One penny inventory I as soon as thought might soar is BATM Superior Communications (LSE: BVC). It now appears a far cry from the dizzying heights of some years in the past.

So what’s occurred? Ought to I purchase or keep away from the shares? Let’s take a more in-depth look.

Tech inventory

BATM is an Israeli-based expertise enterprise specialising in cyber safety, networking, and diagnostics merchandise for its clients. These embody governments, the healthcare trade, and the army.

The shares are down 28% over a 12-month interval from 28p at the moment final yr, to present ranges of 20p. Going again even additional, they’ve fallen from highs of 140p in July 2020, to present ranges, which is an 85% drop.

The downfall and dangers forward

BATM capitalised on Covid, because it managed to create and promote dwelling testing kits in partnership with medical agency Novamed. On the top of the pandemic, this served the enterprise effectively, and boosted efficiency ranges and the shares spiked.

As demand tapered off, efficiency and the share price adopted.

So as to add additional woes, BATM’s location in Israel has grow to be a difficulty. The battle within the area can’t be good for enterprise from an operational view, and I really feel this has additionally impacted investor sentiment. That is an ongoing danger I’ll keep watch over. I personally do hope for a peaceable decision to the battle for everybody concerned. If it occurs, it could possibly be excellent news for BATM’s future prospects.

Lastly, the enterprise is just not at present making a revenue. Though that is normally a crimson flag for me personally, I do perceive it’s commonplace for small-cap shares. I’ll be maintaining an in depth eye on buying and selling updates.

Potential restoration?

Personally, I do consider there are excessive ranges of demand for BATM’s merchandise within the digital world we’re dwelling in. Cyber safety is one space the place the enterprise might see exponential development sooner or later. For instance, defence spending, together with cyber safety, is at present at all-time highs in response to Statista, and reveals no indicators of slowing. BATM may benefit right here.

One other bullish side I like is that the agency’s efficiency is on the right track. For 2023, the agency reported income had elevated from $116m in 2022, to $122m. The subsequent optimistic signal could be that of a revenue.

Transferring on, the excellent news for BATM is that it has very restricted debt, solely $5m. That is unusual for small-cap shares. This decent-looking stability sheet might supply the enterprise some resilience because it appears to bounce again from a troublesome interval.

Lastly, the shares look first rate worth for cash on a price-to-book ratio of shut to 1.

My verdict

It appears to be a cocktail of points all hitting BATM directly has damage the enterprise, and the shares. It’s not out of the woods but, however there are some promising components for me to get my tooth into.

Nonetheless, I’ve determined I wouldn’t purchase any shares proper now, however I’ll maintain the shares on my watch checklist.