Four Penny Stocks That Created Massive Wealth


penny stocks

We pulled our database last week to look for penny stocks that have been the greatest wealth creators over past few years. Before moving to the list further we think you would like to read the following posts in our series:

Everything You Wanted To Know About Penny Stocks

Basic Fundamental Analysis For Dummies

Indian market has given outstanding returns to long term investors, this is a known fact. But while analysing our databases we found that some individual penny stocks have posted returns that are nothing short of breathtaking. To help understand the scale, we have also shown how much Rs 1 lakh invested in each stock would have grown to now.


Symphony



Symphony is one of the best wealth creators for investors. You will be surprised to know that Symphony was penny stock few years back. In the year 2003 Symphony was available at price of just 1.6 Rs. per share . The stock made a high of 3270 Rs. in April 2015 and still trading around 2300

1 Lakh rupees invested in symphony in 2008 would be worth more than 20 Crores in 2015


Lupin



Another mega bagger stock. This pharma major was at 10 Rs cost in the year 2001. Later in April 2015 the stock touched a peak of 2100.

Purchase of Lupin stock worth 1,00,000 Rs would be worth more than Rs. 2 Crores in 2015.




Mahindra and Mahindra



Leading Vehicle manufacturer Mahindra and Mahindra is third stock in our list. It may surpise for you to know that one could have purchased this stock at a price of 50 Rs. in the year 2001. The stock achived a peak of 1441 in the year 2015. Purchase of Rs. 1 Lakh Mahindra and Mahindra Stock in 2001 worth 28 Lakhs in the year 2015.


Ajanta Pharma




Pharma space which appears to be loosing shine these days but the sector has been the biggest wealth creator in recent years.  Ajanta Pharma is the last penny multibagger in our list. This stock was  available at 22 Rs cost in 2003. A decade later, in 2015 the stock made a high of 3,450.

Purchase of Rs. 1,00,000 Ajanta Pharma Stock in 2002 worth more than 1.5 Crores in 2015.


These stocks were able to generate  super returns for the investors due to their business potential,  brand name, management, and other factors. If you are also planning to invest in penny stocks then experts have a sugestion. One should always consider the quality of the management and the macro financials of the company.

In the past one year, penny stocks have given mixed set of returns. The data show that there are chances to get positive return from penny stocks even in a volatile market conditions. Stocks such as Dynacons Technologies which were trading at Rs 0.38 two years back, surged 4,097 per cent, to Rs 15.95 till Feb 16, 2016. As on December 31, 2015, promoters holding in the company was at 60.17 per cent, however public held 39.83 per cent stake in the company.

Similarly, share price of Cambridge Technologies jumped 3,506.06 per cent to 119 on Feb 16, 2016 from Rs 3.30 on Feb 17, 2014. CMI Ltd shares surged 3,385.69 per cent to Rs 340.90 on Feb 16, 2016 from Rs 9.78 on Feb 17, 2014.

On the other hand, shares of Indian Infotech & Software which were trading at Rs 9.85 on February 17, 2014 fell to Rs 0.25 on Feb 16, 2016. Others such as Shalimar Production, VHCL Industries, Rei Agro, and Winsome Diamonds and Jewellery declined 94.26 per cent, 90.84 per cent, 90.36 per cent and 87.21 per cent, respectively, in the past two years.

G Chokkalingam, founder and chief executive, Equinomics Research and Advisory in his Interview with Financial Express elaborated more on the penny stocks. He said, “There is no theoretical definition of penny stocks – practically, very low promoters stakes (say less than 25 per cent), huge debt and accumulated losses, stock price in single digit, poor dividend track record, etc are the typical characteristics of penny stocks. Honestly it is difficult to identify penny stocks for me.”

According to market experts, conservative investors should avoid such penny stocks. Only speculative traders could enter such stocks as there are many examples of many stocks getting suspended from the exchanges become penny stocks before their eventual exits.

Nithing Kamath (Founder, Zerodha Securities) is cautious on penny stocks and said, “Look for companies with consistent growth numbers and belonging to high growth sectors. Also not trying to average down on penny stocks and not putting large sums of money here would be good advice to follow.”

These type of stocks are for those investors who can take high risk. “High risk investors invest in penny stocks, important factors to note would be to allocate a very small part of your portfolio towards this sector. Majority of your portfolio should still be in more liquid assets which can bring security to your portfolios,” said Kamath.

Our personal experience in penny stocks has been nice so far. But we recommend investors to never ignore fundamental and technical aspects while selecting for these stocks & diversification is must. 

Whats your experience with penny stocks so far. Do share your views in the comments.

Happy Trading
The Mutliplier


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6 comments

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June 15, 2016 at 10:32 PM delete

Beautiful article which highlights the importance of fundamental strength in counters. When companies are cheap but have extreme potential due to great management, good orders, visionary products, debt which is manageable and trading at low multiples, thats the time to buy. But identifying them is not easy.. That's where Stock King comes in :-) Keep guiding...

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June 16, 2016 at 11:04 AM delete

Suggest penny stock like vidhi n Manali.

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Puru ji
AUTHOR
June 16, 2016 at 8:38 PM delete

My experience with Penny stocks is similar to - 'Chal Gaye to Chal Gaye, Nahi Chale to Phas Gaye".
Generally, I have made money more in large caps.

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July 7, 2016 at 8:17 PM delete

Bought syncom formulation firstly I earned 5rs par share but than I again I bought @5 rs but the share price is now 2.45

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Rohan Shenoy
AUTHOR
July 7, 2016 at 10:33 PM delete

bhai.. ajanta pharma has given so many bonuses . Is that adjusted ?

Motherson Sumi and KSCL are also big wealth creators

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October 20, 2016 at 11:05 AM delete

Some penny stocks might have the ability to become multibaggers. But identifying them is the most difficult part.

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