Investing in penny shares is one of the most exhilarating, albeit risky, strategies available to ordinary, everyday investors. The failures are frequent, and the losses can be total. But when it works, a small £500 initial investment can skyrocket.
Just look at Hardide (LSE:HDD). In the last 12 months alone, the penny stock’s delivered a staggering 748.5% return. In terms of money, a £500 investment this time last year is now worth £4,242.50 today.
So the question now is, how can investors spot winners like Hardide before they surge? And is Hardide only getting started?
Picking winners from losers
The stock-picking process for penny shares follows broadly the same logic as investing in larger companies. But since the margin of error is far smaller, the standards need to be significantly stricter.
- Does the business generate real revenue?
- Is there a credible path to profitability?
- Is the balance sheet robust enough to withstand short-term setbacks?
These are all critical questions to ask. But fundamentals alone aren’t enough.
The real differentiator is competitive advantage. I need to find something that protects the business from being undercut or copied by larger, better-funded rivals. That could be something like a patent, a proprietary process, or an exclusive customer relationship, which can potentially make all the difference.
Looking back, Hardide was a textbook example of these principles in practice.
Why did Hardide succeed?
As a quick crash course, Hardide’s a provider of advanced surface coating technology. Using a process called chemical vapour deposition (CVD), it applies tungsten carbide coatings to precision engineering components used in the energy, aerospace, and industrial sectors.
These coatings dramatically extend component life in the harshest operating environments which, in turn, reduces downtime and customer costs. And while it’s certainly not the only player in the coating sector, its success was ultimately supported by its patented coating technology.
The results speak for themselves. In the first half of 2026 alone, revenue surged 71% to £4.8m, EBITDA jumped 321% to £1.6m, and operating profit reached £1.3m.
At the same time, gross margins expanded 11 percentage points to 65%. And then a week after results were released, a landmark £2.4m order from a major North American energy customer landed, leading to a further upgrade to full-year guidance.
Combining this string of successes with outstanding manufacturing capacity to support up to £20m of annual revenue, Hardide appears to still have a long runway before its next round of intense capital investment, paving the way for continued rapid growth.
However, shrewd investors will have already picked up that this new energy deal. While exciting, it’s just massively concentrated the revenue stream. If this contract falls apart, or supply chain pressures on input materials like tungsten gas disrupt progress, Hardide could start stumbling.
So is it still worth buying?
Hardide’s no longer the undiscovered secret it was a year ago. But it’s still in penny share territory. Yet with a patented technology that commands genuine pricing power, expanding end markets, and a management team beating its own targets, Hardide might not stay that way for much longer.
That’s why for investors seeking exposure to a high-risk, high-reward opportunity, this niche enterprise is worth a closer look.
Should you invest £5,000 in Hardide right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Hardide made the list?
Zaven Boyrazian does not hold any positions in the companies mentioned.
