- Penny stocks are considered risky, as they are highly volatile investments.
- These stocks hold the potential to deliver high returns compared to other stocks.
- They are inexpensive as they generally belong to small and emerging businesses looking to grow.
Penny stocks are the stocks of small businesses with low share prices and a market capitalisation around AUD 50 million. Generally, penny stocks are preferred by investors who have much higher risk appetite, as they are highly volatile and risky investments.
The Australian stock exchange offers access to a wide variety of penny stocks. Amid multiple stories of failing penny stocks, there are shining stories like that of The a2 Milk Company Limited (ASX:A2M), which began its journey as a penny stock.
On that note, let us discuss three ASX-listed penny stocks from various sectors.
Brightstar Resources Limited (ASX:BTR)
Brightstar Resources Limited (ASX:BTR), earlier known as Stone Resources Australia Limited (ASX:SHK), recently in January 2021 released its cashflow report for December 2020.
The receipts from customers for December 2020 stood at AUD 88K, and for six months a year to date, totalled to AUD 141K. The bank balance for the month stood at AUD 334K, and for six months, it was AUD 479K. The cash and cash equivalents at the end of December were AUD 359K.
In December 2020, the company announced the commencement of a sub-audio magnetics (SAM) survey programme for identifying additional near-surface drilling targets at its Cork Tree Well Project in the Laverton region, WA. The program is expected to be completed around the mid of this month.
On 13 January 2021, BTR traded at AUD 0.072, down by 1.370%. It has a market cap of AUD 31.80 million.
Ultima United Limited (ASX:UUL)
Last year in December, UUL entered a binding letter of intent concerning a real estate project, TELLUS Villas in Niseko, Japan.
The property developer joined hands with Infinity Capital Group Japan Development Godo Kaisha (ICGJ) to acquire three lots of land at the project. ICGJ owns the TELLUS Villas (TVP), which is planned to be established on a 17-lot land plot covering over 34,000m2. Niseko is a popular ski resort town in Hokkaido, Japan.
UUL also planned to seek shareholder approval for the transaction and capital raising of AUD 20,190,203 by issuing up to 33,650,338 ordinary shares at an offer price of AUD 0.60 per share.
The proposed fixed-priced placement represents a 20% premium on the announcement date's price per share. Out of this capital raising, UUL plans to allocate AUD 6,354,730 to acquire three plots for the project and invest AUD 12,988,588 in villas construction on these plots.
Ultima United is optimistic about obtaining the shareholders' approval in the general meeting to be held in Q1 of the 2021 calendar year.
On 13 January 2021, UUL traded flat at AUD 0.500, with a market cap of AUD 18.32 million.
Harris Technology Group Limited (ASX:HT8)
Early in December 2020, e-commerce business Harris Technology Group released an update on its Amazon Australian Black Friday/Cyber Monday Sales Event. The company experienced exceptional four-day sales valuing at AUD 729,000.
On 27 November 2020, the sales totalled to AUD 235,000, next day it reached AUD 273,000. On 29 November 2020, the sale was valued at AUD 103,000, which on next day stood at AUD 118,000.
The company has included more gaming brands to its portfolio and is focussed on improving its gaming product sales.
On 13 January 2021, HT8 traded at AUD 0.195 with a market cap of AUD 53.54 million.