When we talk about ‘cheap’ stocks to buy, it’s easy to focus on how many we can buy rather than what we’re actually buying. Owning thousands of low‑quality shares rarely turns into good long‑term returns.
I’d rather ask whether the business is profitable, cash‑generative and sensibly valued. With that in mind, here are three UK stocks priced below £1 that, to me, look more like potential bargains to consider than dangerous penny shares.
Iofina
Iofina produces iodine and speciality chemicals using brine streams from oil and gas fields in Oklahoma. The shares recently traded around 49p, still comfortably under £1.
In 2025, revenue climbed 18.4% to £50.47m and earnings soared 161.4% to £5.97m following heavy investment in new facilities.
CEO Dr Tom Becker highlighted “record revenues for the seventh straight year”, underlining steady demand.
- 2025 adjusted EBITDA: £8.97m
- Free cash flow: £1.89m (up 24%)
- Price-to-earnings (P/E) ratio: 15
- Return on equity (ROE): 14.9%
Of course, micro-cap shares are inherently illiquid, volatile and more prone to slip into financial trouble. That makes this a slightly riskier pick, albeit with higher growth potential.
Smiths News
On the other end of the spectrum is Smiths News (LSE: SNWS), the UK’s largest newspaper and magazine wholesaler. It delivers titles like The Sun and The Times to thousands of retailers every morning, with the shares trading around 67p.
Latest full‑year results showed adjusted revenue of £1,103.7m, an operating margin of 3.5% and gross margin just over 7%, which is typical for an asset‑light logistics business.
The income story is strong too: trailing 12‑month dividends of roughly 5p per share give a yield close to 8.9%, and management aims for around 2x dividend cover.
With a trailing P/E of just 6 it looks cheap — especially after a new 10‑year deal to become News UK’s exclusive national wholesale distributor from July 2027. That’s expected to add about £125m of annual revenue.
However, print media is rapidly falling out of favour, so unless Smiths innovates, it might soon find itself redundant.
Metals Exploration
Metals Exploration (LSE: MTL) is a gold producer focused on the Runruno mine in the Philippines, with additional copper exposure. Its share price is just 12.3p, well under £1. Still, that’s 500% higher than five years ago as the business recovered from losses to solid profitability.
Recent analysis puts ROE at about 15% for the 12 months to December 2025, unusually high for a small miner.
In June 2026 the company secured exclusive rights to explore, develop and operate the Batong Buhay copper‑gold project, with approvals and support from Philippine Mining Development Corporation. Work can start immediately, with CEO Darren Bowden calling Batong Buhay “one of the best, undeveloped advanced porphyry copper‑gold targets in the Philippines”.
However, mining can be highly volatile and the Philippines presents political and regulatory risk that could hurt future profits.
Final thoughts
Buying shares because they’re cheap has never been a great strategy in my view. What matters is whether the company behind the ticker can grow, generate cash and handle the bumps in its industry.
If it can, a ‘cheap’ £1 share today could be masking long‑term growth potential. In time, businesses like these could justify higher valuations – so long as their strategy works.
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Mark Hartley does not hold any positions in the companies mentioned.
