Investing in penny shares is a high-risk/high-reward strategy. Dangers include low liquidity, which can lead to extreme share price volatility. Another is the fact many are smaller, younger companies that are more exposed to competitive threats and industry downturns.

Yet the long-term returns can also be considerably higher than when buying FTSE 100 and FTSE 250 shares. Take the following three penny stocks, for instance: Brave Bison (LSE:BBSN), Panthera Resources (LSE:PAT), and Kodal Minerals (LSE:KOD).

Over the past five years, they’ve delivered an average return of 111%. An investor who put £20,000 equally in these companies five years ago would have £42,260 sitting in their Stocks and Shares ISA.

Can these shares continue outperforming? I think so, as I’ll now explain.

Video star

Brave Bison produces online video content that it then distributes. Over the last five years, its shares have gained an impressive 135% in value.

Thanks to widescale restructuring, it’s turned from a loss-making company into one with strong earnings growth. In 2025, revenues leapt 57% and adjusted EBITDA (earnings before interest, tax, depreciation, and amortisation) rose 44%, as its operations successfully straddle key growth areas of digital advertising and influencer marketing.

Brave Bison has successfully leveraged acquisitions to capture these opportunities. It works with major brands like Arsenal FC, Vodafone, and Google, and today has a larger and more diversified business model. This is especially important, as it helps the business to spread risk if cyclical sectors come under pressure and marketing budgets dip.

Feline good

During the past five years, Panthera Resources’ shares have risen a hefty 41%. This chiefly reflects gold’s multi-year price surge — the yellow metal was last at $4,700 an ounce, up from roughly $1,700 in May 2021.

Panthera doesn’t actually own any gold-producing assets. However, it owns a string of high-quality exploration projects in India and West Africa. This includes Kalaka in Mali, where the exploration target was recently hiked to 5m ounces from 3m previously.

What I would say is this early-stage miner is high risk. I expect gold prices to keep rising, but Panthera could still sink in value if it experiences operational setbacks. A $1.58bn damages claim against the Indian government for stopping work at its Bhukia mine could also go either way.

Another mining share to consider?

Over five years, Kodal Minerals’ share price has leapt 158%. The company’s evolved from an exploration play into a full-blown metals producer, reducing its risk profile — output has steadily ramped up since February 2025, and revenues have rolled in. The business operates the Bougouni lithium mine in Mali, which is expected to produce the white metal until 2038.

In my view, this makes Kodal one of the hottest penny shares in the mining sector. Lithium prices have been choppy in recent years, and volatility could return if the Iran war drags on. But the long-term lithium outlook is robust as electric vehicle (EV) sales lift off — analysts at Canaccord think the market could move into a prolonged deficit until 2035 as new demand outstrips supply growth.

If so, prices of the critical energy transition metal could explode, driving Kodal shares even higher.