5 FTSE penny stocks that are on a bull ride

Summary 

• Penny stocks are more popular with investors as they are often believed to provide quick money and have a significant upside during the trade
• Shares of GSTechnologies and One Heritage Group have returned over 950 per cent and 500 per cent respectively in the year so far.

Penny stocks trade at a very low share price (traded below £1 in the United Kingdom) and have low market capitalisation.  Low share prices of these stocks lure several investors who have limited funds but still want to test the waters of the equity market. It also draws millions of risk-taking investors who are willing to purchase penny stocks in bulk. However, investors keen on investing in penny stocks need to conduct proper due diligence before investing and must be willing to hold these stocks for a longer time duration for potential upside gains.

Penny stocks are more popular with investors as they are often believed to provide quick money and have a significant upside during the trade. However, these stocks may often be speculative and associated with high levels of risk due to the lack of liquidity, relatively small number of shareholders, and little or no disclosure of information. Further, they may also be associated with regulatory scrutiny, risk of sudden delisting and price manipulations. Despite the large number of risks associated with these stocks, some of them also have the potential of turning small investments into significant returns. An investor usually considers purchasing a large volume of penny stocks due to their low price to gain a huge return on investment.

How long should one hold penny stocks?

Unlike the movements of traditional stocks on the exchange, penny stocks do not generally follow the cyclical trends in the market. Instead, they usually track general market trends in their respective sectors, and even small price fluctuations may lead to significant gains or losses. Thus, it is extremely challenging to assess the time period to hold penny stocks. While all companies hit their peak at some point, it is important to understand what comes after hitting the peak from an investor point of view. These stocks may consolidate or collapse, depending on several factors. Thus, it is extremely necessary for investors to monitor specific indicators closely.

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Here are the top five FTSE-listed penny stocks that have been on a bull ride since the beginning of this year.

GSTechnologies Ltd (LON:GST)

GSTechnologies Ltd is a provider of integrated IT and telecom infrastructure solutions. The company’s total income for the year ended 31 March 2021 was US$3.41 million, down by 25.1 per cent (2020: US$4.55 million), due to the impact of the Covid-19 pandemic. 

Nevertheless, the total comprehensive loss decreased to US$0.33 million in 2021 compared to US$0.46 million in 2020. The company plans to expand in blockchain-related technologies and services segment through the establishment of wholly-owned subsidiaries - GS Fintech Ltd in the UK and GS Fintech Pte Ltd in Singapore, in February 2021.

GSTechnologies’ shares gave a year-to-date return of 971 per cent, and its market cap stands at £17.90 million as of 05 August 2021.

One Heritage Group Plc (LON:OHG)

One Heritage Group Plc is a residential developer focused on the Northwest of England. On 24 June 2021, it inked a development management agreement with One Heritage North Church Limited to redevelop North Church House, Queen Street, into 58 apartments for £7.6 million. The redevelopment project is slated for completion in Q3 2022.

The company successfully got listed on LSE on 23 December 2020 and raised £930,000 through 9.3 million ordinary shares. Further, in February 2021, the company raised an additional £548,000 through 1.83 million ordinary shares. 

One Heritage Group’s shares gave a year-to-date return of 504.17 per cent, and its market cap stands at £24.51 million as of 05 August 2021.

Quantum Blockchain Technologies Plc (LON: QBT)

UK-based Quantum Blockchain Technologies Plc is artificial intelligence and quantum computing cryptography-based research and development firm. On 6 July 2021, Quantum Blockchain announced a collaboration with D-Wave Systems, a provider of quantum computing systems, software and services, to use the Leap™ quantum cloud service to develop cryptography algorithms for cryptocurrency mining.

For the year ended 31 December 2020, the operating loss of the company was reduced to €1.1 million (2019: €1.4 million), on account of the growing focus of investors on the blockchain, quantum computing, and cryptocurrencies.

Quantum Blockchain Technologies’ shares have a year-to-date return of 380 per cent, and the market cap stands at £10.77 million as of 05 August 2021.

Tavistock Investments Plc (LON:TAVI) 

Tavistock Investments is a privately held international investment firm. The company offers advisory and investment management services. On 14 June 2021, Tavistock Investments entered into a 10-year strategic partnership, according to which Titan will acquire Tavistock Wealth Limited (TWL) for a cash consideration of up to £40 million.

For the financial year ended on 31 March 2021, gross revenues of the company's advisory business were in line with the previous financial year, at £24 million, which comprises approximately 80 per cent annualised recurring revenue.

Tavistock Investments’ shares have a year-to-date return of 232.14 per cent, and its market cap stands at £28.26 million as of 05 August 2021.

Lookers Plc (LON: LOOK)

Lookers Plc is UK-based motor retail and aftersales service company. As per the trading update for the six-month period ended 30 June 2021, the underlying pre-profit tax of the company in H1 is expected to be approximately £50 million compared to a £36.1 million underlying loss in the last year.

The H1 results also include £13 million in funds from the UK government initiatives, which includes £4 million from the job retention scheme and £9 million from business rates relief and grants.

Lookers’ shares have a year-to-date return of 223.81 per cent, and its market cap stands at £261.62 million, as of 05 August 2021.