When penny shares get it right, the returns can be life-changing.
A £10,000 stake in a penny share that grows 10,000% becomes £1m. It sounds far-fetched. But it’s happened many times before, and it’s why investors keep hunting for the next transformational winner despite the enormous risks of investing in such tiny businesses.
So could Kromek (LSE:KMK), which has already started jumping 60%+ over the last 12 months to 8.6p, be quietly building towards something far more explosive?Let’s find out.
What Kromek actually does
Kromek’s a detection technology company operating across two divisions. The first is Advanced Imaging, which supplies specialist radiation detector components based on its proprietary cadmium zinc telluride (CZT) technology to medical scanner manufacturers. Think next-generation CT and SPECT machines used to detect cancer and Alzheimer’s.
The second, called CBRN Detection, supplies compact, handheld radiation detectors to governments and security agencies worldwide. These are the devices used to protect ports, stadiums, and critical infrastructure from the threat of dirty bombs.
Both markets are growing. And both carry structural tailwinds that aren’t likely to go away anytime soon.
Why the share price is moving
Looking at the firm’s results for its 2026 fiscal year (end in April), the company delivered both revenue and pre-tax profits in line with market expectations at £27.2m and £2.15m respectively.
But the positive share price momentum actually comes from strong performance in the second half. Kromek won £8.8m of new orders across both divisions, a significant proportion of which was delivered before year-end. The timing’s what matters here.
A relatively tiny business delivering on substantial contracts this quickly requires genuinely excellent execution. Even more so given the challenging supply chain environment Kromek’s currently navigating.
Digging deeper, underlying growth in Advanced Imaging has continued alongside the CBRN Detection segment. And that’s, once again, despite the latter suffering from government procurement delays.
Pairing all this with the anticipated demand ramp-up for its radiation sensors from NATO countries in a geopolitically tense world and it’s no surprise that this penny share is starting to make waves.
So should I consider buying shares today?
Taking a step back
While Kromek has achieved some impressive feats, it’s important to remember that the company’s still a penny share for a reason.
With a tiny pre-tax profit of just over £2m, the firm has limited margin for operational mistakes. And with a significant chunk of the revenue stream sensitive to potential further government procurement delays, the group’s next set of results in September could ultimately disappoint through no fault of the company.
So where does that leave investors today? Kromek has the right technology, the right end markets, and a talented management team that gives it the potential to be an explosive winner over the next few decades.
Those full-year results in September will be the next major test of whether the growth trajectory’s steepening or stagnating. Therefore, for now, I’m keeping this penny share on my watchlist. But it’s definitely going to be near the top.
Should you invest £5,000 in Kromek Group Plc 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 Kromek Group Plc made the list?
Zaven Boyrazian does not hold any positions in the companies mentioned.
