5 TSXV penny stocks to buy in October

Highlights

• Before diving into penny stocks, investors should assess their risk capacity and accordingly invest their money.
• One of the companies mentioned below saw its stock soar by almost 206 per cent in the past year.
• One stock among these, experienced an increase of more than 233 per cent in the last nine months.

Many investors are interested in making small investments to earn high returns. Such investors look to penny stock as these are cheaply priced and have the potential to earn significant returns assuming the stock would respond positively in the future. They buy the stock when the prices are low and tend to sell when the stock’s prices are at a peak or higher to earn profits.

However, penny stocks are highly volatile and vulnerable to market circumstances, which makes it a risky venture. Thus, investors should do their own research about the stock and its performance and track the latest market updates to avoid any loss.

Also read: Tricon (TSX:TCN) eyes US IPO. How to buy the real estate stock?

To be more specific, penny stocks are the shares of companies holding a market capitalization of C$ 60 million to C$ 300 million. Such companies generally have the capacity to fetch higher returns than small and mid-cap stocks.

Let us explore some penny stocks listed on the Toronto Stock Exchange Ventures (TSXV).

1.    Cypress Development Corp. (TSXV:CYP)

Cypress Development Corp. is a Vancouver-based mining firm engaged in the acquisition, exploration and development of lithium properties. The company owns a 100 per cent stake in the Clayton Valley Lithium Project in southwest Nevada. It also holds an interest in the zinc/silver-rich Gunman Project.

The lithium miner saw its stock closing at C$ 1.48 apiece on Wednesday, October 6, nearly 40 per cent down from its 52-week high of C$ 2.45 (January 13).

The firm’s stock surged by almost 128 per cent in the past year and noted a rise of more than 68 per cent on a year-to-date basis. Its stock increased by approximately 56 per cent in the last three months.

On the valuation front, Cypress Development Corp. held a price-to-book (P/B) ratio of 7.4 at the time of writing.

2.    mCloud Technologies Corp. (TSXV:MCLD)

mCloud Technologies Corp. is a software technology company that provides Software-as-a-Service (SaaS) asset management solutions to the foodservice, heavy material, commercial buildings and energy sectors with operations in Canada and the United States.

The company’s stock rose by more than 29 per cent in the last three months and expanded by almost 24 per cent on a YTD basis. Its stock wrapped up trading at C$ 2.29 per share, on Wednesday, October 6, marking a fall of nearly 30 per cent from its 52-week high of C$ 3.25 (February 8). However, it was about 118 per cent above its 52-week low of C$ 1.05 (May 14).

The Calgary-based software provider held a P/B ratio of 19.083 and a debt-to-equity (D/E) ratio of 10.12 on October 6.

3.    Graphite One Inc. (TSXV:GPH)

Graphite One Inc. is a Canadian graphite producer involved in the mining, processing and manufacturing of coated spherical graphite (CSG), which is mainly demanded in clean technologies, such as lithium-ion electric vehicles, energy storage systems and other value-added products.

The vertically integrated graphite materials company noted its scrip trading roughly 40 per cent below its 52-week high of C$ 2.4 (February 9) and wrapped up trading at C$ 1.45 apiece on Wednesday, October 6.

Its stock soared by more than 233 per cent in the last nine months and grew by almost 196 per cent YTD. In the past one month, its stock climbed by approximately 39 per cent.

Graphite One had a P/B ratio of 3.718 and a D/E ratio of 0.28, from a valuation standpoint.

Also read: 5 Canadian tech penny stocks to buy

4.    Ecolomondo Corporation (TSXV:ECM)

The Quebec-headquartered Ecolomondo Corporation is a clean technology firm that leverages the Thermal Decomposition Process to reduce and recycle hydrocarbon waste into marketable commodities.

On Wednesday, October 6, the firm’s stock closed at C$ 1.04 per share, marking a fall of nearly 30 per cent from its 52-week high of 1.48 (September 13). Its stock jumped almost 206 per cent in the past year and increased by more than 285 per cent in the last six months.

The firm posted a P/B ratio of 988.07, price-to-cash flow ratio of 3,215.60 and D/E ratio of 162.84, on October 6.

5.    Covalon Technologies Ltd. (TSXV:COV)

The junior biotechnology technology company Covalon Technologies Ltd. develops a variety of advanced wound care, infection protection and perioperative care products and has its headquarter in Mississauga, Ontario.

The COV stock increased by roughly 164 per cent in the past year and surged by 120 per cent YTD. In the last three months, its stock expanded by nearly 69 per cent. Its stock closed trading almost 20 per cent below its 52-week high of C$ 3.15 (September 13) at C$ 2.53 apiece, on Wednesday, October 6.

The healthcare company recorded P/B ratio of 7.143, P/CF ratio of 71.40 and D/E ratio of 2.17.

Also read: Is this Canadian oil stock a buy with prices at a 7-year high?

Bottom line

Investment in penny stocks may fetch significant returns to investors. However, at the same time, these stocks are highly volatile and are riskier than other equity investments like small-cap, mid-cap and blue-chip stocks. Thus, investors should be well versed with the stock and its performance, market trends and forthcoming market situations to earn profits and avoid any losses.

Before making any investment in penny stocks, investors and traders should also assess their risk capacity and accordingly invest their moolah.