Penny for your thoughts

For the past few weeks, penny stocks have been rallying strongly. Retailers who are late coming into this market tend to get drawn to these stocks. To be fair, even sophisticated investors are getting into these trades. We tend to go for a cheap stock, with cheapness measured in term of price rather than value. I believe many would agree that most of the stocks trading at RM1.00 or below are likely to be overvalued today. They have been picked over so many times that one cannot expect to find any good value stock in this area. Remember the "stoopers' market" analogy? Then, what do we do? We move up the price chain.

Let's look at stocks in the RM1.00-2.00 bracket. I have done a simple exercise where I have selected a few stocks that have not moved up too much over the past 3 months (by comparing the last 3 months' 'low', closing price about 4 weeks ago & yesterday's closing price). A remisier can easily get these using the Bursa's Stock Movement Data. Looking at the latest quarterly results & the charts, I have narrowed down the stocks to the following. Except for Tongher- which is slowly turning around- most may agree that these stocks' financial numbers are quite alright. This quick exercise can be completed within 15-30 minutes. In this bullish market, one needs only to have a reasonably good shot to make some moneys. Getting into the overcrowded penny stocks trade looks too risky to me.



PS- The financial numbers in the above table is based on the latest quarterly results only. You should look at the past 8 quarterly results to get a more accurate picture of the true financial performance of a stock.