — a return to profit.
They expect fairly modest earnings per share, which would put the price-to-earnings (P/E) ratio at around 17. But I think even a small profit in such a tough economic year would still represent an impressive achievement.
The negative side is that forecasts for the following two years show earnings flat. And we really need to see improvements to justify that P/E multiple — which certainly isn’t in dirt-cheap territory, in my view. Still, I suspect forecasters are remaining cautious for now, waiting for those results to see if a period of profit growth might really be on the cards.
Penny stock risk
I’m cautiously optimistic here. But IG Group does highlight some typical risks with the smallest-cap stocks. There aren’t many analysts paying attention to it, and we should expect forecasts to be more uncertain than most.
The difference between good and bad results might not be very much at all. Even if the expected profit shows up, it wouldn’t need much of a shortfall to push that P/E significantly higher. And just small performance variations can lead to big share price shifts.
This kind of stock doesn’t fit my strategy. But I do think penny stock specialists might do well to consider it.
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Alan Oscroft does not hold any positions in the companies mentioned.
