There is a good chance that even in the new Bull market, these stocks may become favourites of investors and deliver huge gains.
Kesar Petroproducts Ltd saw its shares jump more than 9,100% in 2014. Over a 12-month period until 28 January 2015, the stock gained 12,000%.
Kesar was a sick company but the new management has restored the company by paying off all the bank dues, infusing new capital for business, and starting a new product in the company, which will slowly build up as we utilize the capacity of the plant.
White Lion Asia Ltd, formerly known as Bombay Talkies Ltd, also has been a huge gainer in the past with a return of more than 7,500%. The company is a non-banking financial services firm.
Shantanu Sheorey Aquakult Ltd gained more than 4,900% in 2014. The company is in the packaged food industry.
Kamalakshi Finance Corp. Ltd saw its shares rising over 4,700% in 2014. Omega Interactive Technologies Ltd’s shares have surged from Rs 0.76 in September 2013 to Rs 112.50 on 28 January 2015.
Omega Interactive underwent a reduction and consolidation of share capital.
There are different reasons for which some penny stocks give huge return in a rally. One of them could be low liquidity leading to high level of appreciation in a market uptrend.
These stocks also have low floating stock and market capitalization. It could also be a genuine case where a company has turned around its business.
Investors prefer penny stocks because there is not much to lose while investing in a 50-paisa stock. However, we must be careful of manipulation by operators, experts say.