Stocks trading on the London Stock Exchange with a share price below £1, with a market
capitalisation of less than £100 million, are often defined as penny stocks. These stocks
tend to attract investors willing to generate high returns with an even higher risk factor.
Penny stocks trade at low valuations compared to blue-chip or mid-cap stocks, tempting highly
speculative traders with the illusion of easy exponential growth. Companies in this category
often have weak balance sheets and are typically volatile in nature. However, investors usually
invest in penny stocks for a brief period. These investments become riskier during a
recession or economic slowdown due to high volatility. Market sell-offs in a recession
create opportunities for the investors to build a portfolio by investing in stocks that
are trading at a cheaper value but have strong fundamentals. Before investing in such stocks,
investors should always do some research and diversify their portfolios to offset losses
during economic slowdown or recession. Companies in high-growth sectors and emerging markets,
such as fintech, cybersecurity, and biotech, may offer greater return potential as relative
economic growth in these sectors occurs faster. Let’s look at 5 penny stocks that you may
consider for now and decide their future looking at the market conditions.
First on the list is Blue Star Capital. The share value of the FTSE AIM All-Share listed
company has appreciated by 61.67% over the last one year as of 9 May 2022. Its year-to-date
return has fallen by 47.09%. The investment company is engaged in investing in assets
or companies in various sectors, such as technology, gaming, and media. Blue Star Capital shares
closed its days trade at GBX 0.29, down by nearly 9% as of May 9.
Second on the list is Kodal Minerals. The share value of the FTSE AIM All-Share listed
company has appreciated by 20.83% over the last one year as of 9 May 2022. Its year-to-date
return has fallen by 9.38%. This mining development and exploration company is active in West
Africa. Kodal Minerals shares closed its days trade at GBX 0.29, up by 1.75% as of May 9.
Third on the list is Tavistock Investments. The share value of the FTSE AIM All-Share
listed company has appreciated by 118% over the last one year as of 9 May 2022. Its year-to-date
return has surged by 28.24%. This investment advice company engaged in providing institutional
quality investment services to private investors of any wealth. Tavistock Investments shares
close its days trade at GBX 5.45, down by 3.54%, as of May 9.
Fourth on the list is Wishbone Gold. The share value of the FTSE AIM All-Share listed precious
metal exploration and trading company has depreciated by 19.52% over the last one year
as of 9 May 2022. Its year-to-date return has surged by 7.02%. Wishbone Gold shares
closed its days trade at GBX 10.06, up by 29.81%, as of May 9.
Last stock on the list Baron Oil. The share value of the FTSE AIM All-Share listed independent
oil and gas exploration company has fallen by 11.11% over the last one year as of 9 May
2022. Its year-to-date return has surged by 14.29%. Baron Oil shares closed its days trade
at GBX 0.08, as of May 9.