From WDT to ARB: 3 NZX penny stocks returning over 40% YTD

Highlights

• Penny stocks are low-priced stocks of small companies.
• WDT, ARB and Geo have posted over 30% YTD returns each.
• Proper research and experience are required to invest in penny stocks.

The benchmark S&P/NZX 50 closed 0.07% higher at 11,919,67 on Tuesday. However, investor sentiment was weighed by the Russia-Ukraine conflict, inflation and the COVID-19 pandemic. The S&P/NZX 50 SmallCap Index also ended the trading session 0.12% higher at 91,207.

Let’s have a look at 3 NZX penny stocks that have given over 40% YTD returns so far.

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Wellington Drive Technologies Limited (NZX:WDT)

The first stock on the list is Wellington Drive. The Company is involved in the marketing, sale, manufacturing and development of electric motors and related software and has a market cap of $0.07 billion.

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Wellington Drive reported a 74.1% increase in revenue to $64.2 million in 2021 against 2020. WDT expects revenue to continue to grow strongly in FY22 with an expected growth of nearly 25% to US$60 million.

WDT expects EBITDA to be between $4.5 million to $5.5 million for FY22. The stock has returned 123.38% YTD and ended the day flat at $0.172.

ArborGen Holdings Limited (NZX:ARB) 

The second stock on the list is ArborGen Holdings. The Company produces tree seedling products and provides tech-enhanced seedlings to the forestry industry and has a market cap of $120.3 billion.

The Group lowered its EBITDA guidance in January 2022 to the US$9.5-US$10.5 million range for FY22 from US$11.3 to $11.7 million previously. The reduction came due to a deficit in sales of lower margin Open Pollinated (OP) seedlings.

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The rapid prevalence of Omicron, labour shortages, transport constraints continued to pose challenges for ARB.

ARB has returned 41.1% YTD and ended the day 4.17% in red at $0.23.

Geo Limited (NZX:GEO)

The third stock is Geo Limited. The Company offers cloud-based software solutions to manage door-to-door sales and has a market cap of $0.01 billion.

Geo posted a 21% decline in revenue on pcp to $1.7 million in H1 FY22 due to COVID-19 subsidies and the divestment of the Geo for Sales business. Geo, on the other hand, has continued to produce record new client growth in successive quarters despite COVID-19 challenges.

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Geo expects existing financial reserves to be used to support material product and platform expansions as the company grows.

Geo has returned 41.86% YTD and ended the day 5.17% in green to close at $0.122.

Bottom Line

Investing in penny stocks needs proper research and due diligence.

(NOTE: Currency is reported in NZ Dollar unless stated otherwise)