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Want to know the Best penny stocks to invest in for 2022? Here's my Watchlist!

by , 04 February 2022
Want to know the Best penny stocks to invest in for 2022? Here's my Watchlist!
Small cap shares, or penny stocks, were by far 2021's best performing sector.
My Red Hot Penny Shares closed portfolio provided us with an average gain of 72.82% on 20 stocks for 2021, with a win rate of 80%.
In comparison, the Alt-X index was up 30% for the year, whilst the All Share index is up 19%. The Small Cap Index was the top performer of the lot with 42% for 2021 to date.
I expect another super year for small caps as 2022's economic recovery takes hold. We'll see underappreciated smaller companies really gain even more favour with investors…
Every year at the start of the year I reveal my penny stock watchlist as well as my top five penny stocks to buy now to my Red Hot Penny Share subscribers...  Read on below to discover the shares I've pinpointed to rocket up in 2022...
 
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Here’s some of my favourite plays to look out for on the market right now

Penny Stock Watchlist share #1 - Caxton Publishing
Caxton is a well-diversified business that is better known for owning newspapers like The Citizen. But the company is much more than newspapers and magazines.

It owns PrivateProperty.co.za as an online business, and then it owns printing companies that do labels for the like of Castle and Black Label.

It even owns a significant share in MPact, another successful packaging business.

The reason I love this stock is the fact that this R3 billion business has R2 billion cash in the bank.

What’s more – the company has a net asset value per share of 1717c, compared to an 889c share price. So, shares are selling for a massive discount of around 50%.

It’s also paid a 50cps dividend. That’s a yield of around 6% - way more than you’d get on cash in the bank…

Penny Stock Watchlist share #2 – Master Drilling
Master Drilling operates drilling equipment for the mining exploration, civil engineering and hydro power sectors.

The company has certainly benefited greatly from the big boost the mining sector received this year as all commodity prices shot up.

The company announced interim results for 2021 at USD6c per share – that’s around 91.8cps locally. Annualised it would amount to 183.6cps. This puts the company on a PE ratio of only 6.26 – way below market average meaning it is still very cheap. On a net asset value basis, the share is also undervalued. Its value per share sits at 1552c, with the current share price at 1150. That’s a discount of 26% to the company’s underlying value!

These results are not only a big increase on 2020 figures but an increase on pre-Covid profits as well – so it is better off today than it was pre-pandemic!

Master Drilling also recently announced the acquisition of an engineering business for a maximum of R210.4 million – effective 31 July 2021.
The business made a profit of R28 million in the year ending February 2020 and has a book value of R236 million. So, it should add value to the bottom line in year one.

Penny Stock Watchlist share #3 – Bell Equipment

You’ve seen the yellow trucks at a mine, or a front-end loader at a construction site before. That’s Bell equipment. A manufacturer, distributor and seller of mining, construction and forestry equipment.

Bell Equipment results for the interim period ending June 2021 came out in mid-September 2021.

The company saw a massive increase in profits – from a 48cps loss in 2020 to a 177cps profit in 2021.

This is quite amazing – as the six-month profit alone puts the company on a PE ratio of 7.

If the company repeats that profit in the second half of the year it would see earnings of 354cps – putting it on a PE of only 3.52.

That’s way too low.

Considering the share has an underlying net asset value of 3779c – it is hugely discounted.

Even if we apply a 50% discount to its NAV the share price is still below nav at its current 1320c.

Management staged a failed buyout of the company, trying to buy it on the cheap. I suspect there will be interest in it from competitors if its
share price doesn’t increase soon – and it will be taken out at a big premium to the current share price.

Penny Stock Watchlist share #4 – Bowler Metcalf

Bowler is a family owned and managed packaging company. It’s been around for ages and has always been a solid performer.
The company hasn’t skipped paying a dividend for a single year since 1992.

Back then it paid a 2cps dividend.

Now it’s grown 2,470% to 51.40cps in 2021.

In its most recent results, the company increased revenue by 14%. Net profit after tax increased 11% and earnings per share increased 15%
from 111cps to 127.3cps.

The share price is currently 1101c, so it sits on a PE of only 9.16 with these results.
 
 
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My Five Top Small Cap Stocks to Buy Now!
 
1. I’m expecting 380% upside from one of the hottest Covid Recovery Stocks on the market right now!
 
2. There's a 148% in gains on the table for this precious metals producer!
 
3. You could double your money on one of SA's last Gold Miners
 
4. You could pocket 132% gains in 12 months from this metals recycling business
 
5. Demand for this Defence business' stealth products is soaring - this could mean only one thing for its share price!
 
If you want to find out the name of these five small cap stocks then claim a free copy of my newest Red Hot Penny Shares report!
 
To reserve your no obligation, trial copy of Red Hot Penny Shares and more smart ways to get invested, go here now...
 
 
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Penny Stock Watchlist share #5 – Clientele
Clientele is a life insurance company that uses direct marketing to sell to its clients.

We’ve all seen the TV ads – and clearly, they’re effective.

In the company’s results for the year ending June 2021, it announced that it added R215 million new business to the bottom line, and a 19% increase in diluted earnings per share to 116.86cps. That means it is on a PE Ratio of only 8.62 now.

The company also declared a MASSIVE dividend. Shareholders will get 110cps in dividends from the company, up 16% from last year. That means you get a dividend of more than 10% on the company’s current share price.
Its interim results are due 22 February 2022 – and should they continue the past trend there’ll be a handsome dividend on the way, and further share price appreciation.

Penny Stock Watchlist share #6 – Attacq Ltd
Attacq is a listed property developer and Real Estate Investment Trust (REIT). The company traded around R16 early in 2019. Today it’s at a mere 752c.

That said, latest earnings per share released in September 2021 was 121.4cps. That puts it on a PE of only 6.19.

On a net asset value basis, the company’s shares are worth 1628c. That means it currently trades at a discount of 53.8%.

Now I can hear you say that following the pandemic, work at home regulations and growth in online shopping, a property company like this isn’t a great investment.

But guess what – it’s shopping malls are already seeing higher turnover than they did BEFORE the pandemic. It has recovered in terms of mall turnover BUT the share price doesn’t reflect that yet. 
 
Compared to 2019 all the malls, except Brooklyn Mall had grown. Hence turnover is back at 2019 levels. Many thought we’d only see that happen in 2023 – but retail revenues are back to pre-pandemic levels.

I suspect the picture still looks different for some manufacturers who are dealing with supply chain issues, and then the tourism sector is still far from a recovery to pre-pandemic levels as well. But this is positive news, not just for Attacq, but the economy as a whole. 

Attacq has also refinanced R920 million of its debt, at a 0.3% improved interest rate. The company has unrestricted cash balances of R1.5 billion and R310 million undrawn debt – so there’s still plenty powder in the keg as well.

These are just six penny stocks to keep an eye on right now – but it’s definitely not an exhaustive list – there are many more.

I have just sent my Red Hot Penny Share readers My top five shares to buy right now, if you want an in on these stocks, go here..
 
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Want to know the Best penny stocks to invest in for 2022? Here's my Watchlist!
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