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Highlights
- Penny stocks trade at a low price and are illiquid in nature.
- Some penny stocks can prove to be multibaggers due to their massive growth potential.
- However, they come with certain risks.
Penny stocks are high-risk and high-reward investments. Companies that issue them may grow into big corporations with above-average revenues, or they may fail pathetically in their early years, leading to massive losses.
Let’s have a look at 3 NZX stocks that are trading under $1.
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Wellington Drive Technologies Limited (NZX:WDT)
High-efficiency motors supplier and IoT solutions provider, Wellington Drive, notified in a trading update on 15 December that it anticipated revenue to be nearly US$47 million and an EBITDA of roughly $3.9 million for FY21 in spite of being affected by production limitations and increased costs.
RELATED READ: Why to explore 5 NZX technology stocks ahead
The Group appointed David Burden as its Chief Customer Officer. WDT expects its revenue to be roughly US$60 million in FY22 and the resulting profit will be reinvested in developing infrastructure and expanding staff and infrastructure.
On 31 December, MWE ended the trading session at $0.205, up 5.13% from its previous close.
Bremworth Limited (NZX:BRW)
Bremworth, a renowned carpet and flooring manufacturer, made aggressive moves in FY21 to implement its all-wool and natural fibres plan.
RELATED READ: Are there any NZX shares to be explored under NZ$1?
Due to its decision to abandon synthetics, the Group's revenue fell 5% in FY21. Wool carpet sales, on the other hand, grew rapidly in H2 due to strong consumer demand in New Zealand and Australia.
BRM has a strong balance sheet and is well funded to carry out its five-year strategy.
On 31 December, BRW ended the trading session at $0.72, down 1.37% from its previous close.
The New Zealand Refining Company Limited (NZX:NZR)
NZ’s sole oil refining company, NZR, reported RAP throughputs of 1.6 Mbbls in September/October 2021 because of Auckland's Level 4 and Level 3 lockdowns, and this was 37% lower than the same time the year before.
ALSO READ: How have 5 NZX financial stocks performed in 2021?
Furthermore, the Group has raised about $48.5 million in new stock, including a $39-million placement of extra shares last month, to fund private storage facilities and those under discussions.
On 31 December, NZR ended the trading session at $0.94, up 2.17% from its previous close.
Bottom Line
Penny stocks are low priced but carry risk and volatility.
(NOTE: Currency is reported in NZ Dollar unless stated otherwise)