Investing In Penny Stocks in Nigeria

Penny stocks are common shares of small public companies that trade for less than one dollar per share, here in Nigeria penny stocks has a low price per share value that falls within the price range of N5 and below, which means the investor does not need a ton of cash to invest in them. They are also often capable of providing massive returns to investors, and this is what attracts investors to them.

Also, penny stocks are quite prone to massive drawdowns due to their high volatility and can be viewed as a blend of high risk and strong profit instruments. Consequently, some stock analysts discourage purchasing them for long-term buy-and-hold investments as the sector is often built on short-term trades. It is, therefore, critical for investors to know when to take profit as these stocks often offer cyclic returns.

The founder of Tradelines DotBiz Investment Limited, Mr Tunde Jeariogbe, says “the phrase Penny Stock has coined out the American unit of currency, it refers to equities selling below one dollar. Since penny is a lower denomination, it, therefore, signifies that equities in this class are low priced stock or small companies.”

Advantage of Patronising Penny stocks

Jeariogbe says the first is that traders can purchase a high volume of such stocks due to the low price, and increase their returns at a very little change in the share price.

Secondly, he notes that the probability of recording high loss is lowered since most of them are already at rock bottom, especially in a controlled market as we have in Nigeria. Recall that price movement is set at every day’s trade and traders cannot even move a stock below a particular price. In other words, the chances of hitting the profit line are some of those stocks are high.

Tips For Choosing Best Penny Stocks

“Now, what are the things to watch out for in penny stocks? The first is the numbers released by the companies; you must be sure that the stock is not down for extremely poor performance, Secondly, you must ensure the liquidity of such stock; in other words, ensure that when you decide to exit the stock, someone will be willing to take it from you. Lastly, identify the management strength, how efficient is the organization run?” he pointed out.

Good Penny Stocks

They include; Livestock Feeds Plc, Champion Breweries Plc, AXA Mansard Insurance Plc, AIICO Insurance Plc and First City Monument Bank.

Livestock Feeds Plc

The medium-capitalized company known for manufacturing animal feeds has recorded significant buying pressures from investors, as its bottom line continues to impress investors.

Champion Breweries Plc

The fast-rising Nigerian brewery company is currently enjoying significant buying pressures for multiple reasons.

AXA Mansard Insurance Plc

A member of the AXA group and a global leader in insurance and asset management has increasingly attracted a significant number of investors amid its recent impressive results.