A penny stock can pique the curiosity of many investors. After all, while their volatility could be undesirable at times, certain high-quality shares have potential for huge price rises.
Looking at the three examples below, we can see how rewarding they can be for patient, long-term focused investors:
- Trading at 25.7p per share in early 1999, Diploma shares are now at 6,685p. They have returned 25,991.7% to investors.
- At 93.5p in June 1999, Halma shares now trade for 4,524p. They have returned 4,738.5% to investors in that time.
- In November 2008, Melrose Industries shares were worth 16.94p apiece. They’re now worth 483p each. A 2,751.2% return.
Of course, these are very successful examples, and there are very many penny stocks that go on to fail. But they show how an investor can potentially make life-changing returns through careful and diligent stock picking.
In the case of Diploma, a £10,000 investment in its shares in early 1999 would be worth £2,601,167 today!
Now, these are no longer penny stocks, so investors may want to consider looking at current ones to consider buying today.
Helix Exploration
Yesterday (13 May), Helix Exploration (LSE:HEX) shares increased by 12.2%. Looking online though, it seems like no specific company news caused this.
I suspect this is mainly because of the very speculative nature of the company. In fact, the firm currently makes no revenue. Therefore, its operations are completely loss-making.
This is a big risk for investors if they’re thinking about investing in the company’s shares. As a young company, which was founded in September 2023, it’s still in the early stages of its operations. There’s no guarantee the business will execute well and be successful.
Still, a £10,000 investment made yesterday would have still turned into £11,216 by the end of the day. That’s a very nice one-day return!
Investors who bought some of the company’s shares at its IPO in April 2024 would have done much better. By rising 277.3% in that period, an initial £10,000 investment would be worth £37,727 today.
While this rise looks to be for speculative reasons, let’s see what some more tangible reasons might be.
Can it fly like a balloon?
As a company that specialises in the exploration of helium, Helix Exploration has benefited from the tragic war in Iran.
Qatar supplies roughly 20% of the world’s liquified natural gas (LNG), and unfortunately, 17% of its capacity has been damaged.
As helium is usually recovered as a natural byproduct of LNG processing, its supply has become restricted. This has caused helium prices to soar. This affects the whole market.
Even though the company is operating and looking to extract helium in Montana, USA, it’s still able to sell the commodity at higher market prices while keeping its cost base the same.
This could see Helix Exploration’s projects be of higher value than they were initially. Therefore, its shares could continue rising. Of course, like any commodity, prices could fall if/when circumstances change.
Yet I think investors could consider buying its shares.
