Two penny stocks currently on my radar are BATM Advanced Communications (LSE: BVC) and Anglo Asian Mining (LSE: AAZ).
Both picks are similar in that they have the potential to provide bumper growth and returns in the long-term. However, they also both have some unavoidable external risks that could derail their progress.
Let’s dig deeper.
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BATM Advanced Communications
BATM is an Israeli-based technology business with interests in cyber security, networking, and medical technology.
As I write, BATM shares are trading for 22p. At this time last year, they were trading for 32p, which is a 31% drop over a 12-month period. Macroeconomic volatility, but especially the war, has pushed the shares down.
The obvious risk for the firm is the current geopolitical picture in the Middle East. Continued conflict could hurt performance, sentiment, and growth. In addition to this, larger competitors in its industry with much more money and resources could out-muscle the firm.
However, I’m impressed by BATM’s performance and growing presence. Between June and December, it racked up $32m of orders. Its half-year period to the end of June saw revenue, profit, and margins all rise too. The business also looks to have a healthy balance sheet too.
I’m hoping for a peaceful resolution in the current conflict. It would also be good news for BATM, and I think this is one small-cap to keep an eye on.
At just over 22p a share, I’d be willing to open a small position the next time I have some cash to invest. I reckon there’s plenty of room for growth, especially as we hurtle towards the artificial intelligence (AI) revolution and governments continue to increase spending to ward off digital threats!
Anglo Asian Mining
Anglo is a mining company that focuses on copper and gold.
As I write, Anglo shares are trading for 55p. They’re down 100% from 110p at this time last year to current levels.
Mining stocks are very cyclical. This is one of its biggest risks. I reckon the shares are down due to the economic slowdown in China, as the country is one of the largest copper users in the world. Similar to BATM, Anglo is affected by the current conditions of the country it operates in. An unsteady geopolitical outlook could present issues when mining for commodities and this could dent performance and growth.
However, I reckon Anglo shares could climb once macroeconomic volatility cools. Gold and copper are generally both in high demand. The latter especially is essential for infrastructure building. If the Chinese economy turns around, I think demand and sentiment towards copper and copper miners could soar.
Finally, I find myself intrigued that Anglo’s current dividend yield is close to 12%. Now I reckon its shares falling has pushed that up but the firm has indicated a dividend is on the cards. Whether the yield is covered by earnings remains to be seen as it’s worth remembering dividends are guaranteed.
Although Anglo could experience a sharp rise in the future, for me personally, it’s the riskier of the two stocks. I’ll keep Anglo on my watch list for now.
