2 ASX Penny Stocks with Solid Balance Sheets

Penny stocks often get a reputation for being risky, unpredictable, and highly speculative. Many investors avoid them altogether, believing that low share prices automatically mean weak businesses. But every once in a while, a few small-cap gems emerge that quietly strengthen their balance sheets, improve operations, and position themselves for long-term growth.

Two such companies on the Australian Securities Exchange (ASX)—SKS Technologies Ltd (ASX: SKS) and Delorean Corporation Ltd (ASX: DEL)—are defying stereotypes. While they operate in completely different industries, what connects them is their financial discipline and resilience. SKS is making strides in the booming technology infrastructure sector, while Delorean is building its future in renewable energy.

Let’s take a closer look at how both these under-the-radar penny stocks are proving that strong fundamentals can exist even at small market caps.

SKS Technologies – From Small Contractor to Project Powerhouse

A Surging Growth Story

Once a modest player in the audiovisual and electrical contracting space, SKS Technologies has rapidly evolved into a high-growth infrastructure company. It now delivers large-scale electrical, communications, and integrated technology projects across Australia—serving corporate, commercial, and government clients.

In FY2025, SKS reported revenue of approximately $261.7 million, an impressive 92% year-on-year increase. This kind of growth is rarely seen in companies of its size and reflects both its expanding project capacity and reputation within the sector. The company has managed to win several large contracts in data centers, smart buildings, and commercial infrastructure—areas expected to remain in high demand as digital transformation accelerates across industries.

A Strong Tender Pipeline

SKS’s growth momentum doesn’t seem to be slowing. The company’s tender pipeline reached $334.8 million—around three times higher than in previous years. This not only shows strong demand for its services but also offers clear revenue visibility heading into FY2026. With clients continuing to invest in technology-driven facilities and energy-efficient systems, SKS is well positioned to capture future opportunities.

Balance Sheet Strengthening

Behind this growth story lies a solid financial foundation. The company has steadily reduced its debt ratio while improving its cash flow position. Operating margins have expanded due to disciplined cost control and the company’s shift toward higher-value, design-integrated projects.

SKS’s growing backlog of contracts—especially long-term service and maintenance deals—also provides recurring income, helping smooth out the volatility typically associated with project-based businesses.

Risks and Realities

Of course, no small-cap story is without its risks. For SKS, project execution and cost management are key watchpoints. Large infrastructure projects can face delays, unexpected costs, or pricing pressure. However, SKS’s track record of delivering complex projects on time and within budget provides confidence that management has learned to handle these challenges effectively.

Overall, SKS Technologies is demonstrating that even in the competitive contracting sector, small companies with operational discipline and financial prudence can build a stable foundation for future expansion.

Delorean Corporation – A Cash-Rich Renewable Energy Innovator

A Strategic Transformation

While SKS builds the digital infrastructure of tomorrow, Delorean Corporation Ltd (ASX: DEL) is helping power the future with renewable energy. Based in Australia, Delorean specializes in bioenergy and renewable gas projects, offering design, build, and operational services for clean energy facilities.

Over the past two years, the company has undergone a major strategic shift—from a pure engineering contractor to a Build-Own-Operate (BOO) model. This transformation means Delorean now not only constructs renewable projects for clients but also owns and operates them, generating long-term recurring revenue from the energy they produce.

Financially Fit for the Future

Despite being a penny stock, Delorean’s balance sheet is far stronger than one might expect. As of 30 June 2025, the company reported cash and term deposits totaling around $10.7 million—a significant amount for a small-cap renewable company.

In addition, Delorean recorded FY2025 revenue of approximately $19.5 million and secured grant funding worth $11.1 million (subject to conditions). This grant support acts as a financial cushion for its renewable projects, allowing the company to progress construction and development without excessive reliance on debt or equity dilution.

The combination of cash reserves and government funding gives Delorean the flexibility to finance growth projects, invest in innovation, and weather industry fluctuations—all without over-leveraging its balance sheet.

Why It Matters

For small renewable energy companies, cash flow stability is often a major concern. Delorean’s financial strength means it can pursue new projects confidently, while its BOO model provides a foundation for recurring earnings once assets become operational.

The long-term appeal here lies in scalability—each new project that Delorean completes adds another layer of predictable cash inflow, potentially turning the company into a steady income generator over time.

Risks to Keep in Mind

While Delorean’s financial position is impressive, it’s still in the investment phase. The company posted an EBITDA and comprehensive loss in FY2025 as it continues to fund project development. Renewable energy projects can also face delays due to grant approval processes, supply chain issues, or regulatory changes. However, as more of its projects reach operational status, these early-stage risks should gradually decline.

The Common Thread – Small Caps with Big Discipline

At first glance, SKS Technologies and Delorean Corporation might not have much in common. One deals in cables, infrastructure, and smart systems, while the other works with biogas and renewable power. But when you look deeper, both companies share traits that are rare among penny stocks:

1. Strong cash positions and prudent financial management
2. Clear growth strategies with long-term visibility
3. Focused execution and improving profitability trends

Both companies are also operating in sectors that align with major global trends—digital infrastructure and clean energy—offering growth potential beyond Australia’s borders.

Final Thoughts – Strength Beyond the Share Price

Penny stocks are often overlooked, but SKS Technologies and Delorean Corporation are proving that size isn’t everything.

1. SKS Technologies (ASX: SKS) is quickly outgrowing its small-cap label with a surge in revenue, expanding tender pipeline, and improving project execution. Its ability to scale efficiently while maintaining a healthy balance sheet is a strong sign of sustainable growth.
2. Delorean Corporation (ASX: DEL), on the other hand, is emerging as a quiet achiever in the renewable energy space. Its cash-rich position, strategic shift to asset ownership, and secured grant funding all point to a business building for the long haul.

While both stocks still carry the risks that come with small-cap investing—such as liquidity issues and execution challenges—they stand out for their balance sheet strength and operational focus.