It’s quite possible that penny stocks can provide huge potential upside for investors comfortable taking on substantial risk. However, the majority tend to fall out of fashion just as quickly as they became popular.
So for long-term buy-and-hold investors like we Fools, which penny shares might one day be household names? Here’s what some of our contributors think!
CleanTech Lithium
What it does: CleanTech Lithium is an AIM-listed lithium exploration company that owns three strategic projects in Chile.
By Charlie Carman. There’s a strong case to be made that lithium will be the 21st century’s indispensable commodity due to the metal’s industrial applications in electric vehicle batteries. CleanTech Lithium (LSE:CTL) is well positioned to benefit from growing demand.
The company plans to use Direct Lithium Extraction technology (a process involving an absorbent to extract lithium from a brine solution) in conjunction with Chile’s renewable energy grid to ensure its production is carbon-neutral.
However, the business faces notable risks. First, it’s at a pre-revenue stage. In addition, President Boric’s recent announcement that private companies will be required to partner with the government in exploiting Chile’s lithium is a cause for concern.
Nonetheless, CEO Aldo Boitano has assured investors that CleanTech Lithium continues to have “very positive discussions” with state entities.
Overall, the company’s solid ESG credentials and the absence of competing projects in its key locations suggest it could have a bright future.
Charlie Carman does not own shares in CleanTech Lithium.
Epwin Group
What it does: Epwin Group sells building products, including energy-efficient windows, doors, and conservatories.
By Dr James Fox. Epwin Group (LSE:EPWN) produces energy-efficient and low-maintenance building products. And given the downward pressure in the housing market, it’s no surprise the stock is trading far below its 2021 peak. At the time of writing, the market cap was just below £100m.
So, what makes this company exciting? Well, its energy-efficient products remain popular due to medium and long-term drivers, including a shortage of affordable housing, concerns about existing housing quality, and efforts to improve the energy efficiency of British homes.
In a May trading update, Epwin said revenue was running 3% higher than last year – 2022 was a record year for revenue. Amid a testing environment for the housing market in 2023, this is an outstanding achievement, and a testament to the strength of its offering.
Naturally, even higher interest rates represent an unfortunate headwind, but one that should ease in 2023. Despite this, all the signs point towards a bright future ahead.
Dr James Fox does not own shares in Epwin Group.
Kodal Minerals
What it does: Kodal Minerals is a lithium-focused miner, with its attention predominantly fixed on West Africa.
By Charlie Keough. Investors in Kodal Minerals (LSE: KOD) will be ecstatic with the stock’s 150%+ rise in 2023. And I think it could be on its way to becoming a future stalwart.
With a focus on lithium mining, the business is placed in a market that is set to grow massively in the years ahead. Lithium is a key component for products such as electric vehicles and phones. And as such the global lithium market is predicted to grow at a compound annual growth rate of over 15% between now and 2030.
The business also owns the Bougouni mine in Mali, which at full capacity can produce 220,000 tonnes of spodumene (a lithium-rich mineral) every year. Moreover, the recent $100m investment into the Bougouni project by China’s Hainan Mining also highlights its potential. A recent positive drilling update, where Kodal spoke of Bougouni’s potential “additional prospects” reinforces this.
The biggest risk with Kodal is geopolitical tensions. With China holding a strong grip on the market, the West may veer away from lithium. However, from a long-term view, I think Kodal could be a future stalwart.
Charlie Keough does not own shares in Kodal Minerals or Hainan Mining.
