Penny stocks are shares of companies that have a very low market value, typically ranging between INR 10 to INR 30. While penny stocks are considered risky investments, some penny stocks with strong fundamentals can be worth considering for long-term investment.
Fundamentally strong penny stocks are those that have a decent market capitalization, sustainable annual earnings growth, and secure ratios such as price-to-earnings and debt-to-equity. Forbes Advisor India has compiled a list of the best fundamentally strong penny stocks available in the market.
1. Indbank Merchant Banking Services: This company has shown potential for attractive returns with sound PE, PB, and return on equity ratios. It reported a quarterly net profit rise of 320.37% in June 2023.
2. Zeal Aqua: With strong PE, PB, and return on equity ratios, Zeal Aqua is considered a fundamentally strong penny stock. It reported a quarterly net profit rise of 147.13% in March 2023.
3. Acme Resources: Acme Resources is a secure penny stock with good ratios and a growth balance sheet. It reported a quarterly net profit rise of 396.79% in March 2023.
4. 3P Land Holdings: This company has PE, PB, and return on equity ratios within a secure range, with a quarterly net profit rise of 8.44% in June 2023.
5. White Organic Agro: Despite a quarterly net loss, White Organic Agro is an interesting penny stock with low debt and strong ratios.
6. Odyssey Corporation: Odyssey Corporation, despite a quarterly net loss, has the potential for attractive returns with sound ratios.
7. Gowra Leasing & Finance: This company reported a quarterly net profit rise of 350% in March 2023, making it a promising penny stock.
8. Fraser & Company: Fraser & Company has low debt and potential for attractive returns, despite a quarterly net loss.
Investing in fundamentally strong penny stocks requires analyzing key ratios such as PE ratio, PB ratio, ROCE, RoE, quarterly earnings, and stock volatility. These metrics can help determine the health and performance potential of a penny stock.
It’s important to note that penny stocks are inherently risky investments, and past performance may not guarantee future growth. Before investing in penny stocks, it’s advisable to carefully study market trends and factors that may impact their prices.
In conclusion, while fundamentally strong penny stocks can provide opportunities for growth, investors should conduct thorough research and exercise caution when investing in such volatile assets.