Penny stocks are a favorite among beginning investors. They’re inexpensive, and a great way to start a small portfolio without spending your entire life savings.
In the United States, a majority of penny stocks are listed on NASDAQ. And in the UK, you can find many of them on the London Stock Exchange. But what should you buy? Here’s a bit of information to get you started, and a list of the best LSE penny stocks.
What is a London Stock Exchange Penny Stock?
A penny stock very rarely costs a penny. It’s typically described as a stock that’s selling for £5 or less per share. Often, these stocks aren’t listed on the major exchanges but instead are traded over the counter.
For the purpose of these article, we’re going to talk only about the stocks which are listed on the London Stock Exchange. These are easy to buy through a discount or a traditional broker, and it’s quite easy to find information about these stocks and companies.
Over the counter stocks and penny stocks are both very volatile. They’re bought by beginning investors because these investors tend to take a speculative approach to the markets. To put it another way, penny stocks are a crapshoot. They literally could make or break your portfolio.
We’ll look at a few penny stocks in a few industries. All are listed on the London Stock Exchange, and are trading for less than £5. As always, be sure to look at our investment guides and other resources before investing in the stock market.
Best LSE Penny Stocks: Tech
This penny stock is issued by an IT service management company. It’s headquartered in London, and has seen its share prices on the rise over the past 3 months. The company works heavily in mapping, in telecommunications and in government data solutions, and shows promise to be a good bet for investors.
Be Heard (LON:BHRD)
This is a media company, which focuses its expertise in digital marketing. The company has recently been successful, but we like that they partner with other companies to increase their presence in the tech industry. Once Be Heard grows just a little, we think a merger of these companies will send the share price soaring.
Crimson Tide (LON:TIDE)
Crimson Tide is a software company which has seen a lot of growth over the past year. They are, for all intents and purposes, a mobile app developer, but they don’t create games. Instead, they focus their efforts on creating mobile enterprise software for business use. Recently, they released a cloud sharing software program which was quite successful. Look for more of these developments from the company to raise the share prices.
Best LSE Penny Stocks: Energy
Frontera Resources (Lon:FRR)
An American company, Frontera is headquartered in Houston, Texas. It’s listed on the London Stock Exchange. The share price remained pretty low throughout most of 2016, but a positive report at the end of the first quarter this year showed investors that Frontera is still a viable option. Frontera is a gas and oil exploration company.
Echo Energy PLC (LON:ECHO)
This is an energy stock with headquarters in the United Kingdom. They’re an investment company, focused on acquiring oil and gas opportunities in the United States. Recently, they’ve also begun to set their sights on acquiring opportunities for mineral mining and production, which resulted in a huge jump in their share prices. Watch Echo Energy to see how this new strategy plays out.
ECR Minerals (LON:ECR)
We’ll be truthful. Looking at the performance of this stock over the past 12 months doesn’t leave us with a warm fuzzy feeling. It’s remained stable at best. But, stable can equate to good with regard to penny stocks, and we have high hopes for this one. ECR Minerals recently announced that they’d be partnering with Chinese investors. Shenyang Xinliaoan Machinery Co have prolific involvement in the London market and this could be a positive investment.
88 Energy Plc (LON:88E)
Want to add a bit of adventure to your portfolio? This company is headquartered in Australia and is one of the best LSE penny stocks. While the stock can be fickle, it’s remained on an upward trend over the past 12 months. In 2014, the stock reached its all time low but has been a steady riser since. Recently, it’s begun an Alaskan exploration coined “Icewine” which has encouraged analysts and investors both.
Best LSE Penny Stocks: Other Stocks
Equatorial Palm Oil (LON:PAL)
This company does just as its name implies. Equatorial Palm Oil cultivates palm oil. But if you’re going to be a one trick pony, you may as well do that trick right. The company is researching ways to create production methods which are “world class” and sustainable. Over the past 12 months, this stock has grown in leaps and bounds. We think PAL is a nice penny stock for beginning investors.
BioPharma Credit (LON:BPCR)
Looking for a new company to invest in? Back in April, this company issued an IPO to the tune of $762M US dollars. Its cash flow and assets look healthy, and we think that it’s off to a great start on the London Stock Exchange. It’s trading for $1.06, but expect that number to rise. The biopharmaceuticals industry is huge, and BioPharma Credit is a lender to these biopharma companies.
Image Scan Holdings (LON:IGE)
Image Scan Holdings is an x-ray supplier in the United Kingdom. The past 12 months looked very good for the company, and while the share price is low, don’t let that fool you. The company has had a 15.5% return on equity for that same time. We think that IGE might be worth a look for beginning investors.
There are, of course, many more penny stocks that we didn’t list here. But we think that these are the some of the best LSE penny stocks, particularly for beginning investors. Based on the companies’ histories and their willingness to restructure in order to achieve success, we recommend that you take a look at a few of these penny stocks to add to your portfolio.