With a stock market valuation of less than £100m and a share price below £1, Angle (LSE:AGL) meets the definition of a penny stock.
The last time I wrote about the company I said that taking a position would be based on “a hunch” rather than a proper understanding of what the company does and its prospects.
It describes itself as a “world-leading liquid biopsy company with innovating circulating tumour cell solutions”. Its technical reports make for heavy reading and, to be honest, I don’t really understand them, which is why I said I didn’t want to buy any of its stock.
That was on 19 January. Since then, the share price has risen 12%. However, despite this good run, they are 70% lower than they were in May 2019.
Two-faced
But is my approach justified, or am I being a hypocrite?
For example, I own shares in Lloyds Bank. And yet I can’t say with my hand on my heart that I fully understand how financial institutions work and the industry in which they operate.
Yes, I know what a bank does and how it makes money. But when it comes to the intricacies of the sector, I haven’t a clue. I don’t know what CRD IV models are. Nor do I understand countercyclical capital buffers. As for Pillar 2A requirements …
So my reasons for not investing in Angle are probably misplaced.
I’m aware that the company is trialling a cancer diagnostics tool. In January, it announced that initial results show that in 70% of patients, its technology found cancer mutations in cells that could not be identified from the DNA in the same blood.
And the more successful it is at detecting cancer — and the more lives it saves — the more money it will make.
Simple. And worthy.
The key question
But should I invest?
Well, in April, the company signed an agreement with AstraZeneca to develop a novel approach to tumour detection. It’s worth a relatively modest £150k. But the company must be good at what it does if the UK’s most valuable listed company wants to partner with it.
This was followed up, in May, by another agreement with AstraZeneca worth £550k. The two parties are looking at ways of identifying prostate cancer at an earlier stage.
If successful, these projects could lead to further collaborations or, perhaps, a takeover.
There’s little point dwelling on the company’s financial history. At 30 June 2023, it had accumulated losses of £113m. Revenue for 2023 is expected to be £2.2m. This company is all about the future.
Encouragingly, it claims to have enough cash to see it through until, at least, early 2025. Although with a market cap of £55m, it doesn’t have the financial might to withstand a shock to its business.
And there are no guarantees when it comes to medical research. It’s hugely expensive and failure is common. However, if successful, the rewards are large.
But despite these risks, I’m going to put the company on my watchlist for when I next invest. It looks like a company that’s going places.
The post Is it time to do a 360 degree u-turn and buy this penny stock? appeared first on The Motley Fool UK.
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James Beard has positions in Lloyds Banking Group Plc. The Motley Fool UK has recommended AstraZeneca Plc and Lloyds Banking Group 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.
