Penny stocks have always been quite an alluring group on the stock market. Admittedly, they probably include the highest concentration of bad investments than any other type of stock. But occasionally, a gem emerges and offers investors the opportunity to make some lucrative returns. In fact, among the penny stocks is where I discovered Oxford Biomedica in October 2016. It has since risen by over 770%!
Recently I’ve stumbled across two more very young but potentially explosive penny stocks that I’m keeping a close eye on. Let’s take a look.
A new fuel standard for cargo ships?
As the world starts to ramp up its efforts to slow and eventually reverse climate change, new solutions are being employed to cut carbon emissions. Renewable technologies like wind turbines, solar panels, and batteries are becoming widespread throughout the energy sector. Meanwhile, electric cars are on the road to being the new standard vehicle type within the next decade.
Unfortunately, the ocean-bound transportation industry has yet to see any such technological shift. Currently, cargo ships account for around 3% of global emissions. That may not seem like much, but it roughly equates to 1.09bn tonnes of carbon dioxide every year. And to make matters worse, this figure is expected to increase by up to 250% by 2050.
That’s why Quadrise Fuels (LSE:QFI) has piqued my interest. This early-stage (and I mean very early stage) penny stock has created a new fuel called bioMSAR. It is lighter, cheaper, and more efficient than traditional cargo ship fuel. And best of all, the carbon emissions are approximately 30% lower.
As promising as this alternative fuel may be, there remains a long road ahead. BioMSAR is still in its testing phase, albeit testing is running at an accelerated pace. The next set of testing results is expected to arrive this month. I’m eagerly waiting to see how it turns out. But for now, Quadrise is staying on my watchlist.
A rising penny stock in the cannabis sector?
The legal marijuana industry is still firmly within its infancy in the western world. Yet its rapid adoption, especially in the medical sector, has led to the market size growing by double-digit percentages. According to Grand View Research, the industry is forecast to grow by 26.7% each year until 2028.
That’s why Kanabo (LSE:KNB) has become an interesting company for me to follow. It develops and manufactures a collection of cannabidiol-based products designed for health & wellness applications. These products are used in combination with its hopefully-soon-to-be certified inhalation device called VapePod MD. I say hopefully because it remains entirely possible for the application to be rejected by regulators.
However, assuming its medical device receives approval, this penny stock may be on the verge of launching an incredibly lucrative ‘razor and blade’ type of business model. And with its production and disruption infrastructure now in place thanks to recent partnerships, the Kanabo share price looks like it’s almost ready to start surging.
But, just like Quadrise, Kanabo has yet to begin generating any substantial revenue. And so, once again, it remains quite a speculative investment with plenty of risks. And there are regulatory challenges that are likely to arise in the future, given the controversial nature of cannabis use. Therefore it’s another penny stock that’s staying on my watchlist for now.
