Penny stocks can be an effective way to build wealth. Price movements for these small-cap shares can be extreme at times. But over the long term, they can offer investors the opportunity to supercharge their capital gains.
Here are two I’m aiming to buy for my portfolio soon.
CleanTech Lithium
Soaring electric vehicle sales paint a bright picture for lithium demand in the years ahead. Chile-focused miner CleanTech Lithium (LSE:CTL) could prove a great way to profit from this theme.
Should you invest £1,000 in Carlsberg Britvic right now?
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Indeed, the penny stock leapt on Monday after significantly upgrading resource estimates for its gigantic Laguna Verde asset. The flagship mine is now said to contain 1.8m tonnes of the battery metal, while measured and indicated resources were lifted by 39% to 1.1m tonnes.
Chief executive Aldo Boitano has said that the upgrade “[provides] more confidence in the resource potential and further de-risking of the project after an extensive work programme this year”. The pre-feasibility study is now underway, with CleanTech seeking annual production of 20,000 tonnes at the project.
The AIM company is also working on two other assets, one of which — Francisco Basin — is also expected to yield resource upgrades this quarter.
Purchasing early-stage miners is always risky. Buying lithium specialists in Chile adds another layer of peril for investors, too. Earlier this year the country’s government vowed to nationalise important assets on economic and environmental grounds.
But CleanTech’s mission to produce ‘green’ lithium from brine projects reduces the nationalisation risk. Its Direct Lithium Extraction method negates the need for evaporation, thus cutting the impact on local environment. The projects will also be completely powered by renewable energy.
Gaming Realms
Online gambling is big business and has much more scope for growth, and especially so in North America. Mobile games developer Gaming Realms (LSE:GMR) is a penny stock I’d buy to capitalise on this opportunity.
The business creates, licences, and distributes entertainment software to some of the biggest names in the gambling sector like DraftKings, Entain, and 888 Holdings. Pre-tax profits here surged 224% in 2022 as the firm launched in six new markets in North America and Europe.
Gaming Realms’ most lucrative title is Slingo, which, as the name implies, combines elements of slots and bingo. It’s been a massive money spinner since its launch in 1996, and the company is launching new titles in the franchise to keep the revenues streaming it (it rolled out three more last year alone).
I especially like Gaming Realms because of its plans for rapid expansion in the US. Loosening regulations there mean the market is growing strongly, and analysts at Researchandmarkets.com expect it to expand at an annualised rate of 11.8% through to 2028.
That’s not to say that the regulatory environment will remain friendly for operators, of course. Any changes could have a significant impact on the company’s profits. But on balance I believe this looks like a good penny stock to own.
