Is this lesser-known penny stock the UK’s next 10-bagger?

In the UK, penny stocks typically means shares trading under Â£1, often on AIM, with low market-caps and limited liquidity. These companies can grow much faster than FTSE 100 blueâchips because it’s easier to go from, say, a Â£95m valuation to Â£950m than it is for a Â£50bn giant to become a Â£500bn titan.

That potential to turn a small stake into a lifeâchanging gain is the core appeal. A move from 7p to 70p is âonlyâ a 63p share price rise, but itâs a 10x return for the early investor. This type of 10-fold growth is often referred to as a 10-bagger.

Of course, micro-caps are also usually unprofitable and lack a proven track record of success. That 7p could just as easily fall to 1p if the company’s business strategy doesn’t go as planned. So when assessing penny stocks, I tend to focus more on the company’s progress rather than core fundamentals.

A penny stock with promise

Pantheon Resources (LSE: PANR) is a good example of this risk/reward potential. The AIMâlisted energy group focuses on oil and gas exploration and appraisal on Alaskaâs North Slope. It operates roughly 258,000 acres near existing roads and pipeline infrastructure. Trading at 7p, it has a market-cap of about Â£95m, just within pennyâstock territory.

Financially, the story’s mixed but improving. Even though earnings are up 70% year on year, the business remains lossâmaking. In its 2025 fullâyear results, preâtax losses narrowed from $13.4m to just $5m. This was helped in part by nonâcash adjustments and tighter cost control. On the balance sheet, net debt is Â£7.13m against Â£228.7m of equity, suggesting a conservative capital structure for such a small outfit.

The shares also trade on a priceâtoâbook (P/B) ratio of roughly 0.35, implying its market values are about oneâthird of its stated net assets. This is a classic undervalued trait often seen in up-and-coming small-caps.

So will it be a 10-bagger?

There’s one strong reason it could surge. It recently raised $10m to fund further work on its Ahpun and Kodiak projects in Alaska. Management plans to use the cash to continue testing the Dubheâ1 appraisal well and potentially drill a new appraisal well as early as the 2026/27 winter season. These steps are aimed at pushing its untapped resources closer to commercial production — potentially hundreds of millions of barrels, according to independent experts.

Yet Pantheon also demonstrates why penny stocks are inherently risky. The company has no sustained profits and depends on capital markets to fund drilling and appraisal programmes. Each raise dilutes existing shareholders, and if future wells disappoint, the share price could fall further, even as the share count rises. History shows huge price swings as a result, with declines as big as 80%. Investors need to consider if they can stomach this volatility.

Final thoughts

Pantheon’s a textbook pennyâstock case study: a small, volatile company with genuine assets and huge growth potential, balanced by financing dependence and execution risk.

Within a diversified portfolio, it could offer exciting returns — but should never be mistaken for a safe, core holding. Overall, I think it’s one worth considering as a small allocation.

Energy and mining show lots of promise this year, so also check out big names such as Rio Tinto, Glencore and Fresnillo.

The post Is this lesser-known penny stock the UK’s next 10-bagger? appeared first on The Motley Fool UK.

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Mark Hartley has no position in any of the shares mentioned. The Motley Fool UK has recommended Fresnillo Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.