Stock market investors are always seeking high-quality opportunities instead of speculative bets. Penny stocks are investment options that can become multibagger stocks in the future.
In this article, let's explore the top 5 multibagger penny stocks that possess strong fundamentals and as an investor, you can take a chance on these stocks. Along with that, let’s look at how you can pick these stocks while also managing risks.
Swiss Military Consumer Goods Ltd
Swiss Military Consumer Goods Limited is in the business of distribution and marketing of lifestyle merchandise. Some products they sell are travel equipment, leather goods, and electronic devices under the SWISS MILITARY brand.
They also provide household appliances such as mixers, grinders, and microwave ovens. It has delivered a profit growth of 84.8% CAGR in 5 years and maintained a dividend payout of 28.2%.
Open Demat Account and Start Trading!
Goyal Aluminum Ltd
Goyal Aluminum Limited is a trader and manufacturer of aluminum products like aluminum coils, sheets, sections, and other parts. The company’s growing return on equity, low debt, and cash flow management show it can outperform in the market.
Shelter Pharma Ltd
Shelter Pharma Limited produces herbal medicines for humans and supplements for animal healthcare. Some of their products are lemonade barley water and agriculture powder, marketed under the "Shelter" brand. They aim to provide affordable herbal healthcare to consumers.
The company has an ROE of 30.1% over the last three years and very low debt.
Rajnandini Metal Ltd
Rajnandini Metal Limited is a manufacturer, trader, and dealer in high-grade copper casting rods and copper wires. The company has manageable debt levels and smart investment initiatives. Recent dividend distributions show the company is committed to its shareholders.
Rajnandini Metal can become a formidable contender in the industrial and electrical applications sectors in the years ahead.
Jupiter Infomedia Ltd
Jupiter Infomedia Limited provides web-based solutions and investment services. They are a web information media company that manages online websites in the business, encyclopedia, Yellow Pages, and news portal domains. Some of their e-commerce sites are JimTrade.com, JimYellowPages.com, and GiftsnAccessories.com.
The company has provided a profit growth of 188% CAGR over the previous five years and the future seems bright for the company.
How Should Investors Pick Penny Stocks?
When considering investments in penny stocks within the Indian stock market, keep the following things in mind:
● Examine the company’s financial health, leadership team, and operational practices thoroughly.
● Look for penny stocks that show consistent revenue growth, profitability, and a low debt-to-equity ratio.
● Assess the broader industry trends and the specific growth potential of the company before deciding to invest.
● Understand that penny stocks can be highly volatile in the short term and consider holding them for the long term to realise potential gains.
● Set stop-loss orders to limit potential losses associated with penny stock investments.
● Spread your investments across various penny stocks to reduce the risk of significant losses from any single investment.
● Choose penny stocks that have adequate liquidity and trading volume to make buying and selling easier.
● Keep up-to-date with news and market developments that could affect the company or its industry.
How to stay cautious and avoid risks while investing in Penny Stocks?
Before investing in penny stocks, it is essential to research to reduce risks. Here are ways you can do so:
● Study the company’s financial statements in depth and check the business's overall viability.
● Focus on industries that have the potential for future growth.
● Check the quality of the company’s management and its track record.
● Choose transparent companies.
● Spread your investments across multiple penny stocks to reduce any associated risks.
● Have a long-term investment outlook.
● Manage your risk by setting realistic investment goals and using stop-loss orders to manage potential risks.
Final Thoughts
Before investing in penny stocks make sure to thoroughly research the company's financial statements, debt levels, and growth prospects. As you understand penny stocks more deeply, having a disciplined approach will improve your chances of finding investment opportunities.
The best way to go about this is by managing your risks thoroughly.
Financial Calculators: SWP Calculator | EMI Calculator | SIP Calculator | Compound Interest Calculator | CAGR Calculator | Sukanya Samriddhi Yojana Calculator | Retirement Calculator | Mutual Fund Returns Calculator | EPF Calculator | Inflation Calculator
Popular Stocks: ICICI Bank Share Price | HDFC Bank Share Price | CDSL Share Price | UPL Share Price | TCS Share Price | BHEL Share Price | Trident Share Price | IRFC Share Price | Adani Power Share Price