PPL to EUR: 4 ASX lithium penny stocks with over 25% past month returns

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Highlights

  • Penny stocks are popular among investors.

  • Shares of ASX-listed lithium companies have gained sharply in the past few months.

  • Australia holds the tag of being the largest exporter of lithium globally.

Shares of ASX-listed lithium companies have gained sharply in the past few months on account of a rise in demand for electric vehicles (EVs) globally. Rising prices of lithium -- a vital component of batteries used in EVs - have boosted profits of several firms in Australia. There are expectations that lithium prices may rise further considering the fast adoption of EVs all across the world amid a steady shift towards clean energy fuel.

Australia holds the tag of being the largest exporter of lithium globally. According to estimates, Australian lithium exports may generate a revenue of AU$9.4 billion for the economy by 2023-24. Australia’s lithium export surged to AU$2,632 million in the June quarter of 2022 compared to AU$2,318 million in the corresponding period last year.

On this note, let’s discuss four ASX-listed lithium penny stocks which have delivered over 25% returns in the past month (as of 19 August 2022, at 12:30 PM AEST). Investors should always conduct deep research before investing in any of these stocks as penny stocks are highly illiquid.

Piedmont Lithium Inc (ASX:PLL)

Piedmont Lithium was recently added to the US Russell 2000 index and the Russell Microcap index.

The share price of Piedmont Lithium has risen 83% in the past month. The shares have declined nearly 19% on a year-to-date (YTD) basis. In the past 12 months, the stock has surged over 27%. The share price has advanced over 34% in the past six months. The stock’s 52-week high and low stand at AU$1.08 and AU$0.48, respectively.

Lithium Power International Ltd (ASX:LPI)

Lithium Power recently assumed full control of the Maricunga Lithium Brine Project in Chile.

The share price of Lithium Power International has risen over 45% in the past month. The shares have risen over 23% on a YTD basis. In the past 12 months, the stock surged over 105%. The share price has fallen nearly 1% in the past six months. The stock’s 52-week high and low stand at AU$1.04 and AU$0.26, respectively.

Infinity Lithium Corporation Ltd (ASX:INF)

In 2022, Ramón Jiménez Serrano was appointed as chief executive officer (CEO) by Infinity Lithium for its completely owned Spanish subsidiary with an aim to expand the business in the country.

The share price of Infinity Lithium Corporation has risen nearly 32% in the past month. The shares have fallen over 23% on a YTD basis. In the past 12 months, the stock has surged over 61%. The share price has fallen over 9% in the past six months. The stock’s 52-week high and low stand at AU$0.25 and AU$0.090, respectively.

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European Lithium Ltd (ASX:EUR)

European Lithium recently announced that it had entered into a partnership with luxury auto manufacturer BMW AG to potentially supply lithium hydroxide in Europe.

The share price of European Lithium has risen over 25% in the past month. The shares have fallen over 37% on a YTD basis. In the past 12 months, the stock has surged nearly 26%. The share price has fallen 20% in the past six months. The stock’s 52-week high and low stand at AU$0.19 and AU$0.050, respectively.

Can penny stock investment make you rich?

Penny stocks represent companies with a low market capitalisation whose shares trade for less than a dollar. These stocks hold popularity among a set of investors as these tend to surprise with sharp upsides.  As a result, penny stocks hold a perception that they can make investors rich quickly. But spotting a potential multi-bagger in the penny stock category is not easy.

It requires detailed research when it comes to spotting the right penny stock. Investors need to be careful while dealing in penny stocks since they can lose their penny stock investments within no time as these stocks lack liquidity. Thus, penny stock investment is different from investing in regular equities. There is also a lack of authentic information related to these stocks in the market.

Things to keep in mind while investing in penny stocks:

Don’t go overboard while investing in penny stocks

While chances of making a 100% profit in a share priced at AU$1 are higher compared to AU$40, there is also a higher probability of quickly losing the entire investment. Experts advise that investors should not invest more than 3% to 5% of their corpus in penny stocks.

The other point is that searching for a good penny stock can be cumbersome in the absence of credible information and low liquidity. So, investors should at least research 30-40 companies before settling for a stock.

You would not find many takers for penny stocks.  So, investors should track the trading volume of a penny stock closely for at least six months to 1 year to check if the stock is consistently high. There may be instances when a stock may have traded at high volumes as a result of market manipulation. Thus, investors should always take into consideration all these factors while dealing in penny stocks.

Stop-loss

Experts always advise investors to have strict stop-loss targets while investing in penny stocks. There is every possibility of an investor losing his hard-earned money as soon as penny stocks correct sharply during a volatile market scenario. Additionally, it may not be a regular market correction, and the stock price may have fallen due to serious business problems or manipulation.

Therefore, these stocks need to be dealt differently by investors to reap rich rewards. Investors should always conduct detailed research and thoroughly check the trading volume history of a penny stock before banking on it. The other important point is not to depend on random advice when it comes to investing in penny stocks. More often than not, these recommendations are not dependable and lack authentic research. Market regulators always advise investors to maintain distance from such platforms and people.

NOTE

  • Since penny stocks carry high risks, one needs to do some research before taking any exposure to them.
  • High dividend-paying shares are not good always. A stock’s dividend yield might be on the higher side due to a significant fall in its stock price, implying financial trouble that could impact its ability to deliver future dividends.

 


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