Five ASX penny stocks that are in momentum

Highlights

  • Short-term traders who are quite nimble and agile are some of the market participants who trade in penny stocks.
  • Penny stock picks coupled with strong momentum could deliver strong results fairly quickly.
  • NXM, DRE, AGY are some of the penny stocks that have been in strong momentum for the last three months.

Penny stocks are the lowest lot of small-cap companies that often trade at a less than a dollar value. These stocks are often quite risky as they don’t generally have a good underlying business and hence quite a few investors try to bet on them.

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Short-term traders who are quite nimble and agile are some of the market participants who trade in these stocks. However, if the stock is having momentum, even penny stocks could deliver some quick gains. Momentum is the rate at which the stock is moving up/down.

Let us have a quick look at five ASX penny stocks that are going through a high momentum for the last three months.

Read more: Five high-dividend paying Australian miners in July

  1. Nexus Minerals Limited (ASX:NXM)

Nexus Minerals is an Australia-based gold digger that is actively investing in new exploration techniques. During the recent quarter ended 30 June 2021, the company had executed an option to purchase the Bethanga Porphyry Copper-Gold Project in northeast Victoria, expanding its portfolio. The NXM share price is trading at AU$0.15 and has delivered a 76.5% return in the last three months.

  1. AXP Energy Limited (ASX:AXP)

AXP Energy’s robust performance has led to a month-on-month revenue (after royalties) to AU$1.8 million in August 2021. The strong performance has been driven by significantly fewer gas processing outages for the month. The AXP share price is trading at AU$0.01, clocking a 75% return in the last three months.

  1. Argosy Minerals Limited (ASX:AGY)

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Argosy Minerals is an ASX-listed miner, having a 77.5% interest in its flagship Rincon Lithium Project in Salta Province, Argentina. Recently, the company progressed with its drilling works in this project to source industrial groundwater supply. The AGY share is in strong momentum and has delivered a 72% return in the last three months and currently trading at AU$0.16.

  1. Dreadnought Resources Limited (ASX:DRE)

The DRE share price is trading at AU$0.04, clocking a 72% return in the last three months. The company is in mining sector, having a market capitalisation of AU$111.68 million. During the quarter ended 30 June 2021, the company raised AU$3 million (before costs) via the issuance of 166.67 million shares at an average price of AU$0.018 per share.

  1. Poseidon Nickel Limited (ASX:POS)

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Poseidon Nickel is another Australian miner on our list, with a market capitalisation of AU$346.08 million. The company successfully executed a share purchasing plan worth AU$3 million, which was heavily oversubscribed to AU$13.5 million. The management exercised its discretion.

Bottom line

Investing in penny stocks could be a risky venture as there is an excess level of volatility. Also, the underlying business of these stocks is not robust enough to rely on them for a long-term investment. However, momentum is a phenomenon which can generate relatively higher returns in penny stocks as well.

Based on this theme, a very popular type of investing style is making noise, called “Momentum Investing”, which solely capitalises on momentum, without looking at the fundamentals of the company. Penny stock picks coupled with strong momentum could deliver strong results fairly quickly. However, a heightened level of risk associated with penny stocks cannot be ignored while dealing with them.

Read More: Five exciting shares under AU$1 - KEY, ARO, BAT, WEL, IDZ

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