- Penny stocks’ attractive pricing and potential high returns may look appealing to investors. However, these stocks are highly volatile and risky in nature.
- Investors must do a proper background check for penny stocks.
- We look at three penny stocks on the TSXV: Kodiak Copper Corp. (TSX: KDK), Nano One Materials Corp. (TSXV: NNO) and CloudMD Software & Services Inc. (TSXV: DOC).
Penny stocks’ attractive pricing and potential high returns seem like an appealing option to investors. But these lowest-priced stocks on the equity markets come attached with high volatility and associated risk factors. In this article, we look at three penny stocks on the Toronto Stock Exchange Venture (TSXV): Kodiak Copper Corp. (TSX: KDK), Nano One Materials Corp. (TSXV: NNO) and CloudMD Software & Services Inc. (TSXV: DOC).
Before considering any penny stock, investors must do a background research of the company, its financials, the management’s long-term plans and other critical details. One must also take into account the microeconomic and macroeconomic factors that define market trends.
Kodiak Copper Corp. (TSX: KDK)
Sector: Basic materials
Industry: Metals & mining
Kodiak Copper stock ranks highly on three TMX Group lists -- Rising Stars ( a list of TSXV companies outperforming the market), Top Metals (a list of metals stocks outperforming their peers) and Top Basic Materials (a list of basic materials companies outperforming their peers).
The company has a current market capitalization of C$ 106.3 million and is trading at C$ 2.71 apiece.
Kodiak stocks have soared by a whopping 470+ per cent this year. In the last one month, the scrips have gained 62 per cent. Its present price to book (P/B) ratio is 8.742 while price to cash flow (P/CF) ratio is 35.6, as per TSXV data.
The mining firm announced that it will raise C$2 million through non-brokered private placement offering. It also reported the discovery of a high-grade copper-gold extension at the company-owned mine in Gate Zone, southern British Columbia.
Mining company Teck Resources Limited recently announced strategic investment of C $10.5 million in Kodiak via private placement for a 9.9 per cent stake in the company.
Kodiak is the sister company of Great Bear Resources (TSXV-GBR) and a part of Discovery Group of Companies. The company’s assets are spread out in Canada’s southern British Columbia and Nunavut, and USA’s Arizona.
The company posted net loss of C$ 0.38 million for the three months ended June 30, 2020, down from C$ 0.57 million same period last year. The net loss stood at C$ 1.79 million for nine months ended June 30, 2020. It further expects to incur future losses in the development of its business.
The company changed its name from Dunnedin Ventures to Kodiak Copper in April 2020.
Nano One Materials Corp. (TSXV: NNO)
Sector: Basic materials
Nano One Materials in another penny stock that ranks well on the lists of Rising Stars and Junior Basic Materials (a list of micro and smallcap basic materials companies). The company produces low cost, high performance cathode powders that is used in lithium ion batteries.
The company has a market capitalization of C$ 222 million and is currently trading at C$ 2.82.
Its current P/B ratio is 20.143, P/CF ratio is 45.60, while debt to equity (D/E) ratio is 0.02, as per data on the TMX Money.
The scrips have been riding high with the recent push towards green energy and zero emission economy, gaining 140+ per cent year-to-date. The stocks have advanced by 26.4 per cent in the last three months and up 168 per cent in six months.
The company has partnered with German automaker Volkswagen for expansion into electronic vehicle segment, China’s Pulead and France’s Saint Gobain.
This British Columbia-based company debuted on TSXV in March 2015 at C$ 0.25 a share. In the last five years, the stocks have skyrocketed by over 1000 per cent.
Nano One Materials’ loss from operating expenses for three months ended 30 June 2020 narrowed to C$ 0.56 million from C$ 1.131 million same time last year. It ended the quarter with cash and cash equivalents of C$ 8.9 million.
The company recently completed milestone 1 of "Scaling Advanced Battery Materials" project, which is supported by Sustainable Development Technology Canada (SDTC). It will now advance to milestone 2 and received a funding of C$2.8 million from SDTC and others for the same. It also received aggregate proceeds of C$ 3 million from the exercise of 2,160,811 warrants and options.
CloudMD Software & Services Inc. (TSXV: DOC)
Industry: Healthcare Providers & Services
CloudMD stocks are among the most active shares across the TSX and TSXV, recording two million average trading volumes in the last 10 days. It also ranks high on TSXV’s Rising Star list and Top Healthcare stocks (a list of healthcare companies outperforming their peers).
Stocks of this SaaS-based health care technology company has been able to capitalize on the current pandemic crisis with more patients turning to online consultations.
CloudMD debuted on the TSXV in June this year and has since then gained an impressive 175+ per cent growth.
The company has a telemedicine platform, medical clinics, pharmacy services and Cloud Practice offering cloud-based electronic medical records (EMR).
Its market capitalization is C$ 275 million. The stocks are currently trading at C$ 2.05 apiece. The present P/B ratio is 10.25 and D/E ratio is 0.21.
The company plans to acquire 87.5 per cent of Benchmark Systems, an artificial intelligence-powered cloud software dealing with practice management, billing and telehealth enabled electronic health record provider. With this acquisition, the company aims to gain a foothold in US markets. Benchmarks has an established network of 200 clients, 800 physicians, 5.5 million patient charts across over 35 states in the US.
CLoudMD also announced the closure C$ 20.79 million oversubscribed bought deal financing.