Down 17% to 94%! 3 penny stocks I’m watching like a hawk

These penny stocks have caught my eye recently. Here’s why I’ll be monitoring them with a view to making a possible move in May.

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I’ve been busy buying blue-chip stocks the past couple of weeks. But I’ve got a little bit of cash left over for more speculative buys. And these three penny stocks are on my radar.

Lithium

Cleantech Lithium (LSE: CTL) only went public a little over a year ago. Since then, the stock is up a very respectable 27%.

This is a pre-revenue company that holds licence rights over three lithium projects in Chile. Its mission is “to produce battery-grade, carbon-neutral lithium for the EV future“.

It aims to do this through extracting lithium from brine without the need for evaporation. This, the firm claims, should result in no harm to the local environment.

However, the stock is down 49% since the middle of February.

There are two big reasons for this drop. First, wholesale lithium prices have tanked recently. Second, Chile’s president last week unveiled plans to bring the nation’s lithium industry under state control. He said there would be stricter environmental rules.

So why am I interested? Well, the authorities in Chile have already signed off on its exploration licences. The company is to begin drilling shortly. Plus, it already has two other projects under development in the country.

After the nationalisation announcement, the lithium miner said: “the Board have been given reassurances that [our] assets will not require majority state participation“.

Given its cleaner extraction techniques, its projects may still be commercially viable. So, despite the obvious risks, I’m watching developments closely.

Clothing

Superdry (LSE: SDRY) clothes have been worn by the likes of David Beckham, Leonardo DiCaprio and Kate Winslet down the years. If only the share price had done as well as those A-list stars. It’s down 94% in five years!

Earlier in April, the retailer issued a profit warning, saying that its earnings would fall short of its previous guidance. It blamed the cost-of-living crisis and poor weather for its spring-summer collections performing poorly.

But this is part of a longer trend in declining sales now. Revenue was £610m last year, down from £872m in 2018. Profits and margins are also down over this time, and there’s a risk things could worsen.

However, I still find the company’s clothes (with the Japanese-style graphics) very distinctive. And the name Superdry remains well known to many in the UK. So I think there is major brand equity here.

The firm now has a market cap of just £74m. I think value could be unlocked in the company from here, potentially through an acquisition. So I’m keeping this one on my watchlist while I dig in a bit more.

Shipping

Braemar hasn’t fallen as much as the previous two stocks, but it’s still down 17% in just under six months.

This is a leading global shipbroker serving large industry players across different time zones. Its well-diversified operations include tankers, dry cargo, and renewables.

Owning this stock would give my portfolio exposure to growth in global shipping. That said, shipping markets are driven by freight rates, which are cyclical. So there’s a risk I could mistime my investment.

But the company is on track to double its profits by 2024. And there’s a well-covered dividend here too, with a forward yield of 4.3%. So I’m very interested.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Ben McPoland has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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