1 penny stock under 25p that I’d buy today

It’s been a tough two years Creo Medical Group (LSE:CREO) shareholders. The company now trades as a penny stock with a share price below 25p and a market capitalization of just under £87m. But some unlucky investors will be buying shares when they are trading above £2 not long ago.

Creo Medical is a healthcare device developer with a focus on minimally invasive surgical endoscopy. Despite the new problem, I’m in AIM– listed firm appears poised for a big turnaround after successful fundraising.

Here are my thoughts on this broken stock.

Positioned for a comeback?

After two share offerings, Creo Medical announced it had raised more than £33m this month, surpassing its original target by more than £3m. This provides much-needed momentum to the business and is an important step in the company’s journey to positive cash flow and – hopefully – profitability.

After all, one of the main reasons for the decline in Creo Medical’s stock price is concern about the company’s low cash reserves. The recent boost to the company’s cash flow should help ease investor concerns.

Creo Medical’s long-term strategy to develop its intellectual property portfolio is starting to pay off. In its latest trading update, the company confirmed that it is generating revenue from licensing Campative electrosurgical medical device for the first time.

Total sales for our core product offering increased eightfold in FY22 versus FY21, from £0.3m to £2.3m. Going forward, the group believes it is on track for an EBITDA break-even during FY25.

product innovation

The company is innovative and has launched an upgraded version of its flagship Speedboat Inject product in November 2022. It is a multimodal instrument designed for flexible endoscopy. The product offers the ability to differentiate, resect, coagulate, and inject in a single device.

Additionally, a multi-site clinical study was conducted to evaluate the company’s safety and feasibility Microblate Flexible technology for the treatment of lung lesions.

This bronchoscopic microwave ablation device shows considerable promise. Creo Medical’s very target market. After all, lung cancer is one of the most common and serious types of cancer. The technology has the potential to offer a less invasive way to treat lung tumors than chemotherapy or radiation therapy.

Bottom line, this stock has a lot of growth potential. The latest cash injection boosts the company’s capacity to continue developing breakthrough technologies.

Risk

That said, Creo is a much safer investment than an established healthcare company with a long history of profitability. I am optimistic about its growth prospects, but speculation about future benefits does not equate to concrete results.

In short, the possibility of further downside should not be ignored. Stock prices are no stranger to volatility and disappointing news about financial results or disappointing findings from clinical trials can send stocks into another tailspin.

Should I buy it?

Creo has a unique offering that can generate significant sales in large markets. What’s more, I think the stock price is looking like it is today after a big drop.

However, there are significant risks. Therefore, if I had the money, I would enter a small position now to maximize the upside potential while keeping an eye out for more challenges ahead.