In India, amongst different types of securities, there is a penny stock that Investors or traders invest to get the benefits of diversification.
Penny stocks are the stocks that trade at a very low price and are generally the ultra micro-cap companies that have low market capitalization. These stocks are mostly illiquid and range between Rs 0.01 to Rs 10. These stocks are speculative and also lack liquidity.
In the west, penny stocks are of small companies that have stocks with a per-share value of less than $5.
What Are The Advantages to Invest In Penny Stocks?
Many retail investors are generally not into investing in penny stocks, but they can be multi-baggers at times. Regular investors are hesitant to invest in this security because they fear that a lack of fundamentals can disrupt their line of wishful returns. Institutional investors also avoid such stocks because of low market capitalisation.
However, if an investor keeps a keen eye on the fundamentals of the company and closely observes their technicals, then an opportunity to bag big returns arises. It’s because such stocks trade at lower prices, giving investors the impression that they may purchase a large number of shares for a low price.
Low liquidity is also a favourable factor for many investors. When compared to other categories of equities, penny stocks have fewer trading shares on the exchanges. Furthermore, because penny stocks provide significant returns in a short period, investors with a high-risk tolerance like them.
In 2021, it is seen that many penny stocks are giving multifold results and we’ll discuss that later in this article.
What Are The Disadvantages Of Investing In Penny Stocks?
As we already discussed, the lack of fundamentals makes them highly risky stocks. The investor gets no clues, at times, on how the company is performing, what are its plans, what guidance does it keep for the future course or what are its interests, etc. Even the credibility of the audited account can be doubtful. The second concern is that they are traded at low volume. This makes them an obvious target for greedy operators who want to manipulate the stock price by cornering a large quantity and driving up the price or dumping a huge number and driving down the price.
Perils of Stock Exchange Restrictions
The reason being, they are typically very small businesses, adherence to the law and stock market requirements may be lax. This may result in negative regulatory action from stock exchanges, which might result in the scrip’s suspension from trade.
Another danger is that the Stock Exchanges (BSE and NSE) would impose upper and lower circuits on firms to discourage excessive speculation in the stock market.
Top 4 Multibagger Penny Stocks For 2021:
1. Adinath Textile-
Adinath Textiles share price has raised roughly 2658% since the start of this year. In the past three months, the stock has yielded almost 1517% returns. This textile business stock stood at ₹1.71 apiece on 1 January 2021. Currently, it is trading at Rs 46.90.
It touched its all-time high of ₹46.90 on the BSE today. The average volume of the stock is 6.523K.
Adinath Textiles reported a 557.1 per cent increase in the bottom line to 3.2 million for the fiscal year ending March 2021.
It’s worth noting that the firm has had no sales for the past five quarters. Its earnings in the most recent June 2021 quarter was 2.3 million, up 360 per cent from 0.5 million the previous year.
2. Flomic Global Logistics
Next up is BSE listed -Flomic Global Logistics. It is a logistics firm based in Mumbai that offers services such as warehousing, distribution, freight forwarding, customs brokerage, cargo, consolidation, multimodal transportation, and country trade. In the last year, the company has delivered almost 17566% returns. In the last 3 months, the company has delivered almost 657% of the gains.
On 1 January 2021, the company stock was trading at ₹1.95 per share. Currently, they are trading at an all-time high of Rs 47.70 apiece with a market cap of ₹269.6 m.
This logistics services firm was earlier called Flomic Freight Services, which in November 2020 completed its amalgamation with Vinaditya Trading. This logistics services company was previously known as Flomic Freight Services, which merged with Vinaditya Trading in November 2020.
Flomic Global Logistics is the new name for the amalgamated company. The company is eyeing to expand in tier-2 and tier-3 cities in India to serve the needs of exporters and importers who will benefit from the ‘Make in India’ programme.
3. Available Finance
Available Finance Ltd., a non-banking finance business, is a BSE listed stock that provides financial services to individuals and corporations to acquire, hold, sell, purchase, or otherwise trade in shares, stocks, debentures, bonds, mortgages, liabilities, and other securities. Despite virtually all of its quarters having zero sales, the firm has managed to increase its net profit.
On January 1, 2021, the stock was trading at ₹6.67 back. Currently, the stock is trading at ₹80.20 with a market cap of ₹900 m. Its 52-week highest is Rs 99.50. Over the last one year, the stock has delivered almost 950% returns and in the last 3 months, it has returned a return percentage of 267.40%.
4. Steel Strips Infrastructure
Steel Strips Infrastructures is a real estate company with its headquarters in Chandigarh. It also has a presence in the infrastructure, trade, and commission agency sectors.
The stock was ₹4.10 back in January 2021, and now it has jumped to Rs 37.30. It touched its 52-week high on August, 26,2021 of Rs 55.90.
In the last one year, the stock has delivered 318.16% returns and in the last 3 months, it gave 400.67% higher returns.
Penny Stocks That You Can Buy Under Rs 10:
1. Ramgopal PolyTex Ltd
Ramgopal Polytex Ltd. is another penny stock that you can buy under Rs 10 apiece. Headquartered in Mumbai, is a wholesale polymer trading company. Plastic, textile raw material, steel, and metal are among the company’s goods. The stock is currently trading at Rs 7.80 with a 52-week high of Rs 11.68 it touched on 26 August 2021.
2. Nyssa Corporation Ltd
Nyssa Corp. Ltd. works in the development of real estate and leasing of immovable properties. The stock is currently trading at Rs 6.11 with a 52-week high of Rs 9.01 it touched on 24, June 2021.
3. SUZLON ENERGY LTD.
Suzlon Energy Ltd. engages in the sale of wind turbine generators and associated components of a range of capacities. Its products encompass S111, S128 and S120 Wind Turbine Generators. The firm operates via the following segments: Sale of Wind Turbine Generators, Foundry and Forging, Operation and Maintenance Services, and Other
The stock is currently trading at Rs 6.80 with a 52-week high of Rs 09.45 it touched on July, 05,2021. In one year, the stock has delivered almost 70% higher returns.
