Here are 3 penny stocks that are fundamentally strong, with expanding margins, growing top and bottom lines over the recent fiscal years and have impressive returns over the medium term holding period. Moreover, these stocks trade at low P/S, i.e, have revenues much higher above their market cap coupled with low price makes them stocks you should add to your watchlist. The stocks are also sufficiently liquid stocks allowing for comfortable market transactions.
Axel Polymers (“Axel”):
Axel has a Piotroski score of 9, indicating strong financials. Axel is up 5% today, currently trading at Rs. 52 with a market cap of Rs. 44 crore. The stock is 9% away from 52 week high and has returned 337% over a 3 year period.
Axel has shown impressive performance over the last 3 years:
Revenue of Rs. 23 crore in FY21, Rs. 73 crore in FY22 (+217% YoY), Rs. 85 crore in FY23 (+16% YoY) – 3Y CAGR of 55%. Net profit of Rs. 0.2 crore in FY21, Rs 0.9 crore in FY22 (+% YoY), Rs.1.2 crore in FY23 (+% YoY) – 3Y CAGR of 82%.
Net Margin in FY23 stands at 1.4%, up 60 bps from FY21. Other key metrics to look at are its ROE – 12%, EPS (TTM) – 1.8.
Axel operates in the Industrial Plastic Products industry,i.e, it manufactures and sells compounds, blends and alloys of engineering, and specialty and commodity polymers in India.
National Plastic Industries (“NPI”):
NPI has a Piotroski score of 9, indicating strong financials. NPI is up 2% today, currently trading at Rs. 53 with a market cap of Rs. 48 crore. The stock is 19% away from its 52 week high and has returned 170% over a 3 year period.
NPI has shown significant progress over the last 3 years:
Revenue of Rs. 76 crore in FY21, Rs. 83 crore in FY22 (+9% YoY), Rs. 112 crore in FY23 (+35% YoY) – 3Y CAGR of 14%. Net profit of Rs. 2.4 crore in FY21, Rs. 2.8 crore in FY22 (+17% YoY), Rs. 4.3 crore in FY23 (+54% YoY) – 3Y CAGR of 21%.
Net Margin in FY23 stands at 3.9%, up 80 bps from FY21. Other key metrics to look at are its ROE – 13%, EPS (TTM) – 4.9.
NPI operates in the Industrial Plastic Products industry, i.e, it manufactures and sells plastic products under the NATIONAL brand name in India.
Rasi Electrodes (“Rasi”):
Rasi has a Piotroski score of 9, indicating strong financials. Rasi is up 5% today, currently trading at Rs. 17 with a market cap of Rs. 52 crore. The stock is 13% away from its 52 week high and has returned 513% over a 3 year period.
Rasi has made great headway over the last 3 years:
Revenue of Rs. 39 crore in FY21, Rs. 68 crore in FY22 (+74% YoY), Rs. 88 crore in FY23 (+29% YoY) – 3Y CAGR of 31%. Net profit of Rs. 1.4 crore in FY21, Rs. 2 crore in FY22 (+43% YoY), Rs. 3 crore in FY23 (+50% YoY) – 3Y CAGR of 29%.
Net Margin in FY23 stands at 3.4%, exactly the same as in FY21. Other key metrics to look at are its ROE – 10, EPS (TTM) – 0.9.
Rasi operates in the Industrial Products industry, specifically, it manufactures and markets arc welding electrodes and copper coated mild steel wires for use in engineering and fabrication industries in India.
Written by Sandeep R
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