With UK share prices falling, I am considering two options in penny stocks

Here are two interesting penny stocks that are selling at their lowest prices in nearly five years. If companies achieve the growth they’re aiming for, I think current cheap valuations could deliver decent returns.

However, there are also risks to take into account. I’m weighing their chances.

Oxford metrics

Oxford metrics (LSE: OMG) is an £83.6m small company that makes smart sensing technology and motion capture systems. Its main product, Viconis used in sports, education, film production, virtual reality and biomedical research. Despite its small market capitalization, the company serves 10,000 customers in 70 countries around the world, including customers Boeing, FordHarvard University and EA Sports.

The price is now near a five-year low of 63 cents, having largely fluctuated between 80 cents and 120 cents over the past five years. But its most successful period was between 2010 and 2020, when it rose 543%, from 35p to 125p.

Can it relive the good old days?

Despite sales increasing 10.5%, the price has fallen 43% since then results first half of 2024 in June. Shareholders were disappointed as earnings per share (EPS) fell 10.5% and net cash flow fell 13.9%. Supply chain issues were cited as a key challenge and continue to pose risks to the shares. The recent acquisition of Industrial Vision Systems is another risk, as profits could suffer if the company does not perform as expected.

Still, the board says it is making clear progress on its five-year plan.

Immediately price-earnings ratio (P/E) ratio of 17.3, is well below the industry average and trades 92.6% below fair value based on forward cash flow estimates. That suggests the current price could be an excellent entry point, but only if profits grow from here.

If the price continues to recover in 2025, I think it could be worth considering. Certainly, it’s one to watch.

Helium One Global

Unlike Oxford Metrics, Helium One Global (LSE: HE1) was extensively covered in the news this year after the price rose 1,400% in February. This spike came after it discovered significant helium reserves at the Itumbula West-1 well in Tanzania.

But since then the price has fallen from 2.85p to less than 1p last month.

Then on November 4, it announced the completion of a Farm-In with Blue Star Helium’s Galactica-Pegasus Project in Colorado, USA. It acquired a 50% stake in the project in exchange for drilling six wells at the site. Since then, shares have risen 24%.

Helium is used in the production of semiconductor chips, an industry that has exploded in the US this year. Other applications include arc welding, nuclear refrigeration, medical imaging, cryogenics and aerospace engineering. Notable buyers include NASA, Intel And Samsung.

The global helium market is expected to grow from $3.76 million in 2023 to $5.4 million in 2030, at a compound annual growth rate (CAGR) of 5.2%. So it’s safe to say the demand exists.

Still, Helium One faces tough competition, especially from abroad Renergen in South Africa, Zephyr energy in Great Britain, and Noble Helium in Tanzania. In addition, because helium is not traded on open markets, it is difficult to accurately estimate its price. This lack of transparency, combined with geopolitical risks and high transportation costs, increases the risk to the investment.

But given its recent growth and U.S. partnership, Helium One is a penny stock worth considering.