2 former penny stocks that grew over 50,000% I’d still buy today!

This pair of one-time penny stocks have both grown immensely — so why would our writer still buy them today?

| 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.

A pastel colored growing graph with rising rocket.

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.

The low cost of penny stocks means that occasionally they can throw up spectacular returns. Indeed, some recent research from CMC Markets highlights a couple of one-time penny stocks that each saw their value soar by over 50,000%.

Although neither of those shares trade for pennies today, I would still consider buying them both for my portfolio now. I also think their stories can help me in my own hunt for potentially lucrative penny stocks to buy for my portfolio.

Pennies shares that soared

The two names in question are famous ones now – Apple (NASDAQ: AAPL) and Netflix (NASDAQ: NFLX).

But what is striking is that one of them was already a famous name even when it was trading for pennies. Apple went public in 1980, seeing its share price on the first day of trading soar from $22 to $29. But by 2002 the Apple share price had crashed as low as 4c. Between its low and high prices, Apple shares soared an incredible 154,900%!

Compared to that, the gain between high and low at Netflix looks more modest, coming in at 54,840%. But that is still an incredible growth feat few shares would ever match. To put it into perspective, it means that if I had put £1,000 into Netflix when its share price touched an all-time low, I could have made more than half a million pounds in profit by selling my investment at the high share price.

Why I’d buy both today

Clearly I have long since missed the opportunity to invest in these two tech titans for pennies. But I would still consider buying their shares for my portfolio today despite the much higher share prices than some years ago. Indeed, I have already bought Netflix shares this year.

I think some of the things that have helped propel the companies to success in the past remain relevant today. They have built strong brands that give them pricing power. Both have large installed customer bases. Both compete in an area where I think demand is likely to grow in coming years, as consumers spend more and more time on their digital devices.

There are risks. For example, declining subscriber numbers at Netflix could lead to lower revenues and profits. As consumers tighten their belts as the economy worsens, both companies could suffer from customers cancelling service subscriptions to cut household costs. But in the long term, I think the quality of the businesses will help them perform well. They have strong brands and unique service offerings, giving them competitive advantages.

My lesson on hunting for penny stocks to buy

Why did those two penny stocks perform incredibly well when many do not?

I think one reason is that, from the outset, both had a unique competitive advantage. That meant that, as they grew their customer bases, they could grow profits without always adding on costs at the same rate. That is the beauty of a scalable business model. It is something I will continue to look for when buying shares for my portfolio, including penny stocks.

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.

Christopher Ruane owns shares in Netflix. The Motley Fool UK has recommended Apple. 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

Surely, the Rolls-Royce share price can’t go any higher in 2025?

The Rolls-Royce share price was the best performer on the FTSE 100 in 2023 and so far in 2024. Dr…

Read more »

A young woman sitting on a couch looking at a book in a quiet library space.
Investing Articles

Here’s how an investor could start buying shares with £100 in January

Our writer explains some of the things he thinks investors on a limited budget should consider before they start buying…

Read more »

Investing Articles

Forget FTSE 100 airlines! I think shares in this company offer better value to consider

Stephen Wright thinks value investors looking for shares to buy should include aircraft leasing company Aercap. But is now the…

Read more »

Investing Articles

Are Rolls-Royce shares undervalued heading into 2025?

As the new year approaches, Rolls-Royce shares are the top holding of a US fund recommended by Warren Buffett. But…

Read more »

Investing Articles

£20k in a high-interest savings account? It could be earning more passive income in stocks

Millions of us want a passive income, but a high-interest savings account might not be the best way to do…

Read more »

Investing Articles

3 tried and tested ways to earn passive income in 2025

Our writer examines the latest market trends and economic forecasts to uncover three great ways to earn passive income in…

Read more »

Investing Articles

Here’s what £10k invested in the FTSE 100 at the start of 2024 would be worth today

Last week's dip gives the wrong impression of the FTSE 100, which has had a pretty solid year once dividends…

Read more »

Investing Articles

UK REITs: a once-in-a-decade passive income opportunity?

As dividend yields hit 10-year highs, Stephen Wright thinks real estate investment trusts could be a great place to consider…

Read more »