3 penny stocks Fools think could be future stalwarts!

A stock is typically placed into the “penny” category if it has a low share price of less than £1 and the total market capitalisation is less than £100m.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

UK coins (1p & 2p) in a savings glass jar against a plain studio background.

Image source: Getty Images.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

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.  

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.

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.

More on Top Stocks

ESG concept of environmental, social and governance.
Investing Articles

5 sustainable UK stocks that Fools love

Five completely different stocks, all listed in the UK, that tick a wealth of ESG boxes as well as looking…

Read more »

Top Stocks

4 stocks Fools love with a long history of increasing dividends

Familiar with REITs? You may want to be after reading this, with two of the four dividend stocks falling under…

Read more »

Mother and Daughter Blowing Bubbles
Investing Articles

5 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Top Stocks

5 stocks that Fools have recently sold

Three complete exits and one partial sale of a shareholding -- why did these five Fools sell these particular UK-listed…

Read more »

British Pennies on a Pound Note
Investing Articles

3 penny stocks Fools actually love for the long term!

Many speculate on which penny stocks might rapidly soar in price. But it’s worth reiterating that our favourite holding period…

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing Articles

Best US stocks to consider buying in May

We asked our freelance writers to reveal the top US stocks they’d buy in May, which included a cybersecurity leader…

Read more »

Bearded man writing on notepad in front of computer
Investing Articles

Best British growth stocks to consider buying in May

We asked our freelance writers to reveal the top growth stocks they’d buy in May, which included a Share Advisor…

Read more »

Entrepreneur on the phone.
Investing Articles

Best British stocks to consider buying in May

We asked our writers to share their ‘best of British’ stocks to buy this month, including a broadcaster and a…

Read more »