Summary
- Penny stocks can be a good investment, but at the same time risky as well
- One can still make money trading penny stocks smartly and having an idea as to what to look for
- Some of the penny stocks have given massive return, 7digital Group Plc delivered a YTD return of 1,021.21 per cent, whereas, Redx Pharma Plc delivered a return of 681.25 per cent
Trading in penny stocks have always been a contentious issue, while they don’t cost much and return a big profit, these stocks can be risky. A majority of these companies are highly volatile, putting traders in a position to lose big; however, such stocks can be a good investment bet and one can still make money trading penny stocks smartly and having an idea as to what to look for.
Characteristics of Penny Stocks
Below we have discussed five LSE-listed penny stocks which are worth looking at.
7digital Group Plc (LON: 7DIG)
It is a United Kingdom-based company, headquartered in London, providing solutions to users in order to enhance their experience of listening to music through digital platforms, striving to become a leader in B2B digital music space.
Usage of advanced technology is adopted by the company with the increased use of storage in the cloud and virtualised applications, helping in a seamless transition to remote working with security.
FY 2020 started on a positive note for the Company along with new contract wins, contract renewals and a strong pipeline. The renewals and new contracts have shifted to the second half of the financial year 2020 due to the impact of Covid-19. Though, all the required measures to reduce costs and preserve cash have been taken by the Group to support financial and liquidity position.
Stock Performance
The stocks of 7DIG last traded at GBX 1.85 on 21 September 2020, down by 17.78 per cent from its previous close of GBX 2.25. The 52-week low/high price was GBX 0.17/3.35. It was having a market capitalisation (Mcap) of £61.25 million. The company delivered a YTD return of 1,021.21 per cent.
Alien Metals Limited (LON: UFO)
It is a mining and exploration company, having interest in Donovan 2 project (copper and gold), San Celso and Los Campos (silver) projects in Mexico. The company is a 51 per cent owner in Hancock Ranges iron ore project and Brockman iron ore project in Australia. Acquisition of the Elizabeth Hill silver project, Australia is in the process by Alien Metals.
With respect to the potential farm out of an interest in its Donovan 2 Copper-Gold project in Mexico, the company entered into an ‘Exclusivity Agreement’ on 9 September 2020.
Earlier in August, the Company had announced that it is on the way to complete the acquisition of the Elizabeth Hill silver project. The project currently owned by Karratha Metals Group and Alien Metals was expected to complete the acquisition by the mid of September 2020. A million ounces had been produced at the mine in the past, at an average silver production rate of 70.24 ounces per tonne.
Stock Performance
The stocks of UFO last traded at GBX 0.73 on 21 September 2020, down by 1.36 per cent from its previous close of GBX 0.74. The 52-week low/high price was GBX 0.07/0.90. It was having a market capitalisation (Mcap) of £19.36 million. The company delivered a YTD return of 229.55 per cent.
Also Read- Which Penny Stocks To Look For In The Current Situation?
Alba Minerals Resources PLC (LON: ALBA)
It is a UK based company in the field of mining and exploration of minerals, having an interest in mining projects in Greenland, Wales and Ireland. Additionally, the company has been making investments in UK oil & gas sector, having 11.76 per cent interest in Horse Hill oil & gas. Mining projects such as Amitsoq graphite, Thule Black Sands, Melville bay iron ore, Inglefield Land polymetallic and Gold mines of Wales are operated by Alba.
The Clogau Gold Mine and the Amitsoq Graphite Project was the company’s main focus of 2020, but the plans had been disrupted by the Covid-19 pandemic. However, the company is currently in the position to execute one of the most significant underground work programmes seen at the Clogau-St David's Gold Mine for several decades. Also, JORC resources at both Thule Black Sands and Melville Bay remains sound. The company has renewed its plans to drill a maiden JORC resource at Amitsoq in 2021.
Stock Performance
The stocks of ALBA were trading at GBX 0.35 on 21 September 2020, unchanged compared to its previous closing. The 52-week low/high price was GBX 0.05/0.42. It was having a market capitalisation (Mcap) of £18.14 million. The company delivered a YTD return of 112.12 per cent.
Eve Sleep PLC (LON: EVE)
Formerly known as Eve Sleep Limited, is an e-commerce company, providing household goods and home construction services directly to the customer. The company focuses on European sleep brand which sells and designs eve-branded mattresses and other sleep products, with the vision to deliver the power of sleep wellness to everyone.
In the interim result for the half-year ending on 30 June 2020, the company recorded an increase of 1 per cent in gross profit. The revenue for Q2 2020 increased year-on-year by 25 per cent resulting from strong trading momentum.
Stock Performance
The stocks of EVE last traded at GBX 4,60 on 21 September 2020, unchanged against its previous close. The 52-week low/high price was GBX 0.83/6.42. It was having a market capitalisation (Mcap) of £12.54 million. The company delivered a YTD return of 95.75 per cent.
Also Read- 5 Penny Stocks to Watch on LSE: PFD, ASLI, SOHO, GFRD, and VEC
Redx Pharma PLC (LON: REDX)
It is a pharmaceutical company, concentrating on the advancement of innovative drugs for anti-cancer and fibrosis. Using its authenticated drug discovery capability, the company is into producing development formulations. The company’s strategic components include cancer, Fibrosis & Research. The targeted products of Redx are Cancer RXC004, Porcupine (RXC006), ROCK2 selective, GI-targeted Rock and Research.
The company has recently announced a new research collaboration with Jazz Pharmaceuticals to discover and develop two targeted cancer therapies, having generated new revenue of £1.2 million.
It has been successful in completed dosing of the first two patient cohorts in Phase 1 clinical trial of lead oncology asset, RXC004 (Porcupine inhibitor).
Stock Performance
The stocks of REDX last traded at GBX 62.50 on 21 September 2020, unchanged against its previous close. The 52-week low/high price was GBX 5.00/65.00. It was having a market capitalisation (Mcap) of £122.03 million. The company delivered a YTD return of 681.25 per cent.
While penny stocks are risky, they can end up giving huge returns depending on the company. One must study the companies in detail before investing in penny stocks or seek professional advice.
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