Penny stocks are the shares of the small-cap companies which usually quote at very low values and are mostly illiquid. These are also known as nano-cap stocks or micro-cap stocks.
Penny stocks have unpredictable pricing because the value of their actively traded shares is small. Therefore, they are subject to wide fluctuations but also have the capacity to offer multi-bagger returns.
However, the investors should be cautious of investing in penny stocks as they are also means of various scams such as pump and dump strategy. Apart from this, the information available about penny stocks is limited which may hamper the investor to make informed investment decisions.
Despite this, penny stocks are preferred by investors with a high-risk appetite. Some investors apply additional filters to add a layer of safety such as low debt, steady earnings growth, consistent profits, and growing revenue.
Here we have covered 4 good debt-free penny stocks that an investor can consider including in their portfolio.
Ajanta Soya Limited
With a market capitalisation of ₹ 385 crores, Ajanta Soya is in the business of manufacturing Vanaspati and various kinds of cooking oil with applications of products for a bakery like biscuits, puffs, pastries, etc.
This edible oils producer which is also owned by ace-investor Dolly Khanna has delivered multi-bagger returns of 106% over the last year. As of 10:50 IST, it trades at ₹ 47.95 per share.
The company is virtually debt-free and has a trailing twelve months price to equity ratio (TTM PE) of 9.15. Its revenues and income have increased consistently over the last 3 years.
Shree Digvijay Cement
Gujarat-based Shree Digvijay Cement is a deb-free cement producer with a capacity of 1.2 million tonnes per annum.
It has generated sustainable returns for its shareholders climbing 281% in the past five years. Its present market capitalization stands at ₹ 836 crores with a below industry median TTM PE of 15.12.
For the fiscal year ended March 2022, its net profit increased 2.45% to ₹ 55.28 crores compared to ₹ 53.96 crores last year. During the year, the company recorded a 25.16% growth in revenue to ₹ 629.34 from ₹ 502.82 crores registered during the previous fiscal year. The stock was trading at ₹ 58 per share as of 10:50 IST.
Jullundur Motor Agency
JMA or Jullundur Motor Agency is involved in the business of trading auto spare parts and petroleum products across India since 1927. It distributes products such as bearings, brakes, engine components, clutches, cooling systems, suspension, power steering oil & lubricants filters, etc.
The stock trades at a TTM PE of 6.16 and has given a return of 25% in the last twelve months. It has a market capitalization of ₹ 149 crores. The stock of the auto parts distributor was trading at ₹ 65 per share.
Ador Fontech Limited:
The shares of the industrial engineering equipment and services provider were trading at ₹ 71.35 per share, up 22% over the previous twelve months.
It manufactures an array of low heat input welding alloys, thermal coating alloy powders, flux cord welding wires, and other products. The company is also providing services engineering services in tandem with its broader product line.
The company has a market capitalization of ₹ 249 crores and doesn’t carry any debt on its balance sheet.
Written by – Vikalp Mishra
Disclaimer
The content in this news article is not investment advice. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
