WHICH PENNY STOCKS ARE WORTH A THOUGHT?
there are numerous penny stocks – small-cap companies with a share price under R1 – on the JSE’s main board and they may seem attractive to retail investors, especially first-timers who want to enter the world of investment.
A few former mid-cap names – in particular construction companies such as Aveng, Basil Read and Group Five – have fallen to the penny-stock category as South Africa’s economy tanks under poor government policy decisions, and a dearth of fixed capital investment by companies.
Nevertheless, there are several penny stocks that shimmer and may prompt a closer look, but investors shouldn’t necessarily be adding them to their portfolios. finweek has identified four stocks that are geared towards a changed future economy, or pose value in terms of their share price.
The returns story on the FTSE/JSE Small Cap Index is a mixed one at best. The index – which includes those stocks not selected for the FTSE/JSE Top 40 Index or the FTSE/JSE Mid Cap Index – declined 4.1% last year, slumped 14.6% in 2018, rose 3% in 2017 and jumped 20.9% in 2016 (see the table below for comparison).
Considerations with penny stocks
The decision to invest in penny stocks should be premised on a solid analysis of a company.
