Penny stock prices can move pretty quickly.
I only buy a share when I think it’s good value, and I won’t buy if I think the value has passed and I’m too late. And the nature of penny stocks often means the good-value window can be short.
Now, prices can move down just as quickly as they can move up. And that’s one of the risks we take if we buy penny stocks. I’ve known far more people lose money on penny stocks than big companies.
With that in mind, these are three where I think I see good value that might not last long.
Old tech
First up is Michelmersh Brick Holdings (LSE: MBH). You know, that old technology that’s fallen out of investing fashion.
Everyone’s looking for the next big thing. Electric cars, AI, biotech… Oh, and the property market is in a slump.
Meanwhile, Michelmersh makes bricks and tiles. And I really can’t see anything other than strong long-term demand for walls and roofs.
The share price has been flat overall in five years. But that hides a climb in 2021 before the interest rate crisis hit. Then things turned bad again.
I can see further pressure in the short term, so there’s a risk the shares could fall back further.
But forecasts suggest a price-to-earnings (P/E) ratio of under 10, with a well-covered dividend yield of 4.8%. And I think that could be good for long-term investors.
New tech
Talking about electric cars, CleanTech Lithium (LSE: CTL) is on a bit of a downer now. The shares are still up 50% since thecompany’s IPO, but they’re well below the peaks of early 2023.
The move towards electric propulsion needs batteries, and they need lots of lithium.
The difficulty, and risk, is that CleanTech isn’t profitable yet, and analysts expect cash outflow for the next few years.
That makes it a tricky one to value.
On the upside, the company does seem to be sitting on some impressive lithium assets. Some are in areas of the world with less than complete economic freedom, though, like Chile. So with potential, comes risk.
But it does suggest one possible way to profit. Small metals and mineral prospectors are often bought out by the big players.
Emerging market
How about an emerging economy, and a long-term staple produce. I’m talking about Kazakhstan and cement. And that can only mean Steppe Cement (LSE: STCM).
Cement isn’t the most exciting thing on the planet. But I think there’s already enough excitement in a penny stock in an ex-Soviet state.
The shares are up over five years. But they’ve fallen back a bit in the past two.
There’s not a lot in the way of forecasts to go on. But in the past few years, Steppe has been recording strong earnings and paying decent dividends.
In the first half of 2023, sales dropped 11% and the cement price fell a little. But I see the long-term outlook as attractive.
With a trailing P/E of under five, Steppe could be good value now. But we do need to watch that that risk from emerging markets penny stocks.
