Can These 3 Penny Stocks Move Higher from Here?

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Summary

  • Some of the penny stocks have multiplied investors’ wealth by over 4 times in past one year.
  • In the current scenario, Tech and resource penny stocks are in high demand due the nature of their business.

Penny stocks are usually small companies looking to disrupt the market with innovative solutions that can revolutionize the sector. Penny stocks often hail from Resource, Technology, Pharmaceutical & Life Sciences sectors. Apart from contributing to the domestic economy, these companies can help economies in climbing out of economic downturns. In the UK, penny stocks can be found in the FTSE AIM index.

Penny stocks can be a boon or bane for investors as they can produce huge capital returns and losses for investors. These stocks typically trade with a share price below £1 in the UK. Market analysts regard penny stocks more as of a speculative investment that is geared for growth as they are yet to develop a product or service. On the flip side, these stocks are prone to market manipulations, as large buying or selling in these stocks can impact their prices. Thus, only risk-tolerant investors usually take exposure in these stocks. However, right stock selection can lead investors to an unprecedented, unparallel growth proposition.

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Also read: Penny stocks-Risks and rewards of investing in low market cap shares 

In this article, we shall put our lens through 3 minnows SEE, ARCM and LOOP that have the potential to grow higher based on the nature of their business.

Seeing Machines Limited

The advanced computer vision technology company, Seeing Machines Limited (LON: SEE) specializes in the design of AI-powered monitoring systems that improve transport safety. The company’s proprietary technology, Driver Monitoring System (DMS) has gained acceptance by carmakers for designing safer cars that guarantee improved safety on roads. DMS has been gaining a lot of popularity among the major automotive markets.

Seeing Machines technology is now being featured in the Driver Attention System of Cadillac Escalade by General Motors. In a bid to expand its DMS market, the advanced technology company has joined forces with leading semi-conductor companies Qualcomm Technologies and Omnivision Technologies.

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During the first half of 2021, the company’s operational revenue was up by 15 per cent year on year to A$18.1 million (H1 2020: A$15.8 million). The company’s underlying revenue at constant currencies grew by 19 per cent year on year during the first half of 2021. Seeing Machines annualized recurring revenues, including royalties grew by 17.4 per cent year on year to A$15.5 million during the first half of 2021. The company’s Aftermarket (Fleet and Off-Road) revenue stood at A$15 million, representing a growth of 17 per cent (H1 2020: A$12.9 million).

Overall, the first half of 2021 was pleasant for the company. Also, the company has bright prospects as the carmakers are increasingly emphasising on improving the safety ratings of their products and keen on mounting safety standards and technology advances inside the cabin, such as the DMS. Shares of Seeing Machines have returned investors a whopping return of 325.67 per cent in the past 52-week period. The market capitalization of the technology company stood at £431.94 million as of 14 April 2021 closing.

Also read: Penny Stocks- These 2 Retail Shares Gained Over 75% In Last 6 Months

ARC Minerals Ltd

ARC Minerals Ltd (LON: ARCM) is engaged in the activities related to the identification, acquisition, evaluation and development of natural resource projects. The company has a strong presence in the African region. The company witnessed improvement in financial performance during the first half of the financial year 2021. The company is currently in the development stage and hence rely on grants and cash balances to carry out its business activities.

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The operations are financed by the sale of equity securities through a private placement mechanism. ARC Minerals has raised additional liquidity to fund its drilling activities that are expected to boost its financial and operational performance. Driven by lower expenses for the period, the profitability improved. The company reported a net loss of £1,435 thousand during the first half of 2021 (H1 2020: loss after tax of £16,082 thousand). Shares of ARC Minerals have returned investors a whopping return of 329.30 per cent in the past 52-week period. The market capitalization of the mining company stood at £68.43 million as of 14 April 2021 closing.

LoopUp Group Plc

FTSE AIM All-Share quoted Company, LoopUp Group Plc (LON: LOOP) is a provider of premium cloud communications services. The Company had recently won contracts from three leading law firms. It has further expanded its partnership with C&W Communications for distribution in the Latin America and Caribbean region till 2022. During the first half of 2020, the Company had decent fundamental metrics as it has maintained profitability margins above the industry median. Moreover, net debt was significantly reduced due to strong fundamentals. It also reduced its net debt to £0.7 million from £11.5 million.

The company stated that 2020 revenue increased to £50.2 million (FY19: £42.5 million), FY20 adjusted EBITDA surged to £15.3 million (FY19: £6.4 million), and 2020 year-end gross cash rose to £12.1 million (FY19: £3.0 million).

Meanwhile, the strong growth achieved during the first half of 2020 shall allow the company to invest in deriving sustainable growth via recently augmented product offering that allows customers to make and receive external calls (Cloud Telephony capability) via Microsoft Teams as remote meetings are expected to remain a competitive market in the current scenario. The company appears confident in its capability to attain sustainable as well as profitable growth and plans to invest from its cash balance to maximise shareholders wealth.

Shares of LoopUp Group have returned investors a double-digit return of 16.74 per cent in the past 52-week period. The market capitalization of the technology company stood at £46.02 million as of 14 April 2021 closing.


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