Investing in penny shares can be a wild ride. Low trading volumes mean that small-cap stocks like these can be subject to extreme price volatility. Fluctuations can be especially fierce when tough economic conditions make investors especially jumpy.
Yet the rewards of investing in sub-£1 shares can also be stratospheric. Some of the world’s largest companies like Apple, AMD and Ford grew from fledgling businesses to the stock market heavyweights of today. And early-stage investors became stinking rich in the process.
Here are two top penny stocks I think could also deliver titanic returns.
Invinity Energy Systems
Energy storage businesses have a vital role to play in the growth of renewable energy. Power generated from wind turbines and solar panels is rarely constant. So technology is needed to store the energy during good times to prevent the possibility of power outages.
This is where Invinity Energy Systems (LSE:IES) comes in. This penny stock produces vanadium flow batteries (or VFBs), a superior kind of storage system. These are safer, more cost-effective and have better durability that lithium-ion batteries. Therefore demand for them is tipped to soar.
Analysts at Consegic Business Intelligence, for instance, expect the global VFB market to expand at a compound annual growth rate of 19.5% between now and 2030.
Invinity continues to rack up contracts from across different sectors. So far in 2023 it has sold 14.4 MWh of its batteries to customers in the US, Canada and Australia. In another positive sign the firm has just announced that its ‘Mistral’ next-generation product prototype will be deployed in British Columbia, Canada early next year.
On the downside, lithium-ion batteries have lower upfront costs than VFBs. So companies could decide to plump for these older technologies instead during this period of high economic uncertainty. But a bright long-term outlook still makes Invinity an attractive stock to own today.
DP Poland
Food delivery business DP Poland’s (LSE:DPP) stock also has the potential to deliver spectacular investor profits over the next decade.
The company is best known as the master franchisee of the Domino’s Pizza brand in Poland. It operates an extensive delivery operation as well as a portfolio of 116 restaurants. More recently it also expanded into Croatia to bolster its customer base.
These regions are ripe for rapid growth due to low food delivery market penetration and increasing personal incomes. Indeed, DP Poland’s trading update in May illustrated the massive sales potential of these emerging markets.
In its core Polish market, like-for-like system sales leapt 18.4% in the first four months of 2023. On a comparable basis sales in Croatia also rose an impressive 15.7% year on year.
High food price inflation presents an ongoing risk to takeaway businesses like this. But in a boost to near-term earnings the firm encouragingly announced that food costs have recently shown “a positive downward trend.”
Helped by the strength of the Dominos brand, I expect DP Poland’s share price to soar from current levels as profits climb.
