UK Penny Stocks To Watch In June 2025: Resilience in Undervalued Growth Plays

As global markets navigate volatility driven by geopolitical tensions and shifting interest rates, investors are turning to undervalued sectors for opportunities. Among these, UK penny stocks in fintech, digital services, and infrastructure stand out for their potential to deliver robust returns. Three firms—Fonix Plc (LON: FNX), Auction Technology Group (LON: ATG), and Alumasc Group (LON: ALU)—are primed to capitalize on structural trends, offering a mix of strong fundamentals, strategic growth initiatives, and resilient financial health. Below, we analyze their merits and risks, with actionable insights for investors.

1. Auction Technology Group: Fintech Meets Digital Transformation

ATG operates at the intersection of fintech and digital commerce, enabling auctioneers to leverage technology for higher bidder engagement and pricing. Its H1 2025 revenue rose 3.4% year-over-year, driven by its ATG Excel tool, which increased asset prices by 10-20%, and value-added services (shipping, marketing) growing 14%. While auction service revenue dipped 9% due to strategic customer consolidation, the shift toward higher-margin white-label partners signals long-term profitability.

Key Strengths:
- Margin Stability: Despite a 2% gross margin decline, high-margin digital marketing (nearly 50% of value-added revenue) offset pressures.
- Strategic Initiatives: New executives (including a former eBay CFO) are prioritizing AI-driven lot descriptions and enhanced search engines, aiming to boost conversion rates.
- Financial Flexibility: A share buyback program and refinanced debt reduce leverage, supporting future growth.

Despite recent volatility (June 2025 prices fluctuated between 448p and 485p), ATG's stock has outperformed peers, rising 12% year-to-date. Investors should watch for stabilization in conversion rates and progress in ATG Ship adoption, which could unlock $200M+ in annual shipping revenue.

2. Fonix Plc: Telecom Infrastructure Agility in Emerging Markets

Fonix, a telecom infrastructure provider, has carved a niche in international expansion, notably through its 2024 foray into Portugal. Its June 2025 stock price hovered around 220–230p, with a special dividend signaling confidence in cash flow.

Growth Catalysts:
- Portugal Play: Partnering with local operators to deploy fiber-to-the-home networks, Fonix leverages its expertise in rural connectivity.
- Diversification: Expanding into IoT and smart infrastructure solutions positions it for post-pandemic digital demand.

While its price remains volatile, Fonix's agility in adapting to regulatory changes and its 2.2% dividend yield offer a defensive angle. Risks include execution delays in new markets, but its lean operations and cash-rich balance sheet mitigate downside.

3. Alumasc Group: Infrastructure Resilience in a Green Economy

Alumasc's focus on sustainable construction and export-driven growth has propelled it to the forefront of the green building movement. With 20% H1 2024 revenue growth (to £57.4M) and a 3.50p interim dividend, the stock trades at 380p as of June 2025, up 20% year-to-date.

Growth Drivers:
- Export Dominance: Exports surged 43%, fueled by projects like Singapore's Changi Airport and Saudi Arabia's Neom Port.
- Margin Expansion: Synergies from its ARP acquisition and operational cost savings (e.g., £800k/year from manufacturing relocations) target a 15-20% operating margin by late 2025.

Despite UK construction market headwinds, Alumasc's 2.83% dividend yield and export focus provide a hedge against domestic slowdowns. Risks include supply chain disruptions and currency fluctuations, but its £136M market cap and strong cash flow suggest it's undervalued relative to peers.

Risk Mitigation Strategies for Penny Stock Investors

1. Liquidity Monitoring: Use tools like volume analysis (e.g., ATG's 1.27M shares traded on May 15) to avoid illiquid picks.
2. Dollar-Cost Averaging: Enter positions gradually, especially for stocks like Fonix with high volatility.
3. Stop-Loss Discipline: Set 15-20% downside limits given penny stocks' sensitivity to macro shifts.
4. Sector Diversification: Pair these picks with defensive sectors (e.g., utilities) to balance risk.

Conclusion: A Balanced Play for Growth Seekers

ATG, Fonix, and Alumasc offer compelling entry points in June -25, combining high-growth sectors, improving fundamentals, and dividend support. While risks like margin pressures (ATG) and regulatory hurdles (Fonix) exist, their strategic moats and cash flow resilience justify consideration. Investors should allocate 5-10% of a high-risk portfolio to these names, prioritizing long-term holding periods (12–24 months) to capture their upside potential.

For those willing to navigate volatility, these UK penny stocks could prove to be cornerstone investments in the coming years.

Disclaimer: Always conduct due diligence and consult a financial advisor before making investment decisions.