Good read Courtesy : Mr. Mahendrasingh

Mahendra Singh, Young investor in stock market.

I have chosen these 3 penny stocks along with rationale behind that.

Date: 7/21/17

I invest mostly in small cap and mid cap stocks and a small portion in Penny stocks. Usually I take calculated risk and target for high return stocks. Needless to say choosing smaller stocks demand great deal of research and screening a large number of stocks.

Most likely you want to invest in penny stocks because you believe that penny stocks can give much more return than other mainstream stocks. I can tell thatfinding right penny stocks is much more difficult and probability of a penny stock giving multibagger return is many times less than a small cap or mid cap stock.

Here we go for three penny stocks.

1. RACL Geartech Ltd
2. Nila Infrastructures
3. Sanwaria Agro Oils

RACL Geartech Ltd:

Auto Parts & Equipment

Market Cap.: ₹ 61.77 Cr.

Current Price: ₹ 62.20

Book Value: ₹ 38.46

Stock P/E: 13.85

Listed on BSE

Sales and profit growth:

source: Screener

Quarterly Results:

source: stockaxis

Advantages:

• Fundamentally company is strong
• Technical graph suggest long term and mid term trend are UP though short term graph is not favorable at the moment
• Interest has come down for company
• It has good financial ratios
• it has impressive profit growth and a good sales growth for last 3 years
• Company has come up with impressive set of quarterly numbers

Disadvantage:

1. Long term perspective of auto industries is not bright due to change in regulations and threat of electric vehicles.
2. Promoter's stake has decreased
3. Promoters have pledged 29.48% of their holding

Nila Infrastructures Ltd:

CMP:19.90

Sector: Construction- Real Estate

source: moneycontrol

Quarterly Result:

• Company is fundamentally strong
• It has recently broken out from long term resistance level
• It is getting orders in consistent basis and current order book is healthy
• It has entered into two separate letter of acceptance (LOA) with Gujarat State Road Transport Corporation (GSRTC) for development of bus terminals under public private partnership recently.
• It has recently got order for execution of new slum rehabilitation project (construction of 1540 housing units), which will start in two quarters.

Disadvantage:

• Promoter's stake has decreased

source: Nila Infrastructures gains 7%, enters in two LOA with GSRTC

Execution of new slum rehabilitation proj to start in two quarters: Nila Infra

Sanwaria Agro Oils Ltd:

Sector: Edible Oils & Solvent Extraction

MARKET CAP (RS CR): 657

CMP: 8.93

P/E: 12.58

• Company is focusing on to diversify it’s products and moving from being a commodity player to FMCG food products company.
• Company is planning to aggressively open new stores in Madhya Pradesh and then in Maharastra. This will help it to increase both top line and bottom line.
• Management has an ambitious plan to have a turn over of 5000 Cr in 2 to 3 years which can be translated to a growth of 25 to 30% annually.
• Recently company issued bonus shares. Usually it’s a healthy sign.