£1,000 buys 8,403 shares of this red-hot penny stock that’s smashing the FTSE 100

Kromek (LSE:KMK) is a penny stock that few people have heard about. However, over the past six months, this one has jumped almost 150% to just under 12p per share.

That’s obviously a significantly higher return than the FTSE 100 or any other index.

Zooming further out though, the picture’s not as rosy as the Kromek share price is 60% lower than a decade ago. The small-cap company doesn’t pay dividends, so this longer-term underperformance is disappointing

Nevertheless, the under-the-radar stock clearly has strong momentum right now. So, might it be worth a closer look?

The firm at a glance

Kromek makes high-performance radiation and bio-detection technology products for two global markets: advanced imaging and chemical, biological, radiological, and nuclear (CBRN) detection.

In advanced imaging, the firm is a key supplier of CZT-based detector modules. These signiï¬cantly improved the quality of medical imaging, with lower patient radiation doses. CZT (cadmium zinc telluride) is a crystalline semiconductor material used to detect radiation.

Its CBRN business consists of handheld devices used for gamma-ray detection and isotope analysis in complex nuclear environments. These are widely deployed in nuclear power stations and increasingly in homeland defence.

Why are investors bullish?

Turning to the financials, it’s easy to see why the share price has done well. Kromek has real business momentum, with revenue rocketing 305% to Â£15m in the six months to 31 October.

This figure was boosted significantly by a major licencing deal signed with Siemens Healthineers in January 2025. The contract was worth $37.5m (Â£29.5m) over four years, pushing the group into profitability for the first time.

Even without this deal though, advanced imaging revenue increased 41% to Â£2.5m, while CBRN detection revenue more than doubled to Â£4.3m. Gross margin improved dramatically to 71.7% from 56.9%, helping the firm swing from a Â£5.7m loss to a pre-tax profit of Â£3.1m.

CEO Dr Arnab Basu said: “With robust customer engagement and a good order book, we expect the momentum achieved in H1 to continue. As a result, we remain on track to deliver a full-year performance in line with market expectations.”

For FY26 (ending April), the market expects Â£27.1m in revenue, with a net profit of Â£2.5m. Revenue was Â£13.1m in FY20.

Medium-term targets

Now, it goes without saying that investing in a small Â£78m-cap posting a Â£2.5m profit adds significant risk. With such a slender margin, it wouldn’t take much to tip Kromek back into the red.

For example, the business could be hit with global supply chain constraints that push costs up or delay production. Also, large contracts like the Siemens Healthineers one can result in lumpiness in the financial results.

However, taking a longer-term view, I’m quite bullish here. Kromek should win more contracts as nuclear comes back into fashion. After all, growth of nuclear power necessitates more monitoring for public safety.

Crucially, the Siemens Healthineers deal was on a non-exclusive basis. So Kromek is free to supply its IP to other manufacturers in advanced imaging markets as it aims for over Â£60m in revenue and a 30% EBITDA margin in the medium term.

Finally, Kromek’s price-to-sales ratio of 2 isn’t particularly high. Putting all this together then, I think this penny stock is worth further research by adventurous investors. A grand currently buys 8,403 shares.

The post Â£1,000 buys 8,403 shares of this red-hot penny stock that’s smashing the FTSE 100 appeared first on The Motley Fool UK.

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Ben McPoland has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.