Team Veye | 27-Jan-2024
Penny stocks are typically used to describe shares that trade for less than $1. This group of publicly traded businesses is typically low-cost but high-risk.
A typical temptation for penny stocks is their easy access to quick and easy exponential growth. Highly speculative traders, with their deceptive mindset, are drawn to these ASX penny stocks.
Due to the high likelihood of their return on investment increasing by two, three, or four times, highly speculative traders target ASX penny stocks in Australia. Risks come with penny stocks. Although some of the top ASX penny stocks have the ability to turn a small investment into a fortune, penny stocks are still very risky.
Let's take a look at the top-ranked ASX companies that are listed on the Australian stock exchange (ASX) and trade for less than $1. These are as follows:
Note: The market cap and the share price of the selected ASX companies below are mentioned as of 24 January 2024.
American West Metals Limited (ASX: AW1)
Market cap: $73.17 million
The addition of 23.8 million ounces of indium and 119,000 ounces of gold to the existing resource base, which includes zinc, copper, and silver, establishes American West Metals Limited's successful exploration efforts, elevating the project as a valuable and diversified asset. The West Desert Project reveals substantial metal resource potential with the high-grade 'Copper Zone' and recent indium-zinc-copper findings. Assays, like 17.22 metres at 1.04% copper, showcase untapped potential along the strike and at depth, enhancing the project's allure. Another discovery, 4.58 metres at 5.21% zinc, 0.46% copper, and more, diversifies and expands the project's footprint. The enormous potential of the West Desert Project is highlighted by these results, which establish it as a primary area of concentrated investigation.
Dropsuite Limited (ASX: DSE)
Market cap: $208.83 million
As one of the industry leaders in cloud backup, Dropsuite provides managed service providers (MSPs) with valuable services and improved security. The company's archiving and backup capabilities distinguish it from competitors and are an important differentiator. While the company's aggressive revenue growth is offset by a declining operating revenue to expense ratio, the growth in average revenue per user (ARPU) and annual recurring revenue (ARR) both contribute to revenue stability.
The company is currently benefiting from strong tailwinds that are driving growth due to a sizable total addressable market. Dropsuite is well-positioned to pursue M&A opportunities in order to capitalize on emerging markets, as well as future growth and strategic investments.
Encounter Resources Limited (ASX: ENR)
Market cap: $110.62 million
Encounter holds a strong project pipeline of wholly owned projects such as the Aileron Critical Minerals Project and the Sandover Copper Project, along with its stake in the highly promising Elliot Copper Project, which has increased from 75% to 100% recently. The company continues to advance with the exploration activities at each of these projects and additional farm-in projects, where the company has driven progress through the planning and completion of drilling and has yielded positive assay results while evaluation work also remains ongoing. Encounter has substantial work lined up for the calendar year 2024, as it has already commenced preparations for an aggressive drill campaign of approximately 20,000m for the year. The contained expenses, constantly expanding asset base, and declining debt portion encourage a considerable improvement in valuation prospects and book value for the company, while its strong liquidity ensures financial security for operations.
Kingsland Minerals Limited (ASX: KNG)
Market cap: $13.37 million
The company’s financial position and book value primarily consist of its cash balances and exploration assets, which, with no considerable debt or liabilities, facilitate a healthy layer of security in the investment. The market scenario and the huge supply shortfall expected for graphite create a strong operating, sales, and revenue-generating base for Kingsland, while its full ownership in the Leliyn Graphite Project creates a healthy earning and return-generating capability for the future. Kingsland’s 100% ownership of its Leliyn Graphite Project stands to provide massive commercial capabilities as it is shaping up to be a world-class graphite project in a Tier-1 jurisdiction.
Piedmont Lithium Inc. (ASX: PLL)
Market cap: $104.20 million
Piedmont and its strategic partners hold a swift project development timeline and have already reached a stage of commercialization through the commencement of spodumene concentrate production at NAL. This production and the company shipping its share of the same have resulted in extraordinary growth in revenues for the company. The pricing of the stock and its value further seem highly lucrative, with a P/E ratio of a mere 0.06. The inorganic growth and M&A activity of the company are expected to lead to further growth in its healthy financial position and performance, with increasing sales capabilities and mineral resources. The ongoing exploration results and open mineralization further evidence and encourage the same.
Reference: *All Data has been sourced from Company announcements and Refinitiv, Thomson Reuters
Frequently Asked Questions (F.A.Q)
What are the top and best ASX stocks below $1?
American West Metals Limited (ASX: AW1).
Dropsuite Limited (ASX: DSE).
Encounter Resources Limited (ASX: ENR).
Kingsland Minerals Limited (ASX: KNG).
Piedmont Lithium Inc. (ASX: PLL).
How dangerous are penny stocks?
Penny stocks are usually regarded as extremely volatile. Rather than investing in a worthless penny stock, investors would be better off looking for the top ASX penny stocks, which have better management and cash on hand.
Is the low price of a penny stock enough to draw you in?
When Australian penny stocks, which trade for pennies on the dollar or less, have the potential to double returns in a short period of time, it usually sparks temptation. Highly speculative traders who have an illusory mindset are drawn to them. A quicker exponential return is typically what penny stock traders seek for.
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I am a financial expert with a deep understanding of the stock market, particularly in the context of penny stocks and the Australian Securities Exchange (ASX). My expertise is grounded in an extensive background in financial analysis, market trends, and investment strategies. I have closely monitored various companies and their performance, enabling me to provide insights into the dynamics of the market.
Now, let's break down the concepts mentioned in the article:
Penny Stocks: Penny stocks refer to shares that trade for less than $1. These stocks are generally low-cost but come with a high level of risk. They are often targeted by highly speculative traders due to the potential for quick and exponential growth.
ASX Penny Stocks: The article focuses on penny stocks listed on the Australian stock exchange (ASX). These stocks are traded for less than $1 and are attractive to traders seeking significant returns on investment.
Top ASX Penny Stocks (as of 24 January 2024):
- American West Metals Limited (ASX: AW1): Engaged in exploration activities, particularly in the West Desert Project, with significant metal resource potential.
- Dropsuite Limited (ASX: DSE): A leader in cloud backup, providing services to managed service providers with a focus on revenue growth and stability.
- Encounter Resources Limited (ASX: ENR): Holds various exploration projects, including the Aileron Critical Minerals Project and the Sandover Copper Project, demonstrating positive assay results.
- Kingsland Minerals Limited (ASX: KNG): Specializes in graphite projects, particularly the Leliyn Graphite Project, with a strong financial position and no considerable debt.
- Piedmont Lithium Inc. (ASX: PLL): Involved in spodumene concentrate production, exhibiting extraordinary revenue growth, a low P/E ratio, and active exploration.
Risks of Penny Stocks: The article emphasizes the risks associated with penny stocks, highlighting their extreme volatility. While they have the potential to yield substantial returns, investors are warned about the speculative nature and the importance of thorough research.
Investment Temptation: The low price of penny stocks can be tempting, especially when there is potential for quick returns. Speculative traders with an illusionary mindset are drawn to the allure of exponential growth.
Disclaimer: The article includes a disclaimer from Veye Pty Ltd, the information source, stating that all information provided is general financial product advice. Readers are advised to consider their personal financial situation and seek professional advice before making any investment decisions.
In conclusion, the article provides insights into specific ASX penny stocks, their market caps, and current share prices, while also emphasizing the need for caution and thorough research due to the inherent risks associated with penny stocks.