In this article, we will cover
– What are penny stocks?
– Things to keep in mind before investing in penny stocks
– A complete list of penny stocks to buy: these are best penny stocks to buy right now listed in India, You can choose to invest in these penny stocks after proper research
– A detailed video on penny stocks to buy covering model portfolio an explanations
So first let’s understand What are penny stocks?
Penny stocks are stocks that trade at very low prices, have low market capitalization, and are mostly illiquid. These stocks (penny stocks) are lesser-known to the larger investing public as investors remain away from them because the information regarding their fundamentals and businesses is either not reliable or not available. However, they are also known for multi-bagger returns within certain trading sessions.
As penny stocks are mostly illiquid meaning traded in very less quantity, sometimes only a few orders can lead to hitting the circuit limit on the exchange. These stocks mostly give higher returns when hitting circuits for a number of days. Though this period of hitting circuit is not accompanied with trading volumes, either there is some story moving around that stock or it might be a result of manipulation by some stock operators who artificially inflate the price and volumes to bring in innocent retail investors and then later offloading their own holdings when participation increases. Now that we have understood what are penny stocks lets see why are penny stocks called “Penny” Stocks
Penny stocks are penny stocks for a reason!
Penny stocks trade at such low rates for a reason because most of the traders buying penny stocks don’t even care about them and look to exit sooner or later once they have given decent returns. Penny stocks in India are often found non-compliant with exchange regulations and non-transparency in reporting.
It is only when there is some news or some turnaround stories on penny stocks, that they move. The speculation leads to an increase in trading volumes and prices soar. But very few of them turn out to be true or genuinely fundamentally stronger. Any negative news causes the price to turn south.
List of Best Penny Stocks to Buy now in India
|Sr. No||Company Name||BSE Scrip Code||NSE Symbol||CMP (Rs.) 4th Dec||Rating(Stars)||Industry|
|1||Vodafone Idea||532822||IDEA||9.75||0.50||TELECOMMUNICATIONS – SERVICE|
|2||NHPC||533098||NHPC||21.8||1.00||POWER GENERATION & DISTRIBUTION|
|3||Trident||521064||TRIDENT||9.2||0.50||Textiles – Spinning|
|4||Jammu and Kashmir Bank||532209||J&KBANK||23.6||0.50||PRIVATE SECTOR BANK|
|6||Tata Steel BSL||500055||TATASTLBSL||38.8||0.50||Steel – CR & HR Strips|
|8||Hindustan Construction Company||500185||HCC||6.8||0.50||CONSTRUCTION & CONTRACTING – CIVIL|
|9||Orient Paper and Industries||502420||ORIENTPPR||18.95||0.50||DIVERSIFIED|
|10||Usha Martin||517146||USHAMART||26||0.50||STEEL – MEDIUM & SMALL|
|15||HBL Power Systems||517271||HBLPOWER||23.5||0.50||ELECTRIC EQUIPMENT|
|17||Sanwaria Consumer||519260||SANWARIA||1.4||0.50||PERSONAL CARE|
|19||KCP Sugar Ind Corp||533192||KCPSUGIND||16||0.50||SUGAR|
|21||Southern Petrochemical Industries Corporation||590030||SPIC||21.35||0.50||FERTILISERS|
|22||Sical Logistics||520086||SICAL||10.05||0.50||TRANSPORT & LOGISTICS|
Things to keep in mind while buying penny stocks
People who generally trade or invest in penny stocks are the lower class of retail investors who do not keep a portfolio approach and invest in them based on news or tip from some random source, thinking the price is already beaten down too much and they will not lose much but if that turns out to be true it will double or triple their capital. However, investors should always keep in mind that they might be investing in small amounts but still, they can lose 100 percent of their capital.
The risk a penny stock will go bust is equally high. The company can suddenly shut down or there can be very little probability of giving multi-bagger returns. The capital that deserves to be invested in penny stocks should not be more than 2 to 3 percent of a person’s portfolio value.
Investing in penny stocks is always on speculation. First of all, investors should avoid investing in them and if they buy any it should be treated as buying a lottery. You should never become emotionally attached to them in the hope of some good news.
Investors should also never follow a buy and hold approach even if they have got good returns recently. Because over a period of time neither they are able to generate value for shareholders nor they follow a transparent reporting system. Investors should also research extensively about the stock and the news going on in the public domain and not become the victim of operators’ conspiracy, who later offload their holdings after manipulating the price.
The transaction cost for some penny stocks is also higher and on some the brokerage is charged on a per-share basis. Similarly when stocks trade at a very low price, the spread between the bid and ask price also turn out to be significant in terms of percentage.
The stocks mentioned in the watchlist have been determined after keeping in mind news, speculation, trend in their price chart, and a few fundamental factors such as debt to equity ratio and cashflows.
But this information will vary on a day to day basis depending on the newsflow and an investor should make some relevant background checks in his capacity before investing in these stocks.
Below is some more information about Best penny stocks in India
Vodafone Idea Ltd
Vodafone Idea Limited is an Aditya Birla Group and Vodafone Group partnership. It is India’s leading telecom service provider. The Company provides pan India Voice and Data services across 2G, 3G and 4G platforms. Competition from peers such as Reliance Jio and Airtel is a major blow to Vodafone’s business as it is losing subscribers slowly to them. Vodafone can be on a speculator’s radar, however, it is extremely risky and volumes should be closely observed before buying this stock.
NHPC Ltd is a Mini-Ratna Category-I Enterprise of the Government of India. The company is one of the largest organizations in the field of hydropower development in the country. It is a hydroelectric power generating company dedicated to the planning development and implementation of an integrated and efficient network of hydroelectric projects in India. The company has a good dividend yield of around 6% and low debt to equity ratio. The stock has a broader price range and generally fluctuates within a range from Rs 14 to 34 and has average yearly volatility of 40 percent.
Morepen Laboratories is a Pharmaceutical company. Morepen has steadily grown from a single product company to a multi-activity company with a global vision and satisfied customers in over 50 countries. It has a USFDA approved manufacturing facility for API at Masulkhana (Himachal Pradesh), adhering to the most stringent standards of quality excellence. It is the largest producer of Loratadine in the World and presently has over 90% market share of generic Loratadine in the US market, a supplier to top-class customers like Novartis, Merck, etc. The company has a good debt to equity ratio of 0.05. Since the last 10 years, this stock has been moving in a broader range of Rs 2.5 to 45 on the higher side and has an average daily volume of around 6 lakh shares.
Manali Petrochemical Ltd.
Manali Petrochemical Ltd. (MPL) is a petrochemical company based in Chennai. It markets propylene glycol and polyols. Manali Petrochemical annually produces 27000 metric tonnes of propylene oxide, 14,000 metric tonnes of propylene glycol and 15,000 metric tonnes of polyether polyol and system polyol. The company has a good debt to equity ratio of 0.03 and a good dividend yield of around 2.19%. The stock has high historical volatility. For the last 10 years, this stock has been moving from Rs. 6 to 40 and has an average daily volume of 3.5 lakh shares.
HBL Power Systems
HBL Power Systems Ltd is a listed Indian company, in business since 1977, with a focus on engineered products and services. The company’s business strategy was to identify technology gaps in India that they could fill by ‘indigenous efforts’. The first products selected and successfully developed were Aircraft batteries – eventually leading to HBL offering the world’s widest range of specialized batteries. This stock has been moving horizontally for the last 10 years from Rs 10 to 60 with an average daily volume of 7 lakh shares.
Here’s a quick video from our team on how you can select the Best Penny Stocks:
List of Penny Stocks in India: Model Watchlist
If one wants to bring down the list to 4 to 5 stocks for closely tracking, then the below table is suitable for a beginner.
|Sr. No||Company Name||BSE Scrip Code||NSE Symbol||CMP (Rs.) 4th Dec|
|5||HBL Power Systems||517271||HBLPOWER||23.5|
A detailed table with various parameters for Best penny stocks to buy:
|Sr. No||Company Name||BSE Scrip Code||NSE Symbol||CMP (Rs.) 4th Dec||Rating
|Industry||PE ratio||Dividend yield (%)||ROCE (%)||5 year average ROE (%)||Debt equity ratio||5 yr CAGR revenue (%)||5 yr CAGR PAT (%)|
|1||Vodafone Idea||532822||IDEA||9.75||0.50||TELECOMMUNICATIONS – SERVICE||–||–||-5.44||-41.1||–||7.33||–|
|2||NHPC||533098||NHPC||21.8||1.00||POWER GENERATION & DISTRIBUTION||7||6.77||8.61||9.52||0.66||4.01||4.2|
|3||Trident||521064||TRIDENT||9.2||0.50||Textiles – Spinning||26||3.65||10.2||11.8||0.28||4.82||23.6|
|4||Jammu and Kashmir Bank||532209||J&KBANK||23.6||0.50||PRIVATE SECTOR BANK||–||–||3.51||-5.58||15.7||3.65||–|
|6||Tata Steel BSL||500055||TATASTLBSL||38.8||0.50||Steel – CR & HR Strips||–||–||2.61||–||0.88||11.3||7.14|
|8||Hindustan Construction Company||500185||HCC||6.8||0.50||CONSTRUCTION & CONTRACTING – CIVIL||–||–||35.4||–||–||-1.84||17.8|
|9||Orient Paper and Industries||502420||ORIENTPPR||18.95||0.50||DIVERSIFIED||–||2.44||2.34||4.4||0.05||-18.3||22.3|
|10||Usha Martin||517146||USHAMART||26||0.50||STEEL – MEDIUM & SMALL||14.2||–||22.2||-12.6||0..41||-13.9||35.8|
|15||HBL Power Systems||517271||HBLPOWER||23.5||0.50||ELECTRIC EQUIPMENT||72.8||1.09||6.06||3.87||0.13||-4.15||-3.28|
|17||Sanwaria Consumer||519260||SANWARIA||1.4||0.50||PERSONAL CARE||–||–||-117||-50.2||–||2.46||–|
|19||KCP Sugar Ind Corp||533192||KCPSUGIND||16||0.50||SUGAR||–||0.59||2.05||5.97||0.64||-1.64||10.4|
|21||Southern Petrochemical Industries Corporation||590030||SPIC||21.35||0.50||FERTILISERS||8.46||–||12.9||13.3||0.23||-1.45||45.4|
|22||Sical Logistics||520086||SICAL||10.05||0.50||TRANSPORT & LOGISTICS||–||–||-4.79||-0.5||1.56||3.99||–|
Our Collection of Best Stocks to Buy Other links you may find useful:
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