The penny stocks are ones which trades at very low price, generally below 10 Rs. The company which has capital market of less than Rs 100 crores are included into Penny stocks. BSE (Bombay Stock Exchange) comprises around 25% of penny stock which trades below Rs 10, where NSE (National Stock Exchange) consists of 10%.
Warning: Some of the set-ups I describe below may no longer be relevant or intact as of the time you read this article. Please conduct your own due diligence. Please note that penny stocks are notoriously volatile.
Penny stocks are mostly not valued but some of it have great potential for growth in coming years. Most of these penny stocks are not worth buying hence, we need to deeply research before planning to invest into such stocks for good gains in market within less time. We can look into following aspects before buying a penny stock which have good potential to be a Multibagger and add some new, inexpensive stocks for investment portfolio?.
- Sustainable advantage in competitive market
- Business potential in future
- EPS growth
- Good performance history
- Company management and vision
- Long term growth
- Currently cheaper at price and identified as undervalued stock
- Number of stocks held by mutual fund schemes
Henceforth, we can discuss few good Penny stocks from our stock advisor which have strong fundamentals in year 2021.
Torrent Power Limited: This Company is involved in electricity distribution, power generation and transmission in Ahmedabad with unparalleled efficiency. It has 3600MW power generation capacity across its various plants providing uninterrupted power supply to over 3 million customers in 6 cities. The T&D (transmission and distribution) loss is very low around 6.15% with net profit reported of Rs 414 Cr at the end of Sep. 2018. The company plays a monopoly role of distribution business in Ahmedabad, Surat and Gandhinagar city. The company is able to maintain a healthy dividend payout of 24.73%; also the stock is held by 10 mutual fund firms including Reliance Mutual Fund, IDFC Mutual Fund, Aditya Birla Sun life Mutual Fund, TATA, Kotak Mahindra and Axis Mutual Fund. The company reflects fair vision of growth with stable and consistence performance having a good bet for one year.
Mahanagar Gas Limited: The Company was incorporated in 1995. It’s the gas distribution company in one of biggest city in India having 20 years of experience into supply of natural gas in Mumbai. Compressed Natural Gas (CNG) and Piped Natural Gas (PNG) are solely provided by this firm in Mumbai city. It’s a mid cap company with market cap of Rs 8871 Cr; reported to have sales of 12% growth in quarter end of Sep 2018. The net profit is INR 136 Cr after tax indicating a healthy sign. Around 21 mutual fund schemes hold the stocks including Aditya Birla Sun Life Equity Fund – DG, Mirae Asset India Equity – DG, BNP Paribas mid-cap fund, Mirae Emerging Blue Chip Fund. The dividend payout is 45.76% which is healthy and debt free virtually. It represents a strong fundamental and good future prospect.
Titan Company Limited holds level of fifth largest integrated own brand watch manufacturer in world incorporated in 1984. It has two most popular and loved brand TITAN & TANISHQ. It is also one of the jewellery retailers in India with 160 brand stores across the country. The company holds large cap market with cap of Rs 82.276 Cr with sales report of 2.26% higher than previous. The company stock is held by 45 mutual fund scheme including SBI Blue Chip Direct growth and ICICI Prudential Balance Advantage Direct.
Other few companies having strong fundamental record included in good penny stocks are
- Eurobond Pharma
- Hawkins Cookers Ltd
- Commex Technology Ltd
- Lloyds Steels Industries Ltd
- Lanco Infratech Ltd