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Some of the penny stocks I’ve been watching include those in the home building and renovation industry.
But the list is getting shorter and shorter, as Michelmersh Brick Holdings have either broken the market capitalisation barrier of £100 million or a share price of 100 pence.
In the case of Michelmersh, shares are now just outside the range at 105 pence, but are still a buy candidate for me.
Penny Stock Dividend
At least Topps tiles (LSE: TPT) is still within the range with a share price of 46 pence. But its market capitalization of 93 million pounds is only just enough.
We often have to choose between a low share price that we expect to rise and a high dividend. In this case, we can hope for both.
Forecasts suggest the dividend yield will be a whopping 7.5% this year. And while forecasts are probably least reliable for very small-cap stocks, they at least suggest that the dividend will grow over the next few years.
A third-quarter trading update showed that conditions remain challenging, as we would expect given the current economic situation.
But the company said: “Positive macroeconomic data on inflation, real wage growth, rising consumer confidence and increased activity in the real estate market give rise to some optimism about an economic recovery.“
Big risk
Sometimes really crashed penny stocks come along. And they have all the signs of either going bust or making a potentially spectacular recovery. That’s the question I’m pondering. Petrofac (LSE:PFC).
Shares in oil and gas services companies rose by over 15 pounds in 2012. Today they are at just 15 pence.
A few years ago there was a bribery scandal and then the Covid pandemic dealt a severe blow to the business.
And in early 2024, there were major concerns about the company’s liquidity, with $250 million in debt coming due in October. At that time, there was a risk of significant dilution of shareholders’ shares.
Recently, creditors agreed to wait a while longer as Petrofac has put in place a restructuring plan. And the order book is looking good, with some notable gains in renewable energy.
If the board can get it right, it could be worth a small investment. The next few months could be crucial.
Lithium recovery?
The AIM-listed Atlantic Lithium (LSE: ALL) The share price has fallen to just 13 pence per share, compared to over 60 pence higher at the start of 2022.
At that time, the price of the hard-to-obtain metal rose rapidly due to the hype surrounding electric vehicles. But in recent years it has collapsed. Today, lithium is no more expensive than it was in mid-2019.
However, the company itself appears to be financially healthy and its developments in Ghana are progressing well.
The future price of lithium has to be the key here. And other technologies like sodium batteries pose a threat. Sodium is much more available and much easier to access.
But if demand for lithium remains strong and Atlantic Lithium can turn a profit in 2026 as forecast, I think the company could move out of the penny stock zone.
