Here’s a 75p penny stock that has the potential to almost triple!

Zaven Boyrazian looks at an up-and-coming natural resource penny stock that’s potentially on track to thrive as demand for copper surges with EVs.

| More on:

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.

When it comes to penny stocks, earning triple-digit gains isn’t unrealistic. After all, smaller companies have far more room for growth if they prove to be successful. Of course, that’s a big ‘if’ in many cases since they also come with extremely high levels of risk compared to larger FTSE 350 enterprises.

Nevertheless, this immense growth potential keeps this class of equities popular among investors comfortable with volatility. And one penny stock that continues to grab attention in 2024 is Anglo Asian Mining (LSE:AAZ).

Explosive potential

As an early-stage mining business, Anglo Asian is filled with literal untapped potential. The group is currently sitting on over 585,000 tonnes of copper across its prospective projects. And since demand for copper is expected to skyrocket thanks to the electric vehicle revolution, the business appears on track to propel itself to new heights.

It’s not surprising that current analyst forecasts predict the stock price to reach just shy of 205p within the next 12 months. That’s almost three times the current stock price. And if accurate, snapping up this stock today could be a very lucrative investment.

So, is this forecast correct? Quite a few things are working in Anglo Asian’s favour. Most recently, the firm has received regulatory approval to increase the height of one of its tailings dams by another seven metres. As a quick crash course, a tailings dam is used to store leftover materials from the mining process. This approval allows the company to bring the dam to its completed design specs and allows mining operations to continue as planned.

This is yet another positive step for the group’s portfolio of projects. The firm’s Gilar project is expected to enter production by the end of this year, adding another 10,000 ounces of gold equivalents to its production capacity each year. And with other projects on track to enter production over the coming years, the long-term potential for this mining enterprise is undoubtedly promising.

Where’s the risk?

Mining is a tough business. Apart from the immense capital expense of scouting, developing, and operating a mining site, there’s a mountain of paperwork and regulatory hurdles to jump through. In this respect, Anglo Asian already has the upper hand against many of its penny stock peers. Since the business already has an active portfolio of producing mines, revenue and profits are already flowing in. But that doesn’t make its explosive potential a guarantee.

The rising demand for copper hasn’t gone unnoticed, especially among industry titans that are also ramping up copper production. If the supply of this metal starts exceeding demand, prices will naturally start to drop. And that could put Anglo Asian’s stellar growth potential in jeopardy.

The group also produces both gold and silver, which adds some welcome diversity to the product portfolio. But just like other commodities, these, too, are affected by the balance of demand and supply. And with only around $4.5m of cash on the balance sheet, a sudden downturn in metal prices could be enormously problematic.

All things considered, just like other penny stocks, Anglo Asian’s risk profile is pretty high. And it’s not a business I’m eager to add to my own portfolio. But for investors who are comfortable with the volatility, this enterprise may merit a closer look.

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.

Zaven Boyrazian 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.

More on Investing Articles

Investing Articles

I reckon these 2 penny shares are hidden gems worth a closer look!

Some penny shares are well-known, whereas many others go under the radar, but that doesn’t necessarily mean they aren’t potentially…

Read more »

Investing Articles

Just released: our 3 best dividend-focused stocks to buy before August [PREMIUM PICKS]

Our goal here is to highlight some of our past recommendations that we think are of particular interest today, due…

Read more »

Investing Articles

2 FTSE 100 shares with blockbuster yields investors should consider buying

Our writer has noticed that these FTSE 100 shares offer mammoth dividend yields, and reckons investors should take a closer…

Read more »

Stack of British pound coins falling on list of share prices
Investing Articles

Down 36% and yielding 7.8%, is this FTSE 250 share a bargain?

Christopher Ruane looks at a FTSE 250 share with a sizeable dividend yield and a recent record of dividend growth.…

Read more »

Investing Articles

Is Barclays one of the FTSE 100’s best bargain stocks?

Right now, Barclays' shares are cheaper than those of FTSE 100 rival stocks Lloyds and NatWest. So should I buy…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

Is a takeover offer about to boost the Rentokil stock price, and should I buy?

The Rentokil share price is up 10% on takeover rumours. Is it a stock to buy or one to be…

Read more »

Investing Articles

Here’s my Rolls-Royce dividend forecast for 2024-27!

Our writer considers whether the Rolls-Royce dividend might be reinstated in coming years, based on financial performance and stated payout…

Read more »

Investing Articles

What would I do if Rolls-Royce shares plunged 50%? History suggests a big decline is coming

While Rolls-Royce shares have delivered massive outperformance in recent years, they also have a history of significant declines.

Read more »