Image source: Getty Images
In the UK, penny stocks generally refer to shares that trade for less than £1, usually open CHECKwith low markets and limited funds. These companies can grow much faster than that FTSE 100 blue chips because it’s easier to go from, say, a £95m valuation to £950m than a £50bn giant to a £500bn titan.
That ability to turn a fraction into a life-changing profit is the core appeal. Going from 7p to 70p is ‘only’ a 63p price increase, but it’s a 10x return for the original investor. This type of 10-fold growth is often called a 10-bagger.
Of course, micro-caps are also rarely unprofitable and do not have a proven track record of success. That 7p could easily fall to 1p if the company’s business strategy doesn’t go as planned. So when I evaluate penny stocks, I tend to focus more on the company’s growth than the fundamentals.
A courtship with promise
Pantheon Resources (LSE: PANR) is a good example of this risk/reward opportunity. The AIM-listed energy group specializes in oil and gas exploration and exploration on Alaska’s North Slope. It operates approximately 258,000 acres along existing roads and pipeline infrastructure. Trading at 7p, it has a market capitalization of around £95m, just inside penny stock territory.
Financially, the story is mixed but improving. Even though the income is increasing by 70% year on year, the business is still losing money. In its full-year 2025 results, pre-tax losses fell from $13.4m to just $5m. This has been helped in part by non-cash adjustments and tight cost controls. On the balance sheet, total debt is £7.13m compared to £228.7m of cash, suggesting a conservative capital structure for such small assets.
The stock also trades at a price-to-book (P/B) ratio of about 0.35, meaning its market value is roughly one-third of its total stated assets. This is a classic under-appreciated feature often seen in up and coming small caps.
So will it be a 10-bagger?
There is one strong reason why it can go up. It recently raised $10m to fund further work on its Ahpun and Kodiak projects in Alaska. Management plans to use the cash to continue evaluating the Dubhe‑1 test well and possibly carry out a new appraisal at the start of the 2026/27 winter season. The moves are aimed at pushing its untapped resources closer to commercial production – potentially hundreds of millions of barrels, according to independent experts.
Yet Pantheon also shows why penny stocks are inherently risky. The company has no sustainable profits and is dependent on the capital markets to finance drilling and evaluation projects. Each increase dilutes existing shareholders, and if future sources disappoint, the share price may drop significantly, even if the number of shares increases. History shows huge price swings as a result, with as many as 80% declines. Investors should consider whether they can hedge this volatility.
Final thoughts
Pantheon’s a textbook-stock case study: a small, flexible company with real assets and great growth potential, balanced by financing dependence and execution risk.
Within a diversified portfolio, it can provide exciting returns – but should never be mistaken for a safe, core holding. Overall, I think it’s worth considering as a small share.
Energy and mining show a lot of promise this year, so also check out big names like Rio Tinto, Glencore again Fresnillo.
