3 Overlooked Penny Stocks With Potential

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3 Overlooked Penny Stocks With Potential

The content of this blog (or content associated with it) is not intended as investment advice. Please do you own research.

Three weeks ago I wrote a blog about MySQUAR. At the time, the interest in it, was nowhere near where it is today.

Its buy and sell volume, on Friday, was around 10 – 15 times of that when I wrote the blog.

This interest has seen the share price go from 0.85p on 4th May to 5.375p on Friday, a 632% rise.

My average buy price was 1.05p, so I managed to capture a lot of this upside, even though I have de-risked along the way, I still hold a small amount.

The point I’m trying to make here, is when a penny stock becomes hot, the momentum generated is almost unstoppable BUT you have to be invested before this force arrives.

How Do We Do This?

Research and wait.

The hope is to identify companies that have the potential to be valued at severals times their current market capitalisation, investing in them and waiting for the news to arrive that could see them rerate.

This is why I’ve highlighted 3 stocks below that I believe are over looked but have the potential to rerate on the right news.

These stocks are micro-caps because it’s a lot easier for a company with a market capitalisation of £2.5m to become £10m in size than it is for a company with a market cap of  £250m to be a billion pound company. Having said that, small caps can be very volatile, so I always employ my scale in method, when investing.

The stocks are ordered, from smallest to largest, in regards to market capitalisation:

3 Overlooked Penny Stocks With Potential

ECR Minerals (ECR)
Market Capitalisation: £2.34m

What do they do?
ECR is a turnaround story. Under previous managment it’s been a perenial disappointer but with Craig Brown, as it’s new CEO and new Ivor Jones as CFO, it seems to be headed in the right direction.

ECR’s owns the Avoca and Bailieston gold projects in Victoria, Australia, a 50% interest in the Danglay epithermal gold project in the Philippines and the SLM gold project in La Rioja Province, Argentina.


1. Funding
ECR have a Chinese investor, Shenyang Xinliaoan Machinery Co Ltd, which is hugely advantageous for a junior resource company.

So far this Chinese backer has given ECR £200,000 of the total £553,564, it intends to invest, at this stage. The £553,564 will be invested at 1p for 29.9% of the company. What’s interesting, is that this £200,000 in a non-refundable deposit, which will be converted into shares a 2p, should the remaining £353,564 not be forthcoming. The shares are currently at 1.725p. You can read more about this subscription here.

Never the less, most junior miners biggest challenges is accessing funding, this doesn’t seem to be an issue for ECR, should the Chinese investor continue to support them.

2. Drill Results
ECR are currently undertaking a drilling program at their projects in Australia and Argentina. Positive results will provide an uplift to the share price.

3. Market Capitalisation
At £2.34m, it will not take a lot of good news for this company to rerate.

You can read my previous blog on ECR Minerals by clicking here

To heat my interview with CEO Craig Brown & CFO Ivor Jones click here

 

Energiser Investments (ENGI)
Market Capitalisation: £2.79m

What Do They Do?
Energiser Investments is an Investment Company.

CEO Dominic White recently posted on Vox Markets stating that, “We’ve been talking about our focus on property operating company investments. We’re working hard in three areas.

1. Micro-self storage.

2. Serviced-apartments.

3. Turning our traditional short term property lending activity (like the successful Kingswood loan) into a digital platform.

Multiple conversations on potential investments happening in each area. It’ll be a busy May and June.”

The shares are very tightly held amoung it’s directors, two of which are Stephen Wicks, CEO & Nish Malde, Financial Director of Inland Homes (mcap = £123m). So they have a lot of experience in this area and Dominic also has an impressive CV. He has held senior investment positions at international institutions such as Security Capital European Realty Private Equity, Henderson Global Investors and Cordea Savills Investment Management where he invested in and managed more than €3bn of real estate assets across Europe.


1. Announcement of a New Investment.
It’s been a while coming but Dominic has pointed out quite a few times, how active they are in the areas they are focused in. News shouldn’t be far off.

2. Announcement of the Sale of One of its Investments
In a trading update on 16th February, Energiser announced that “The Company’s portfolio of 20 residential properties in Wellingborough, Northants is being considered for sale”. This could be worth around £3m to Energiser, more than their market capitalisation.

3. Market Capitalisation
At £2.79m, as with ECR, it will not take a lot of good news for this company to rerate.

You can read my previous blog on Engergiser Investments by clicking here

To heat my interview with CEO Dominic White click here

 

Upland Resources (UPL)
Market Capitalisation: £5.46m

What Do They Do?
Upland Resources are actively building a portfolio of attractive upstream oil & gas assets.

Upland Resources has sensible / sexy asset strategy. They intend to bring into the company around 4 assets. Two being quite sensible, low risk and near term cash generative. Two being of bigger risk but potentially company transformative.

Hardstoft and Wressle are part of the sensible strategy but they’re yet to reveal what is exactly involved in their sexy strategy, although Malaysia and Morrocco have been mentioned many times.

They recently posted this photo on there Twitter account. This is a meeting, in London, with a delegation team from the Sarawak region of Malaysia. The directors of Upland from Malaysia (Norza Zakaria & Datuk Bolhassan Di (Bolhassan)) have substantial skin in the game and have also been building their positions recently.

The Sarawak basin is one of Malaysia’s richest geological areas for hydrocarbons development, particularly natural gas.

Malaysia has more than 200 discovered oil and gas fields off the eastern state of Sarawak that have not been monetized, an official at state-owned firm Petroliam Nasional Bhd (PETRONAS) recently stated.

PETRONAS has pumped in over $70 billion (MYR 300 billion) in cumulative investment in Sarawak in upstream, midstream and downstream projects and activities, according to its LNG Group of Companies Vice President and CEO Dzafri Sham Ahmad.

Sarawak borders Brunei, where the Sultan lives. He’s one of the richest guys in the world. Do you know why? You got it, oil & gas.


1. Announcement of a new investment in Sarawak / Morroco.
As the photo above suggests, meetings are happening and I can’t believe the people from Sarawak would travel half way round the world for a cup of tea and a biscuit. I’d be very surprised if some type of agreement doesn’t materialise from this meeting.

2. Positive Announcement Regarding the Appeal Process at Wressle.
Upland have entered into a conditional agreement dated 24 November 2016 for the farm-in (from Europa Oil & Gas Limited) to a 10% interest in each of PEDLs 180 and 182, including the Wressle Field development.

On 11th January North Lincolnshire County Council’s Planning Committee’s refused planning consent for the development of the Wressle Oil Field. Egdon (the operator) submitted a new Planning Application to North Lincolnshire Council for the Wressle field development on 28 April 2017. Validation of the Application is expected to take one to two weeks.

3. Market Capitalisation
If any of the above news get released soon it should see their market cap of £5.46m move north with relative ease.

You can read my previous blog post on Upland Resources by clicking here.

To hear my last interview with CEO Dr Stephen Staley click here

The content of this podcast (or content associated with it) is not intended as investment advice and people featured may hold positions in the companies they talk about. Please do you own research.

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The content of this blog (or content associated with it) is not intended as investment advice. Please do you own research.