Owning the right penny stock can really turbocharge a portfolio’s performance. For evidence, look no further than Filtronic, which was trading for 7p per share just over five years ago. Today, you’d have to pay more than 220p for the very same share!

The flip side, of course, is that penny stocks are notoriously high-risk. For every Filtronic, there are many dozens that completely bomb. Therefore, while exciting, I would only ever invest a very small part of my portfolio in an ultra-small-cap stock.

But that might be all that’s needed. Returning to Filtronic, for example, £150 invested in this stock five-and-a-half years ago would now be worth nearly £5,000!

With this in mind, here’s an interesting 7p penny stock. It might not generate Filtronic-style returns, but I still think it’s worth attention today.

Aiming to top the market

DP Poland (LSE:DPP) is the operator of Domino’s Pizza stores and restaurants across Poland and Croatia. In the first quarter, group system sales jumped 18.9% to £17.2m at constant currency (up 22.7% on a reported basis). Orders rose 13.7% to 1.3m and like-for-like sales were up 8.9%.

The firm added six new stores to the network during the period, bringing the total Domino’s stores to 141 (135 in Poland and 6 in Croatia). And after acquiring local Polish rival Pizzeria 105 last year, it also has 71 of these locations. It has so far converted 17 to the Domino’s brand.

While DP Poland is still loss-making, it’s moving towards a franchise-led, capital-light operating model. Some 35% of the estate is now franchised, and as more locations head that way, management expects margins to improve significantly.

With 141 Domino’s stores now operating across the group and strong sales momentum in both markets, we see significant opportunity ahead. Our priorities remain clear: accelerating the franchise transition and conversion of Pizzeria 105 stores to Domino’s, expanding towards our 200‑store target by the end of 2027, and delivering sustainable margin improvement and long‑term shareholder value.
CEO Nils Gornall

A few potential risks

Of course, DP Poland is a penny stock for a reason. It has a long history of losses, and there’s no guarantee its franchise-led strategy will pay dividends (metaphorically and literally!)

Moreover, I see two specific risks worth highlighting. The first is pressure on consumer spending — and DP Poland’s input costs — from the inflationary Iran war (higher fuel, food and energy bills).

The second is the rise of GLP-1 weight-loss drugs, which tend to suppress cravings for calorie-rich food like pizza. While DP Poland could always adapt its menu in response, it’s still a potential future threat to sales growth.

However, as a speculative high-risk, high-reward penny stock, I think DP Poland at 7p is worth considering. Analysts expect the company to start posting profits in the next couple of years, driven by the capital-light franchising pivot and Poland’s strong economy (the fastest-growing among large EU nations).

I see no reason why Domino’s can’t continue expanding over time in Poland and Croatia. Just six stores in Croatia sounds quite low to me.

That said, I don’t think investors should go daft with the position sizing. The stock’s only a small part of my own portfolio today and I’m happy to keep holding at that level.