One penny stock I like the look of is Revolution Beauty Group (LSE: REVB).

Not all small-caps can turn into market leaders or blue-chips. Many do fail due to a lack of financial might, or are taken over by bigger firms.

However, I reckon Revolution could see itself growing, and providing me with some juicy returns. Here’s why.

Beauty is in the eye of the beholder

Revolution is a beauty and personal hygiene business that sells multiple brands. It does this direct-to-consumers, and via wholesalers too.

The shares have meandered up and down like an exciting roller coaster I used to enjoy when I was (much) younger. They’re currently trading for 24p, which is exactly the same level as at this time last year. However, the shares have surpassed the 100p mark previously, in 2022, to be specific.

Revolution has been marred by boardroom politics in recent times, which has probably held the shares back. The departures of high-level execs, and the rising stake in the fast-fashion business boohoo, has been problematic, in my eyes.

With all this going on, I’m not surprised that institutional investors want to see the lay of the land in respect of the firm’s leadership and direction. Plus, full-year results for the period ending February 2024 haven’t been released yet.

The investment case

Continuing the theme of issues and risks, boardroom instability is a worry. This can impact the direction of the business, which could hurt operations, earnings, and investor sentiment. This is something I’ll keep a close eye on.

Next, the beauty market is very competitive, and the margins aren’t always the largest, especially with current inflationary pressures too. As I referenced above, a larger player may take the business over, or just outmaneuver it totally into non-existence.

However, it’s not all doom and gloom, in my view. Forecasts indicate the firm’s first profitable year since initial public offering in 2021 is on the cards. This could be huge for the business, and shares. However, I’m conscious that forecasts don’t always come to fruition. Plus, the firm possesses a decent looking balance sheet, which is always positive for small caps.

Next, the business has managed to develop a great footprint despite the fact it hasn’t been around a long time. This includes a wide geographic footprint, as well as key wholesale relationships.

Finally, from a general perspective, the beauty market is a burgeoning one that shows no signs of slowing according to data giant Statista. This could be good news for the business and its growth aspirations.

What I’m doing now

Looking back at recent events, the general landscape of the market, as well as historic share price performance, I’m buoyed by Revolution. I reckon there’s potential for this stock to climb much higher.

I’d be willing to buy a small number of shares at just 24p per share when I can and see what happens. I’ll be marking my calendar for full-year results, and hope boardroom unrest is now a thing of the past!