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Penny stocks have great potential for profit, don’t they? And you have little to lose? Hmmm. Both of those are wrong thoughts.
The maximum we can lose on a penny share is 100%, exactly the same as any stock. And I’d say there’s probably a high chance of a blackout, since something went wrong to send them to such low levels.
I will briefly mention one as a warning. I won’t name the company, but five years ago its shares were around 1p. Don’t have much to lose? They have crashed more than 95% since then.
The value of the investment depends on the company’s performance, not just the share price. Here are two of my favorites.
Venture capital
When you think about investing in venture capital, what comes to mind? Ideas for billionaire investors plowing cash into private equity?
With Triple Point Venture VCT (LSE: TPV), we can continue with smaller figures.
I had never heard of it until I read my colleague Jon Smith’s article, “This penny stock invests in startups. That’s why I think it may continue“. But we foolish investors learn from each other, don’t we?
Investing in venture capital can be a risky business. The things they invest our money in may not be easy for us to investigate and understand for ourselves. We have to hope that the managers are in football.
Trust the trust?
If trusting our money to the people of the City without a proper understanding of what they are doing with it sounds counterintuitive to the foolhardy approach… yeah, that’s a good point.
However, the trust has invested in forest management using artificial intelligence (AI). And some have gone to a company that specializes in low-cost electric vehicle (EV) systems for businesses.
Those are high profiles right now. And it may not take much for one of them to go off and give Triple Point’s share price a boost.
Things may go wrong at first, of course. But I can put a small amount of my investment in 2025 in this penny stock.
Humble
Follow me Topp’s Tiles (LSE: TPT) for a long time.
I have bought their products, and I love them. Many others do too. And over time, it built a strong following.
The problem is, the business is plagued by many external problems. The most recent is the outbreak of the epidemic, which has quickly stopped us from doing anything more than essential shopping.
Inflation, high interest rates, expensive debt, a depressed construction industry… all took their toll.
A beautiful view
But during FY November, the company told us that “continuing to take market share in a tough trading environment.” And although the market “c. 20% down on pre-Covid levels,” Tops saw a 14.9% revenue growth ahead of 2019.
That tough trading environment remains a major threat, and stubborn inflation could hold stock prices back into 2025. But City expects earnings to grow over the next few years, and is forecasting a 9% dividend yield.
That might end up motivating me to buy.
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