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These penny stocks are running - don't ignore this opportunity

by , 15 December 2020
These penny stocks are running - don't ignore this opportunity
Between May 2015 and May 2018, the JSE Small Cap Index went nowhere. And between May 2018 and May 2020 it dropped 44.68%.

Since then however the Small Cap Index is up 29%.

That's a huge rally in just six months.

But here's the thing. It's not over yet. The small companies in this index aren't even back to the levels they traded, at the start of 2020. Never mind their 2018 highs…

If these companies go back to their 2018 levels - we're looking at a further 33% increase on the 29% in the Small Cap Index that we've already seen.

What's more - many of these companies are even more attractive.

Let me explain…

JSE Top Penny Stock 2021 Report: You could make a fortune with the 5 potentially explosive shares hand-picked by our market expert. 
5 penny stocks you need to take notice of today
Penny Stock #1 – Adapt IT
In January 2019 the Adapt IT (JSE: ADI) s share price was 640c – with profits for the full year in 2019 coming in at 57.27cps…
By January 2020 the company’s profits dropped somewhat when it reported interim earnings. The local recession that was taking shape was to blame. The share price had basically halved to 332c.
As the Covid-19 Pandemic took hold, shares in this company crashed to a shocking low of 110c.
That means it was on a PE ratio of only 1.92.
Since then Adapt IT’s share price shot up 219%.
Despite this, the company’s PE ratio still trades at a low 4.89. What’s more, the company produces more than a quarter of its income from outside of SA’s borders. Plus, its paid off nearly a third of its debt in the past year, and grown earnings throughout the Covid-19 pandemic.
Penny Stock #2 – Ellies Holdings
Ellies share price is up 83% in the past month. But it is still down 72.5% on a 3-year basis.
That said the company released results on 4 December 2020, and grew revenue by 1.9%, with EBITDA increasing a whopping 1,261% from R2.5 million to R33.4 million.
Headline earnings per share came in at 2.37cps for the 6-month period. If the company were to repeat these results in the second half of its financial year it would sit on a rock bottom PE ratio of only 2.32.
Net tangible asset value per share is 20.8cps – compared to the share price of 11c.
This is quite a speculative little share – some investors can definitely remember it hitting 990c nearly a decade ago… While I don’t see it hitting that price again in the coming year, there’s definitely opportunity to double or triple its current share price if the current recovery continues.
Penny Stock #3 – Grindrod
Grindrod is an industrial transport company, and it owns its own bank as well.
The company’s financial services business is likely worth as much as the share price is right now – with everything else thrown in for free…
The share is down 59% in the past three years…
But based on August 2020 results, the business isn’t doing badly. It generated R507.4 million cash, up 40% from 2019, and its net asset value sits at R12.34 – while the share price is at 512c.
Clearly investors are starting to notice – as the share price is up 43% in the past month alone!
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Those canny Pickpocket Traders didn’t - this time a 111% gain from a trade.
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Penny Stock #4 – Jubilee Metals
I introduced Jubilee to Red Hot Penny Shares readers at 65c. Today the share price is up 246%. In the last month, the stock is up 55%.
But I’m holding on for more.
You see, the company produced its maiden profit this year as operations have started to mature.
But it’s got a string of new growth projects in the pipeline.
The company is busy with a mammoth mine dump retreatment project in Zambia – and when this starts producing at full potential – I expect the share price to double from current levels.
Based on current profits – the share is on a PE of 13.87 – which isn’t expensive for a mining stock with huge growth potential.
Penny Stock #5 – Santova
Even though Santova shares have shot up 61% in the past three months, the stock is still almost 30% below its three year high.
But results released on 27 October 2020 show why investors have started favouring the company again…
Revenue for the six months March – August 2020 came in at R207 million compared to R187 million in 2019. Earnings per share grew to 21.81cps from 18.31cps in the previous year. And the company now produces the bulk of its profits from offshore instead of SA.
In short – this is a global logistics business, listed in SA.
Net asset value per share is 349c, compared to a 285c share price. So, you’re still getting the stock at a discount of 18%. At its height, the stock traded at DOUBLE its NAV… That means nearly R7 a share compared to R2.85 share price of today…
In short – the small cap index, and many penny shares have run hard in the past month.
But most of these shares have been undervalued for the better part of three years. Many of them have actually been growing profits annually for years even though their share prices are at multi year lows.
What we’re now seeing is investors taking notice of the huge discounts in the small cap market…
And there’s opportunity for some great gains in 2021.
Here’s to unleashing real value
Francois Joubert
Editor, Red Hot Penny Shares
P.S. To get in on my favourite 5 small caps set to double in 2021, go here.

These penny stocks are running - don't ignore this opportunity
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