Home Share Market 1 penny stock I'd buy for 2023 and hold for a decade

1 penny stock I’d buy for 2023 and hold for a decade


Bournemouth at night with a fireworks display from the pier

Image source: Getty Images

The returns from investing in the right penny stock can be huge. Yet such stocks can also be very risky. After all, there’s normally a good reason the market values them so lowly. These companies usually have poor fundamentals and slim prospects for near-term profitability.

Still, I do reserve a small portion of my portfolio for exciting moonshots. One penny stock I own is Creo Medical Group (LSE: CREO).

Here are three reasons why I’m bullish on the shares long term.

Innovation

Creo Medical is a British company that develops and commercialises a suite of electrosurgical medical devices. These are used in the field of endoscopic surgery, which involves surgeons using a scope and a flexible tube with a camera and light at the tip.

The firm’s leading product is called Speedboat, which is a minimally invasive surgical device attached to an endoscope. This is used to cut out or vaporise cancerous and pre-cancerous lesions in the digestive tract.

Endoscopes are traditionally only used to diagnose diseases, not treat them. But Creo’s products can dissect, resect, coagulate and inject, all in a single device. They’re powered by advanced types of energy. This Croma Advanced Energy platform — as it’s known — is patented and is already being licensed out to other surgical companies.

The firm also makes money from selling the consumables necessary to continue using its core devices. This razor-and-blades business model is attractive because to me it’s underpinned by predictable, recurring revenue from consumables.

During the first half of 2022, the volume of procedures used with Speedboat internationally doubled over the equivalent period last year. Revenue for 2023 is estimated to grow 20% year on year, to around £33m.

Massive partnership

Earlier in 2022, the company signed a multi-year collaboration with robotics giant Intuitive Surgical. Under the agreement, its products are to be made compatible with Intuitive Surgical’s state-of-the-art robotics technology. A number of milestone payments to Creo Medical have been agreed, as well as royalties for products sold in the future.

This was a massive endorsement for the company’s technology. Then last month, a second robotics licensing deal was signed with Cambridge-based CMR Surgical. Both these deals bode well for future earnings.

Sad statistics

Unfortunately, it’s estimated there will be a 40% rise in new cases of bowel cancer in the next two decades. Existing surgical treatments involve long recovery times, which puts pressure on health systems such as the NHS.

Creo’s advanced energy platform and innovative surgical tools allow for much quicker recovery, reduced hospital stays, and lower recurrence rates. Its technology is a win-win situation for patients and health care providers.

With a market cap of only £72m, the stock might also be a win for patient shareholders too.

Not yet profitable

Creo Medical has only commercialised its products in the last couple of years. And its progress was slowed down during the pandemic. So it’s not a profitable business yet, which probably goes some way to explaining the stock’s 73% decline in 2022.

There’s a strong likelihood that the firm will need to raise more cash soon to fund its next stage of growth. That could send this growth stock lower, depending on the details of the capital raise. Even so, I’m still adding to my position in 2023, possibly before.





Source link

RELATED ARTICLES

Take advantage of these 3 newfangled things your car can do for you

Recently, I borrowed a friend’s 25-year-old BMW for a long trip. Every time I put it in reverse, I missed not having a...

Up 14% in November, can Rolls-Royce shares hit £1 in December?

As a shareholder in Rolls-Royce (LSE: RR), 2022 so far has not been a banner year. Rolls-Royce shares have fallen 29% since...

Asia-Pacific markets largely higher despite disappointing China’s factory activity data

Japan -0.21%. Japan data - October preliminary industrial production -2.6% m/m (expected -1.5%). China -0.16%. China official Manufacturing PMI 48.0 (expected 49.0) &...

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular

Best Bitcoin-Only Exchanges

IntroductionBitcoin-only exchanges are platforms where people can buy or sell bitcoin using fiat currencies or stablecoins. You can refer to our guide on...

Cashify to open 250 stores by March 2023 in India 

The refurbished mobile retail chain said it aims to reach 120% year-on-year growth. | Photo Credit: Special Arrangement Cashify, on Wednesday, announced plans to launch...

Boston, South Carolina rally for win over UCLA

COLUMBIA, S.C. -- Aliyah Boston looked as healthy as ever, and that's rarely a good thing for No. 1 South Carolina's opponents.Boston had...

Take advantage of these 3 newfangled things your car can do for you

Recently, I borrowed a friend’s 25-year-old BMW for a long trip. Every time I put it in reverse, I missed not having a...

Recent Comments