Popular Penny Stocks List of 2022
Investing in the stock market opens a plethora of opportunities for your money to grow. There are a number of instruments that you can trade with and earn returns from the same. Experts generally advise strategizing for long-term returns and investing accordingly. You can invest in good-quality stocks and other investment vehicles to build a solid portfolio and build a healthy corpus in the long run. Along with that, you can also try to play with those areas of the market that can multiply your returns in a very short period. One such investment arena is that of penny stocks. In this article, we will learn all that we need to know about penny stocks in India, what are they, and the best penny stocks to buy in India in 2022.
Summary in brief:
- Definition of penny stocks
- Features of penny stocks
- Benefits of investing in penny stocks
- Risks associated with penny stock investment
- How to invest wisely in penny stocks
- Top penny stocks in 2022
What Are Penny Stocks?
Penny stocks, as the name suggests, are stocks that are traded at very low prices on the stock exchange. Although there is no specific definition of how low the price has to be for a stock to be called penny stock, it can be anywhere between 0 to Rs 10, or even Rs 20, 30. In general, they are available at a low price and can be bought in considerable quantities with very small capital. The best penny stocks are the ones that can give you multibagger returns, the reason why they are often called multibagger penny stocks. But why are we talking about such stocks in the first place? Let’s go through the key features of penny stocks and get a better understanding of their meaning.
- Penny stocks carry the potential to offer manifold returns in a short period of time
- Low liquidity and high volatility are key risks associated with penny stocks
- Following a proper investment strategy and risk management, you can also increase your chances to earn from penny stocks
- Diversification is important while buying penny stocks
- Dedicate only a small part of your capital to buying penny stocks
Features of Penny Stocks
Here are the key features of penny stocks:
Low Market Price
As discussed, penny stocks are by their definition the ones that are available and at a fairly low market price. Based on price also, penny stocks are casually categorized under different price heads like- penny stocks under Re 1, penny stocks under Rs 10, etc. The reason behind their low price is the low market capitalization of the company. Having said that, it is not that their price always remains low. Some penny stocks can grow substantially in value and come out from the category to be called multibagger stocks.
Penny stocks are also known for their high volatility. Mainly preferred by the ones looking for short-term profits, penny stocks are usually bought and sold in huge quantities by big traders. For example, you can buy 10000 units of a penny stock of Re 1 with just Rs 10,000. The buying and selling of such low-priced stocks in such high quantities induce extreme volatility. This is the reason why the price of penny stock changes very sharply in an unexpected manner. For the same reason, penny stocks are generally considered highly risky investment options.
This is yet another risk factor in penny stocks. Often they have considerably low liquidity and may push traders into a situation where either they do not get enough buyers to sell the holdings, or enough sellers to square their short positions.
High Return Offering Potential
The only reason why we are still learning and caring to read about penny stocks is the reason that can become someone’s reason behind their rags-to-riches story. The best penny stocks list is filled with a number of stocks that have multiplied in their value exponentially within a very short period of time. Such stocks, as we read above, are called multibagger penny stocks. We can understand this with an example- Suppose you buy 5000 units of Re 2 stock that cost you Rs 10,000 overall. Even if the stock prices increase by 50 paise, making its market value to be Rs 2.5, you will earn a profit of Rs 2,500, which is 25%. And this is pretty normal with penny stocks. 25% is nothing, penny stocks can give 300%, 400%, and even more than 1000% return in a very short period of time.
Benefits of Investing in Penny Stocks
The main benefit of investing in penny stocks is obviously their ability to give higher returns in a short period. Their every other benefit revolves around this only. Let’s understand how.
Ability to Turn Multibagger
A number of penny stocks have turned out to be multibagger in the past, and such stories keep on coming now and then from the colony of penny stocks. A stock, that a year ago was trading below Rs 5 is now priced at Rs 500, and all these are quite normal with penny stocks.
An Opportunity to Earn Tomorrow's Favourite at a Low Price
A number of penny stocks that after being first ignored by the mass of investors turn out to be the market’s favorite in a small time. There is a vivid example of one of the top market cap companies- Adani Green. The company was listed with a stock value of around Rs 50. Within less than four years, the stock price crossed the mark of Rs 3000, which is around a 6000% increase in value. This has not only given the early investors great returns but made the company stand out among big giants.
Learn Fundamental Analysis for Free
If you want to be the next big bull and want someplace to test your ability of fundamental analysis, there can be none other than penny stocks. Pick top 50 Indian penny stocks with good fundamentals, do an in-depth fundamental analysis of the companies, and invest in those that you believe will turn out to be a multibagger in the future. Even if you see one out of 10 stocks succeeding as per your expectations, you will become even more confident with your trades. A stock with a solid fundamental only can become a multibagger, and with sound knowledge of fundamental analysis, you can easily filter those stocks.
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Golden Tips for Penny Stock Investment
While we learn the benefits of investing in penny stocks, we should also make ourselves explicitly clear that there stands an equal or more chance of penny stocks failing to perform. The success to failure ratio in penny stocks is extremely low. Low liquidity, high volatility, and non-availability of proper knowledge of the company pose higher investment risks.
But there are ways through which you can take the risk of investing in penny stocks and still mitigate the risk, how? Let’s learn in brief.
Penny Stocks: Don’t Put All Your Eggs in One Basket
The famous diversification rule is also applicable to penny stocks investment. However, it is used not mainly to reduce risk but to increase the chances of earning profit. Keep a low capital (not more than 2-3%) of your entire investment to invest in penny stocks. For example, in an overall investment capital of Rs 10 lakhs, you can keep Rs 20,000 to invest in penny stocks. You can use this Rs 20,000 to buy 4000 units of penny stocks priced at Rs 5 (high and safe in the case of penny stocks). Now instead of buying 4000 units of a single stock, you can buy 500 units of eight different penny stocks.
Even if two out of the eight turn out to be multi-baggers, it will compensate for the losses made in the other six. Say the price of two stocks increases 10 fold, they only can give you a profit of Rs 45,000, which is more than double your initial capital.
Buy Penny Stocks of Extremely Low Value
Instead of hunting out penny stocks that have a value less than Re 1, try to filter out with a bit more price and strong fundamentals. You start with the best penny stocks to buy in India from Rs 5 and increase your chances of getting higher returns by mitigating the associated risks.
Now all theory one side, let’s have a look at the best penny stocks to buy that have the potential to become multibagger penny stocks for 2022 India.
Top 10 Most Popular Penny Stocks in 2022
|Name||Market Cap||Closing Price||52-week High|
|Suzlon Energy Ltd||Rs 6,950 Cr||Rs 7.45||Rs 13.10|
|Jaiprakash Power Ventures Ltd||Rs 3,838 Cr||Rs 6.10||Rs 11.15|
|South Indian Bank Ltd||Rs 1,549 Cr||Rs 7.50||Rs 13.95|
|Shree Global Tradefin Ltd||Rs 893 Cr||Rs 7.30||Rs 10.45|
|Syncom Formulations (India) Ltd||Rs 600 Cr||Rs 7.65||Rs 19.49|
|Mangalam Industrial Finance Ltd||Rs 375 Cr||Rs 4.07||Rs 9.78|
|JCT Ltd||Rs 262 Cr||Rs 3.17||Rs 8.28|
|Inventure Growth & Securities Ltd||Rs 202 Cr||Rs 2.60||Rs 6.75|
|Prismx Global Ventures Ltd||Rs 205 Cr||Rs 4.86||Rs 12.90|
|IL & FS Investment Managers Ltd||Rs 181 Cr||Rs 6.05||Rs 11.25|
(Price date as of June 21, 2022)
Important things to note for the above data:
- 52-week high prices of the stocks are mentioned to show how high these stocks went in recent times.
- Most of these stocks have outperformed the Nifty 50 in the last 12 months. The current value of these stocks is in between their 52-week low and 52-week high. This is when the Nifty is trading near its 52-week low.
- The list is sorted on the basis of the market cap of the companies, along with other factors.
A final comment on the Penny stocks list
To conclude, penny stocks may not and should not take the center stage in your investment portfolio. However, at the same time, they should not be ignored as well. Devising a proper investment strategy based on the aforementioned tips, you can also increase your chances of feeling proud to become an early investor in one of the multibagger penny stocks of 2022.
- Where can I buy penny stocks?
Penny stocks, just like any other stock, are traded on stock exchanges. You can buy these stocks in the same way you buy other stocks.
- Can penny stocks price become zero?
Yes, they can but it is not only with penny stocks. Any company listed on the stock exchange can declare itself bankrupt and the investors may lose out the entire capital. The same risk is associated with penny stocks but it is relatively higher.
- Which penny stocks give dividend?
There are rarely any penny stocks that disburse dividends and penny stocks are not bought for dividend purposes. They are primarily preferred to gain higher returns in a short period.
- Why is liquidity important when buying penny stocks?
The penny stock you are buying should have enough liquidity that you can sell them anytime you wish to.