Why buy penny stocks for short term? 5 exceptions for investment

Be the First to Comment Read

Why buy penny stocks for short term? 5 exceptions for investment

 Why buy penny stocks for short term? 5 exceptions for investment
Image source: Shutterstock.com

Highlights 

  • Investing in penny stocks are gaining popularity among investors as they can be an excellent way to diversify portfolio and looking into smaller businesses with low stock prices and higher return prospects.
  • In UK, penny stocks are generally traded on the FTSE Alternative Investment Market (AIM) index.

 

Penny stocks are the stocks that are available at a very low price and belong to companies with very low capitalization in the market. There is a lot of buzz around penny stocks as they can be an excellent way to diversify portfolio among smaller businesses with low stock prices and higher return prospects. Although, this approach comes with higher risks.

In the UK, penny stocks are those stocks that are trading below £1 with a market capitalization of less than £100 million and below US $5 in the US with a market capitalization below US$300 million in the US. In the UK, penny stocks are generally traded on the FTSE Alternative Investment Market (AIM) index.

Penny stocks are the stocks that are issued by the lesser known and growing companies that are trading at a minimal price and may give larger returns in long-term. These stocks are highly risky, with lower trading volume making them easy to manipulate.

Before investing in penny stocks, it’s important to do in-depth research

© 2022 Kalkine Media®

But, before investing in penny stocks it’s important to do in-depth research about the fundamentals of these smaller companies and to identify the company that can become a big one in the long-term, generating huge returns. Even the world’s largest companies such as Microsoft, Tesla and Amazon were once penny stocks.  So, if you have done your analysis on the penny company and you have seen its growth and prospects, then you can take high risk and keep it for a longer term.

An investor should note that they should implement a sound risk management plan while investing in these volatile assets and only some fraction of their investment portfolio should be invested in penny stocks.

Also Read: Penny stocks or FTSE 100 stocks, which one to choose in 2022

Let us look at five penny stocks that you may consider investing for long-term.

  1. Air Partner Plc (LON: AIR)

Air Partner Plc is an aviation service company engaged in offering aviation safety & security and aircraft carter services solutions to commerce, industry, private individual and governments.

Air Partner Plc has given a return of 29.28% to its shareholders in the last one year and its year-to-date return stands at -0.57% as of 17 January 2022. Air Partner PLC’s shares closed trading at GBX 87.80 with a market capitalization of £55.81 million on 18 January 2022.

  1. Gulf Marine Services Plc (LON: GMS)

Gulf Marine Services Plc is an operator of self-propelled and self-elevation support vessels (SESVs).

Gulf Marine Services Plc has given a return of 13.43% to its shareholders in the last one year and its year-to-date return stands at 10.53% as of 18 January 2022. Gulf Marine Services PLC’s shares closed trading at GBX 6.56 with a market capitalization of £66.68 million on 18 January 2022.

Also Read: These penny stocks might turn around your fortune in 2022

  1. Record Plc (LON: REC)

Record Plc is a currency management business with assets under management for foundations, funds, and other institutional clients globally. 

Record Plc has given a return of 65.00% to its shareholders in the last one year and its year-to-date return stands at -4.35% as of 18 January 2022. Record PLC’s shares closed trading at GBX 79.20 with a market capitalization of £159.24 million on 18 January 2022.

  1. Smiths News Plc (LON: LON: SNWS)

Smiths News Plc is a newspaper, books, magazines, and consumables distributor, with around 55% market shares in the UK.

Smiths News Plc has given a return of 31.77% to its shareholders in the last one year and its year-to-date return stands at -2.37% as of 17 January 2022. Record PLC’s shares closed trading at GBX 36.20 with a market capitalization of £89.65 million on 18 January 2022.

  1. Residential Secure Income Plc (LON: RESI)

Residential Secure Income Plc is a real-estate investment trust with aim to deliver inflation-linked returns by investing in shared ownership and retirement rentals across UK.

Residential Secure Plc has given a return of 22.98% to its shareholders in the last one year and its year-to-date return stands at 2.49% as of 17 January 2022. Residential Secure PLC’s shares closed trading at GBX 110.00 with a market capitalization of £188.35 million on 18 January 2022.

Also Read: 2 AIM-listed lithium penny stocks to buy in 2022

Disclaimer

Speak your Mind

Featured Articles