Chasing only the safest blue chips is going to yield only one thing: diminishing returns.
Enter penny stock.
Penny stocks come with high risk but potentially high rewards.
you must be willing to take the risk investing in penny stocks If you want to make big profit in the market.
A clear line should be drawn while choosing penny stocks as not every penny stock will become the next Bharti Airtel or Eicher Motors.
This is why penny stocks that have a good balance sheet, little or zero debt and a track record for paying dividends do so much better than their peers.
Such companies are eligible to be part of your watch list.
Let’s take a look at the top five penny stocks you should keep an eye on in 2022.
#1 IRCON International
IRCON International Limited is a Mini Ratna Category-I Public Sector Undertaking (PSU) since 1998.
The company has diversified into roads, buildings, electrical substation and distribution, airport construction, commercial complexes and metro segments. It mostly generates revenue from the railway section.
IRCON International is one of the few agencies through which the Ministry of Railways has implemented railway projects across the country for over four decades. It has completed more than 300 infrastructure projects in India.
In the last three years, the company has brought down its debt to almost zero levels. The total debt on it was approx. ₹32 billion as of March 2018. Currently, IRCON only has . has a debt of ₹3.3 billion. It has reduced its debt-equity ratio from 0.85x to just 0.08x at present.
Recently, the Principal Economic Advisor recommended the merger of IRCON International with Rail Development Corporation, citing creation of synergies and removal of duplication resulting from the exercise.
Both these companies are engaged in the construction of railway infrastructure. Experts are of the view that the restructuring will create monopolies and improve capital allocation. He believes that the merger of IRCON and RVNL can result in a solid portfolio.
IRCON has a solid track record of dividend paying, having paid dividend since the year 1998.
The company’s shares have gained 24 per cent in the past one year.
IRCON International Share Price – 1 Year Performance
see full image
The Government of India holds 73.18% stake in the company as of September 2021.
To know more, see IRCON International’s 2020-21 Annual Report Analysis.
#2 Mankasia
The Mankasias (formerly Hindustan Seals) are a multi-division and multi-local group. It has 15 manufacturing plants in India and three overseas: two in Nigeria and one in Ghana.
Manaksia specializes in the manufacturing of packaging products (crowns, closures, and metal containers), metal products, and fast-moving consumer goods.
The company has maintained low debt levels and has kept its debt-to-equity ratio below 0.1x for the past four years.
Although the company’s profits have declined over the past five years, it has maintained a consistent sales volume.
Manaksia has a consistent track record of paying dividends. This. paid its highest ever dividend of ₹10.50 last year resulting in a dividend yield of 38.7% at that price.
Mankasia Dividend History
see full image
The promoters of the company hold 74.93% stake in the company with no shares pledged.
The company’s shares have gained 63 per cent in the past one year.
Manaksia Share Price 1 Year Performance
see full image
#3 Orient Paper & Industries
Orient Paper & Industries, incorporated in 1936, belongs to the CK Birla Group.
It is presently engaged in manufacturing of paper with a paper unit in Madhya Pradesh having a capacity of 110,000 tonnes per annum and Caustic Soda and Derivatives.
The company’s paper products are sold under the brand names ‘Diamond Touch,’ ‘Orient’ and ‘First Choice’.
From a debt-to-equity of approximately 1.1x in March 2016, the company currently trades at a debt-to-equity ratio of 0.06x.
Orient Paper & Industries has been a consistent dividend payer since March 2007.
This year, it did. declared dividend of ₹0.25 per equity share.
Despite the company operating in one of the worst-hit industries due to the COVID-19 pandemic, the company’s shares have strengthened and gained up to 100%.
Financial year 2021 was a tough one for the company, where its revenues were almost halved and the company was making losses after six years.
orient paper and industries
see full image
Educational institutions were closed and there was a tacit demand for the printing of newspapers.
But with India accelerating the ongoing vaccination program and people now adopting the COVID-19 norms, it is expected that the paper and paper products industry will pick up sales during fiscal 2022.
The ban on single-use plastic by the central government from next year and a sharp fall in raw material prices has boosted the enthusiasm in paper stocks.
#4 SJVN
Sutlej Jal Vidyut Nigam, or SJVN, is an Indian government-owned company that produces and transmits hydroelectric power.
The company is investing heavily in hydroelectric projects and expects to complete its 60 MW Natwar Mori hydroelectric project by June next year.
The company is working in exciting areas of renewable energy including hydro, wind, solar and thermal. SJVN has more than 11,000 MW power projects in the pipeline.
If you want passive income in your portfolio then this company is a very good contender. SJVN has issued 19 dividends since September 2010.
SJVN has paid huge dividend of ₹2.20 this year, resulting in a dividend yield of about 8%.
Apart from dividends, it has never reported a loss since FY13 and has maintained consistency in reporting sales and profits.
financial snapshot
see full image
Its debt levels have remained under control, with debt-to-equity staying below 0.3x over the past eight years.
The company’s shares have gained 30 per cent in the past one year.
SJVN Share Price – 1 Year Performance
see full image
at the current price of ₹29, orders the market capitalization of the company ₹112.6 billion.
#5 Haldeen Glass
Incorporated in 1991, Haldyn Glass (formerly known as Haldyn Glass Gujarat) is involved in the manufacturing and marketing of glass bottles and containers.
The company’s manufacturing plant is located in Vadodara, Gujarat.
In FY 2016, Haldyn Glass entered into a 50:50 JV with Germany-based Heinz Glass International GmbH to diversify its product portfolio, renamed Haldyn Heinz Fine Glass.
The company manufactures small vials for pharma companies and also caters to industries such as the food and beverage, wine and beer industries.
As the company supplies vials for COVID-19 vaccines, it is set to benefit from the ongoing worldwide vaccination campaign.
Rating agency Crisil had said that due to vaccination, the demand for glass vials and increase in auto volumes will increase the revenue of glass makers in FY 2022.
Policy decisions of the government will also help. India in November 2020 imposed anti-dumping duty on imports of certain varieties of float glass from Malaysia for five years. Countervailing duty was imposed on import of tempered glass from Malaysia in March 2021.
Haldyn Glass is a nearly zero-debt company and has reported profits for the past three years.
It has a good track record of paying dividend since the year 2005. It has recently declared dividend of ₹0.60 per share.
The company’s shares have gained 46 per cent in the past one year.
Haldyn Glass Share Price Performance
see full image
As of September 2021, the promoters of the company held 56.99% stake in the company with no shares pledged.
Other penny stocks to watch in 2022
In addition to the above, check out these penny stocks, which have a good track record of paying dividends, are in good financial standing and debt levels are under control.
see full image
Data as on 31st March 2021
The ideal strategy to follow when investing in penny stocks…
2021 has been a year of volatility for both penny stocks and blue chips.
Despite the volatility, penny stocks have never been completely out of fashion.
They continue to attract the attention of retail investors.
Why?
Because it is a. not unusual for Good Penny Stocks to Turn a Multibagger Within a few months.
On the flipside, there is a high risk involved. In a bull market, many junk companies with questionable promoters and poor corporate governance standards also rally.
Investors who are new to the market are often tempted to invest in them hoping to make quick profits.
This is why penny stocks are not recommended for low-risk people.
Funds set aside for penny stocks should not exceed 5%-7% of the total funds allocated for equities.
You need a very strong framework to separate the men from the boys in the penny stock. A framework that not only enables you to zero in on the right penny stock at the right price but also helps you avoid those big losses.
Happy Penny Stock Investing!
This article is syndicated from equitymaster.com
Don’t miss a story! Stay connected and informed with Mint.
download
Our App Now!!
.