Now analysts’ forecasts need to be taken with a grain of salt – there are a lot of duds among the 60 shares that realistically have little chance of doubling (or even doing well). But what I thought I’d do is filter the list of stocks for those that have relatively strong momentum (both price momentum and earnings momentum) to identify some potential winners.

A UK defence stock that isn’t on mainstream radars

After this filter, one stock that immediately jumped out at me was Kromek Group (LSE: KMK). It develops radiation detection solutions for a range of markets including security and defence, civil nuclear, and biological detection.

The company’s exposure to defence is what excites me here. The defence industry’s booming right now and I can see Kromek benefitting from increased government spending in the years ahead as radiation detection is vital for the safety of both civilians and soldiers.

Note that last year, the company won a £1.7m contract from the UK government. This was for the procurement of radiological nuclear detection equipment and supporting services for the Home Office.

Looking at Kromek’s financials, revenues are on the up. For the year ending 30 April, revenue’s expected to be £27.1m versus £10.4m five years earlier.

That said, the company’s only recently become profitable and, as a result, its price-to-earnings (P/E) ratio’s quite high. So a doubling of the share price in 2026 is far from guaranteed.

One other thing worth pointing out is that recent growth here has been driven by a large contract win with Siemens Healthineers. There’s a risk that in the near term, growth moderates due to a lack of large deals like this.

I think this stock is worth a closer look however. The average price target is 26p versus today’s share price of 10p.

A deep-value opportunity in the small-cap space

Another stock that looks interesting to me is Water Intelligence (LSE: WATR). It provides tech-driven leak detection solutions for residential, commercial and municipal customers and is therefore a play on the sustainability theme.

This stock’s currently trading near 315p. However, the average price target is about 678p (115% higher).

Looking at Water Intelligence’s most recent trading update, the company has quite a bit of momentum right now. For the third quarter of 2025, revenue increased 11% year on year to $24.3m while adjusted pre-tax profit was up 68% to $2.8m.

“We had a strong Q3 in terms of both revenue and profits which builds upon the momentum from Q2.”

Water Intelligence executive chairman Dr Patrick DeSouza

This momentum isn’t reflected in the valuation though. Currently, the stock trades on a P/E ratio of just nine, so there’s scope for a materially-upward valuation re-rating here.

A risk with this stock is debt. In recent years, the company has made a number of acquisitions and this has weakened its balance sheet.

At the current valuation however, the risk/reward set-up looks attractive, in my view. I think this small-cap stock’s worthy of further research.

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However, there’s a few caveats. The first of which is that there are only two analysts covering the stock, and that’s not uncommon for a small-cap company like this. Also, being a small-cap, it inherently carries more risk, has less liquidity, and has less visibility than its larger peers. Collectively, these factors can contribute to a large differential between the share price and what analysts perceive to be fair value.

What is Water Intelligence?

Water Intelligence is a leader in leak detection and water infrastructure solutions, providing technology-driven services to reduce water loss and improve efficiency for residential, commercial, and municipal customers.

Its core innovation is the TES (Technology Enabled Services) model, which supports preventive maintenance by combining proprietary tools, data analytics and partnerships, such as with StreamLabs, to deliver end-to-end monitoring and aftercare.

This approach not only helps homeowners but also extends to business-to-business channels in insurance and property management, where proactive leak detection mitigates costly damages.

The company has demonstrated consistent growth, with 2024 revenues up 10% to $83.3m and EBITDA rising 11% to $13.1m. US corporate sales advanced 11% to $55.9m, while international corporate sales surged 35% to $10.3m, led by Water Intelligence International. With its Next 50 Plan, Water Intelligence aims to strengthen technology leadership and scale its preventive maintenance solutions globally.

Analysts’ forecasts

Naturally, the two analysts have a Buy rating on the stock. The average target price of 675p implies a potential appreciation of 123% from current levels, with price targets ranging between 500p (+66%) and 850p (+181%).

Forecasts point to continued revenue growth, rising from $83.3m in 2024 to $95.5m in 2025 and nearly $100m in 2026. EBITDA is expected to advance to $17.5m over the same period. But remember, these are just forecasts and they can be wrong.

Valuation multiples reflect this transition. The EV-to-EBITDA ratio’s forecast to compress from 7.6 times in 2024 to under 5 times by 2026. However, there are no dividends, and the company has a net debt position of around £20m.

The forecasts suggest that net debt will moderate in the coming years, but it’s still a sizeable debt-to-equity position.

The bottom line

Interestingly, the company’s share price has plummeted over the past four years. During that time, Water Intelligence has expanded via multiple acquisitions: Wat-er-save Services Limited in 2021 to boost UK operations, Nashville franchise in 2022 for US growth, and Feakle Gas & Plumbing in Ireland in 2024 for EU reach.

These deals are financially accretive, but integration and macroeconomic challenges have seemingly complicated growth despite rising demand and network sales growth of 10.5% in 2022.

Personally, I think this stock’s worth considering. But it requires deep research, adding it to the watchlist and analysing updates before making a move. But I don’t see it as a millionaire-maker, unless an investor has a lot of cash to put in… which in itself would impact the share price.

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Just looking at the FTSE AIM All-Share shows the extent of the damage, with the index dropping by over 36% in the last 12 months. By comparison, the FTSE 100 is only down by around 8% over the same period.

But it’s honestly not all that surprising. The small scale of these enterprises makes them incredibly susceptible to the effects of a potential recession. Even more so for the ones that still reside in the realm of unprofitability, let alone generate a meaningful revenue stream in the first place.

While the painful volatility investors have endured throughout 2022 so far is technically a stock market correction, it certainly feels like a crash. And things may continue to get worse from here. Yet, after all the panic-selling this year, some top-notch companies are trading at dirt-cheap discounts, even in the world of penny stocks.

With that in mind, I’ve spotted one penny stock I believe looks like a bargain for my portfolio as prices continue to tumble.

One of the best penny stocks to buy now?

Recessions are bad news for most businesses. But some sectors have higher levels of immunity to their adverse effects due to sustained demand even when the economy is in the toilet. That certainly seems true for Water Intelligence (LSE:WATR).

The group provides minimally invasive tech-driven leak detection and repair services for commercial and residential properties. Its franchise-driven business model has kept costs low even as it actively expands its network of locations.

Despite this, the stock has collapsed 50% over the last 12 months. However, investors may be left scratching their heads when comparing the share price momentum with the underlying business performance.

Why? Because Water Intelligence seems to be smashing it! Looking at the latest results, revenues have grown by 44% while underlying profitability expanded by 15%. What’s more, with cash flow generation remaining strong, the group has amassed a sizable $21.9m cash war chest in the bank.

Needless to say, double-digit growth paired with strong liquidity is a beautiful sight in today’s market.

Nothing is risk-free

Over the last couple of years, management has begun re-acquiring its top-performing franchise locations to fuel growth. So far, the tactic seems to be working. But it has amassed some goodwill as well as debt in the process.

The goodwill balance now represents a large portion of the firm’s total assets, suggesting the group may be overpaying during these acquisitions. And if these deals fail to live up to performance expectations, it could compromise long-term value for shareholders.

Its debt isn’t too substantial and has the advantage of fixed interest rates until 2027, at 4.9%. However, raising additional capital could prove more expensive, potentially hampering growth in the near term.

Having said that, the long-term potential of this penny stock remains intact, in my eyes. That’s why it’s currently near the top of my watchlist. And may end up becoming a member of my portfolio in my next round of capital injection, especially now that the stock price has fallen by so much.

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Leak detection

The name Water Intelligence nearly fooled me into thinking the business produced smart drinking water. In fact, it is a leak detection business with plenty of years in the industry and international operations across the US, Canada, Australia, Spain, and Belgium.

So what’s the current state of play with Water shares? As I write, they trade for 565p. At this time last year, the stock traded for 1,145p. This is a 50% drop over a 12-month period.

The investment case

Let’s look at some bull aspects of Water Intelligence first. To start with, I’m buoyed by its international presence, which should help boost performance and growth. Drilling down into its specific territories, the piping infrastructure in many of these countries, such as the US and Canada, are ageing. This means that the likelihood of leaks is higher, raising demand for effective and efficient leak detection and repair services. This could serve Water Intelligence’s growth well in the coming years.

Moving onto Water’s performance historically and recently, there is a lot to like for me personally. I do understand that past performance is not a guarantee of the future. However, looking back, I can see it has grown revenue and profit for the past four years in a row. Coming up to date, last month it released a half-year report for the period ended 30 June 2022 that made for good reading. Revenue and sales increased by 44% and 12.5% respectively compared to the same period last year. Net cash also boosted its balance sheet as that increased too. From a growth perspective, this will boost initiatives, including the fact it hired more technicians as it looks to grow the business moving forward.

So to the bull case. Water Intelligence is still a relatively small fish in a large pond. Despite its international presence, there are larger, more established, and arguably better-equipped rivals out there that could dominate the market. This could negatively affect the performance and growth aspirations of Water Intelligence.

Furthermore, Water Intelligence is at the mercy of current macroeconomic headwinds. These include soaring inflation, the rising cost of materials, and recent international currency exchange volatility. Rising costs could put pressure on profit margins. For any growth stock, profit plays a key part in growing the business. In addition to this, Water’s international presence opens it up to unfavourable international currency exchange rates that could damage its balance sheet.

A growth stock I will continue to monitor

In conclusion, I have decided to keep Water Intelligence on my watch list for now. Current volatility, as well as falling investor sentiment help me come to my conclusion. There are some positives to note, including growth to date, as well as recent performance. For that reason I will keep a close eye on the wider economy in relation to its performance to see if I should change my stance down the line.

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So it’s hardly surprising that many such stocks have been sold off in recent months.

While penny stocks are notorious for their elevated risk, this comes paired with the potential for enormous returns. And despite what some share price movements would suggest, not all firms in this stock market segment are destined to collapse.

In fact, I’ve found two penny stocks that are currently chugging along nicely. So much so that it potentially makes them the best investments for my portfolio in October and beyond.

One of the best penny stocks to buy now?

It’s been a rough year for the Water Intelligence (LSE:WATR) share price. As a reminder, the company is a provider of non-invasive leak detection and repair services to the residential and commercial sectors.

With investor sentiment dropping off a cliff, this penny stock has tumbled by 50% in the last year. Yet this volatility doesn’t appear to be backed by rational thinking. At least, that’s the impression I’m getting when looking at the latest results because revenue and profits continue to grow by 44% and 10% respectively.

Regardless of what the economy is doing, a burst pipe needs to be fixed, pronto. And demand is already ramping up as we approach the winter season. Furthermore, with profits and cash flow firmly in the black, its dependence on external financing seems minimal. Even more so when looking at the $21.9m (£19.4m) pile of cash on its balance sheet.

Obviously, this isn’t a risk-free investment. Its small size does create challenges when competing against its more established rivals. And its international presence opens the door to currently unfavourable foreign currency exchange rates. Yet, given its solid track record, even in the current market climate, these are risks I’m willing to take for my portfolio.

Pick #2

Another penny stock that’s lost a lot of momentum this year is Solid State (LSE:SOLI). This is an electronics component designer and manufacturer serving the commercial, industrial, and military sectors.

Over the last 12 months, the share price has actually climbed by around 9%. Yet since the start of 2022, it’s been on a downward trajectory, falling by over 20%. What happened?

Like many of its peers, the group has been struggling with supply chain disruptions, especially when it comes to semiconductors. With customer order fulfilment slowing, it seems investors are jumping ship on fears that clients will switch to a larger competitor that can deliver faster.

While this is a valid concern, it’s worth pointing out that the order book continues to grow, even from customers who know there will be a delay. In fact, in its 2022 fiscal year ending in March, the order book grew by 75.9%. And even with fulfilment delays, the revenue stream continues to grow 28.2%, with dividends following at 21.9% growth.

From what I can tell, the primary issues surrounding this business are all short-term hurdles. And with the long-term picture still intact, combined with a double-digit discount, I can’t help but feel a buying opportunity has emerged for my portfolio.

The post 2 of the best penny stocks to buy in October! appeared first on The Twelfth Magpie.

What are UK growth stocks?

Growth stocks are shares of companies whose sales and earnings have grown — and look likely to continue — beyond the sector average, the market average, or both.

There are many factors that could set a UK growth stock apart from the pack. It might have a cutting-edge product that puts its competitors in the shade and delivers exceptional revenue growth. A business might also grow profits at a breakneck pace thanks to a successful acquisition-based growth strategy.

Growth companies might also operate in an industry or sector that’s growing rapidly. Today, this could, for example, apply to a UK stock that builds electric vehicles, provides cloud-based software that helps people work remotely, or supplies healthcare services.

A stock could also have strong growth prospects based on where it operates. For instance, a bank that does business in an emerging market like Asia could generate stronger earnings growth than one in Europe. Faster economic and population growth in Asia, along with low financial product penetration, means that company sales could grow far more rapidly here.

Top growth stocks in the UK

Let’s look at three UK stock market companies whose earnings have been rising strongly in recent years.

Games Workshop Group

Games Workshop Group is a giant in the realm of tabletop gaming. Thanks to popular platforms like Warhammer 40,000 and Warhammer Age of Sigmar, it has built a large and loyal fanbase in its 40-plus years of existence. 

The quality of its miniatures and the depth of the folklore it’s created around its gaming platforms give it a massive edge against its competitors. The business has also been developing its position in overseas markets and has spent heavily on its e-commerce operation, too.

Games Workshop is currently expanding ways to boost the royalties it receives from licensing its intellectual property to mass media, most notably through its new partnership with Amazon.

The best-selling Total War: Warhammer III video game launched in early 2022 and illustrated massive potential. And the subsequent release of Space Marine 2 in 2024 once again demonstrated the positive impact licensing provides.

As more investments are made into adapting its stories across mass media, the firm could be set to considerably boost the sales of its miniatures, games, and books in the long run.

Water Intelligence

Water intelligence helps solve the problem of water leaks. Through its sophisticated equipment, it detects, finds, and fixes leaks for residential, commercial, and municipal customers.

Preserving water is becoming increasingly important as fears over climate change and water scarcity balloon. So, there is an increasing drive towards finding and repairing leaks to help preserve the precious commodity.

Water Intelligence operates in the US, UK, Canada, and Australia. Creaking infrastructure in these places is resulting in increased incidences of water loss and thus growing demand for the company’s services. Climate change is increasing the rate of such events as well by putting even more strain on pipes and other critical infrastructure.

Softcat

Softcat provides a broad spectrum of IT services to businesses. Profits here have risen strongly as the AI revolution has taken off. And its market-leading range of solutions has led to partnerships with some of the world’s largest tech companies. Its partners include Microsoft, Lenovo, Cisco, and Apple.

This UK growth share offers investors a chance to capitalise on several fast-growing tech trends. For instance, Softcat designs cloud-based infrastructure for businesses and helps them improve their networks. Demand for such services is growing strongly as flexible working practices take off.

The company also provides cybersecurity solutions that can protect users from the growing threat of electronic attacks. Demand for a chunk of its services tapered off in 2024 due to UK political uncertainty. However, cybersecurity and networking have both remained top performers as customers can’t avoid implementing such critical infrastructure. And now that AI spending is on the rise, Softcat has been riding new growth tailwinds.

Are UK growth stocks right for you?

Essentially, a growth-based investment strategy is built around making profits from share price growth. This is quite different from income investing, where individuals try to create wealth by receiving dividend payments.

Ideally, one should try to invest in UK growth stocks as early in a company’s life as possible. Strong earnings growth feeds into electrifying share price growth, so the earlier you can get in, the more you could potentially stand to gain.

This doesn’t mean that the window of opportunity is narrow, however. Some UK growth shares have been generating robust profit increases for many years and would appear in good shape to continue doing so.

Take rental equipment specialist Ashtead Group (LSE:AHT). Prior to the pandemic, the FTSE 100 share grew annual underlying earnings per share at an average of 30% between its 2015 and 2019 financial years. This was thanks to an aggressive acquisition strategy designed to boost market share.

City analysts expect Ashtead’s earnings to keep growing solidly, too, as infrastructure spending in its core US market picks up and the firm remains committed to sales-boosting acquisitions. Profits quickly recovered following the pandemic. However, in more recent years, pressure on construction projects from higher interest rates and strikes in the film industry have once again hampered short-term growth.

Yet, despite these challenges, the long-term outlook appears robust, with average revenue growth over the last five years still sitting in double-digit territory at 17%.

Ashtead shows how a successful UK growth stock has the potential to supercharge one’s returns over the long term. This business provided the biggest return on investment of any Footsie share during the 2010s, rising at a compound annual growth rate (CAGR) of 43% (according to data company Refinitiv). And while Ashtead is being relisted in the US and rebranded under Sunbelt Rentals, there are plenty of other UK growth stocks that have delivered similar long-term returns.

But investors need to remember that many stocks with bright growth prospects trade on high price-to-earnings (P/E) ratios. And this can be extremely risky to investors.

It’s natural that companies with exceptional potential should command a premium. The problem is that these expensive shares can be sold off heavily when their growth potential begins to wane.

Tech stocks, for example, tend to attract sky-high valuations. And they were some of the worst-performing stock market constituents in the 2022 stock market correction triggered by struggling global economies.

Expensive US tech stocks Netflix, Meta, and Amazon have been among the most famous casualties of the 2022 stock market correction due to signs of slowing growth. In the UK, technology-focused growth stocks like IT services provider dotDigital Group and video game developer Everplay Group have also fallen sharply as earnings have come under the spotlight. And in 2026, following the AI-disruption volatility, growth stocks, particularly in the tech sector, have once again been hit hard.

Buying UK growth stocks doesn’t always yield instant results. Some firms take time to deliver strong growth (or any at all) at the beginning as they focus on increasing revenues at the expense of profitability. Here, you are buying potential rather than tangible rewards. More established growth shares, however, can offer the best of both worlds.

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Profits poised to flow

The growing importance of responsible water usage makes Water Intelligence (LSE: WATR) a great UK share for the next decade, I feel. Why? The company is involved in the detection, finding and fixing water leaks for residential, commercial and municipal customers. And boy is business booming. Revenues here rose 38% in the three months to March. I expect demand for its services to keep booming as the climate crisis worsens too.

The rise of responsible investing is turbocharging demand for so-called ethical investments like Water Intelligence shares. According to Close Brothers Asset Management, a hefty 65% of 2,000 investors it surveyed said that they “prioritise responsible investing over a desire to ‘simply maximise’ their financial return”. Rising concerns over the environment bodes well for this UK share, then, a holder of the London Stock Exchange’s ‘Green Economy Mark’.

It’s worth remembering, though, that Water Intelligence carries a hefty valuation at current prices. City analysts expect the firm’s earnings to rise 13% in 2021. And this leaves the company trading on a forward price-to-earnings (P/E) ratio of 59 times. Such a lofty reading could prompt a sharp share price reversal if the company experiences any distress.

A look at Beyond Meat

As I said earlier, I think Beyond Meat is a great ‘green’ share to buy today. A rising focus on animal welfare is one reason why vegan and vegetarian diets are popular. Concerns over the impact of livestock farming on greenhouse gas levels are also driving people away from animal-based foods.

These issues explain why demand for Beyond Meat’s non-meat products is flying. Latest financials showed net revenues at the company soared 11.4% in the three months to March. This may have missed expectations but that sort of growth is still impressive given that its foodservice operations continued to suffer from Covid-19-related pressures. Beyond Meat is spending heavily so that it can play a big part in the meat-free revolution. As it said last week, it has remained “highly focused on investing in and building out production infrastructure in the US, the EU, and China” in recent months.

That’s not to say that Beyond Meat (like any share) doesn’t have its problems. The company has a giant $1.1bn net debt mountain, which could constrain its growth plans. This is particularly high in relation to the foodie’s sales today (net revenues were a shade over $108m in the first quarter). Still, I think this US share’s market-leading position in a fast-growing marketplace makes it an attractive buy right now.

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There are thousands of stocks, and it might not be obvious which ones might be good green picks. So I have set out to save you some work. I present here three UK AIM-listed stocks that a sustainable investor might want to take a look at.

Don’t waste water

Wasting water is not environmentally friendly. Water Intelligence (LSE: WATR) helps its customers detect, find, and fix water leaks. At the moment the core business is American Leak Detection (ALD), which serves residential and commercial customers in the US, Canada, and Australia. A UK-based subsidiary, Water Intelligence International (WII), handles local government and utility customers.

Water Intelligence uses proprietary methods and innovative technology to detect leaks non-invasively. It also provides monitoring services for water companies to detect leaks in their customer’s homes. In addition, there is smart meter and sensor reading technology on offer for businesses to improve their water-use performance and costs.

As we have established, sustainable investing rewards green AND financially viable companies. Water Intelligence’s revenues have swelled from $8.84m in 2015 to $32.36m in 2019. Water Intelligence has also increased its net income, which has grown from $0.58m to $1.7m over the same period. Future growth opportunities include leveraging ALD’s regional reputation to sell WII’s services and vice versa. Then there are the calls for business to provide enhanced disclosure of things like water use which could make them increasingly turn to Water Intelligence for help.

Smart sustainable investing

Installing and managing smart electricity meters on behalf of UK suppliers and collecting a service charge is where Smart Metering Systems makes most of its money. Smart meters, by providing customers with real-time data, should help reduce energy consumption. 

SMS has increased its revenues in each of the last five reported years and turned a profit in each of them. In March, SMS announced a partnership with a sustainable infrastructure fund whereby it fronts the capital for carbon reduction (CaRe) assets (like electric vehicle charging points and batteries for storage) and SMS manages them. The move into the energy management business looks promising given the UK’s net-zero by 2050 target. CaRe assets alongside a green electricity grid (and smart meters) will be key to getting there.

Building a sustainable future

Accsys Technologies takes sustainably-grown wood and through a proprietary process boosts the natural acetyl content of the wood. This creates wood that is more stable and durable and at least as good as alternatives that deplete resources or are highly energy-intensive to produce. In 2016 Accsys reported revenues of €52.77m. In 2020 they were €90.91m. The company was making losses from 2016 through 2019. but in 2020 has swung into a profit of €2.24m. Owing to strong demand for its products the company is opening plants around the world. The European manufacturing base is getting a new reactor. I think Accsys could make a welcome addition to a sustainable investing portfolio.

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