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One penny stock that could grow and looks like a good buy and hold is SRT Marine Systems (LSE: SRT). Here’s why investors should consider buying some stocks.
<h2 class="wp-block-heading" id="h-marine-technology“>Marine technology
SRT is a technology company that creates and sells advanced maritime domain awareness technology, products, systems and services. It specializes in automated identification systems (AIS) and already has a global presence, with operations in Europe, the Middle East, North America and the United Kingdom.
It’s worth remembering that a penny stock is one that trades for less than £1. As I write, SRT shares are trading at 42p. This time last year the shares were trading at 31p, up 35% over a 12-month period.
A penny stock with risks but potential rewards ahead
In my opinion, the increasing adoption of AIS systems could boost SRT. To simplify it, in the same way that road and air traffic systems work, to ensure traffic flow, monitor risks and assist with navigation and heading, AIS does this underwater. With SRT’s geographic footprint and increasing demand for services, it could see an increase in its profits and performance. This is especially the case when you think about how vast the seas are, with many ports, borders and coastguard authorities to consider.
SRT’s most recent annual report, for the year ending March 31, 2023, was impressive. It recorded an increase in group revenue of more than 270% compared to the same period last year. Additionally, each of its segments experienced growth. Finally, an order book of around £160 million could help drive growth in the coming years.
From a risk point of view, SRT has recorded a lot of losses in recent years. This is not unusual for penny stocks. The losses have been due to many capital expenditures. I understand this is often necessary in the tech sector, especially with newer technology. However, at a certain point, it is important for the company to start generating profits to achieve stability, growth aspirations and generate returns for shareholders.
Finally, SRT may discover that technology can change and adapt and that large investments may be necessary to keep up with the times. For example, AIS adoption is increasing rapidly, but there are currently only a minuscule number of ships that have adopted it. It could be years before most ships undertake this adoption, and that is if newer, better technology has not arrived.
my verdict
Overall, I think there are a lot of things to like about SRT Marine Systems. As a penny stock, I understand that it is prone to volatility and there could be some turbulence ahead.
However, SRT looks like a great growth stock option. Currently trading for less than 50p, the shares don’t look like much of a risk considering a small number of shares. There’s a good chance that, in the long term, the business will soar as AIS adoption continues to increase.
If I had extra money to invest now, I would buy a small amount of SRT stock for my holdings.