Despite Indian markets witnessing a major correction in the first half of 2022, some penny stocks delivered over 10 times returns to their investors even in a weak environment.
Despite the stellar returns of certain penny stocks, it is important to note that such stocks are highly volatile and not suitable for investors with a risk-averse approach. Only high-risk investors should invest in such stocks and in very small weightage. These stocks can witness massive increases as well as steep declines.
Three penny stocks rallied over 1,000 percent in the first half of 2022 despite the ongoing volatility in the domestic equity markets. However, according to analysts, the ongoing geopolitical crisis between Russia and Ukraine, rising commodity prices, massive selling by foreign investors, and rise in interest rates by global central banks will continue to weigh on market sentiment in the near future as well.
Let's take a look at the penny stocks that defied market weakness:
Kaiser Corporation: The stock jumped from ₹2.79 on December 31, 2021, to ₹77.2 on June 30, 2022, skyrocketing as much as 2,667 percent in this period. Incorporated in 1993, Kaiser Corporation, through its subsidiaries, provides turnkey project management and engineering services in India. It also engages in printing labels and cartons, packaging materials, magazines, and articles of stationery. The stock has jumped 22,872 percent in the last 1 year and has a market cap of ₹447 crore.
Gallops Enterprises: The stock advanced from ₹4.56 to ₹79 in the first half of 2022, rising as much as 1,632 percent in this period. The firm is engaged in the building construction business; and operated as a property developer, and building and erection engineer, as well as civil, mechanical, and labor contractor in India. In the last 1 year, the stock has risen over 1,600 percent and has a market cap of ₹35 crore.
Hemang Resources: The stock jumped from ₹3 to ₹47.5 in H1CY22, rising as much as 1,483 percent. The stock has advanced nearly 890 percent in the last 1 year and has a market cap of ₹60.5 crore. The firm is engaged in the coal trading business in India through two segments, Coal Trading and Infrastructure. The company sells imported and indigenous coal and trades in land; and provides stevedoring and logistic services.
Meanwhile, other penny stocks like Alliance Integrated Metaliks, Beekay Niryat, BLS Infotech, Sadhna Broadcast, and Mid India Industries rallied over 500 percent each in the first half of 2022.
Cressanda Solutions, Khoobsurat, Diligent Industries, Step Two Corporation, VCU Data Management and Toyam Industries also delivered returns between 200-400 percent each during this time.
Penny stocks are basically stocks whose share price is in single digits or below ₹10. These stocks have a market cap of less than ₹1,000 crore.
Experts believe that before investing in any stock it is important to focus on its fundamentals like promoters, earnings, business model, etc. One should only invest in stocks with good fundamentals from different market cap brackets. It is important to ignore stocks with high debt or poor earnings.
Disclaimer: This story is for educational purposes only. Please speak to an investment advisor before making any investment decisions.