- Penny stocks can deliver multi-bagging returns to investors, primarily because they are undiscovered and high growth companies.
- While there is a high probability of better returns, these companies are also highly-risky investments because of the early stage.
Penny stocks are extremely volatile investments owing to relatively small free float shares and meagre market capitalisation. Companies are usually businesses with relatively small balance sheets with little commercial success.
Since these are budding companies seeking to commercialise or develop a new product, the growth opportunities in the penny stock market remain huge. The investor must be aware of the risks associated with low market capitalisation stock.
Market capitalisation also depicts the conviction of market participants in the stock or company. Given that penny stocks have low market capitalisation, not many investors are willing to take underlying risks.
Here are the seven top penny stocks on ASX that have delivered handsome returns to their shareholders.
West Wits Mining Ltd (ASX:WWI)
West Wits Mining aims to target annual production between 50,000 to 60,000 oz with 20+ year mine life. It is developing two projects: Witwatersrand Basin Project, Central Rand in South Africa and Mt Cecelia, Paterson Province in Australia.
The recent progress by the West Wits mining includes the upgradation of mineral resource base at the Witwatersrand Basin Project to 4.37Moz at 3.88g/t Au (2g/t cut-off) and is undertaking a 2,500 metres Diamond-core infill drilling program at the project. The independent BFS (t Bankable Feasibility Study) for the Qala Shallows confirmed potential for the staged development and operations at the project.
Funtastic Limited (ASX:FUN)
In January, the company announced that the sale of the confectionary business to Sweet Season was completed. The deal represents the strategy to transform business and existing portfolios.
Funtastic’s new strategy revolves around new products, e-commerce focus, inorganic growth and emerging sectors. The sale price was $1.05 million, which represents current inventory, assets, and intellectual property.
For the year ended 31 July 2020, Confectionary business revenue was $4.2 million, which was 17.1% of total revenue.
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Rent.com.au Limited (ASX:RNT)
Earlier this month, the company onboarded strategic investor Bevan Slattery, who bought 55 million shares at a price of $0.05 per share. Rent.com.au raised $2.75 million as a result. Mr Slattery said the company is a disruptive platform with scalability.
Chief Executive Greg Bader said Mr Slattery is a major shareholder in the firm now. The investment will enable to maximise potential and launching of RentPay. The $2.75 million funding would also provide for working capital, marketing, and product development.
In the quarter ended December 2020, the company delivered record EBITDA despite investments in RentPay. Its revenue for the second quarter rose 27% to $734k compared to the same period last year.
intelliHR Limited (ASX:IHR)
In January, the company announced the second-quarter update. Its annual recurring revenue increased by 23% to $522k, while invoiced revenue rose 24% during the quarter. In Q2, the company acquired a record 24 customers, taking its customer base to 151.
intelliHR expanded business in North American and UK markets and seven new contracts were secured. Some of its new customers include OSL Retail Services, Emerge Aotearoa, Penske Australia and New Zealand, Contact Energy, My Health, Fujitsu, and DBM Vircon.
Invoiced revenue for the half-year (1H FY21) period was up 81% over the same period last year. Net cash used in operating activities fell to $0.73 million in the second quarter. During the quarter, investors also exercised options, which resulted in an inflow of $102k.
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Meteoric Resources NL (ASX:MEI)
Meteoric Resources NL is a gold-focused exploration company. Of its three main projects, two are in Brazil and one in Australia. Juruena and Novo Astro are located in Brazil, and Palm Springs Project is located in Australia. It also holds an interest in two JV projects.
Recently, the company reported the results of the maiden drilling program at Palm Springs outlining the intersection of high grade gold mineralisation and extending the continuity of the mineralisation over 360 metres along the strike, southwest of the Butchers Creek Open Pit.
Alterity Therapeutics Ltd (ASX:ATH)
The drug company recently funding of around half-million USD under Michael J. Fox grant. It would use the funds to evaluate optimial dosage for its Parkinson’s disease candidate ATH434.
The company will assess pharmacologic profile of its candidate in a primate model. This would enable the drug company to determine the optimal dose of the lead candidate for Parkinson’s disease trials.
In 2Q ended December 2020, the company appointed Dr David Stamler as the Chief Executive Officer. Cash balance at the end of the period was $35 million after the company completed $35 million via an oversubscribed placement.
Big River Gold Ltd (ASX:BRV)
Recently, the company announced that Dundee Goodman Merchant Partners increased stake in Big River Gold to 19.4%. The investor purchased 180 million shares from another major shareholder, the Copulos Group, at a price of $0.055 each.
Dundee Corp Chief Executive Jonathan Goodman said they believe BRV is significantly undervalued and resilient to commodity prices. It was added that the Borborema Gold Project in Brazil is a fully-permitted, construction-ready, open-pit project.