With the Indian government accelerating its efforts to electrify the automobile sector, investors are unable to stay away from companies even remotely associated with this space. Automakers will not be the only beneficiaries of this megatrend, numerous industries have opportunities as myriad stocks have evolved into proxy plays for investors looking to participate in the global EV revolution.
As the hype continues, investors are acquiring penny stocks in electric vehicles in order to maximize their profits and diversify their portfolios. Let's take a look at the best penny stocks for investors to consider in 2021.
Penny stocks are a type of market-traded security that trades at a discount. These securities are typically issued by businesses with a lower market capitalization. ( In India - capitalization of less than Rs. 5,000 crore) These are also referred to as nano-cap stocks, micro-cap stocks, or small-cap stocks, depending on the market capitalization of the company.
Penny stocks trade at such low prices for a reason: the majority of traders who purchase them are passive and intend to exit sooner or later once they have provided a decent return. In India, penny stocks frequently violate exchange regulations and they are not honest with their financial reports. Which is why Penny stocks do not move unless there is some news or a turnaround story.
Penny stocks are a hit-or-miss type of investment. Companies that issue them may grow into large organizations with above-average returns or may fail in their early years, incurring massive losses. Regardless of these insinuations, penny stocks should be considered for inclusion in your portfolio. There are two primary reasons to invest
1. Multibagger: Certain stocks have the potential to become multi-baggers. This term refers to stocks that yield multiples of the initial investment.
2. Inexpensive: Investing in these stocks is comparatively cheaper. As a result, you can invest in them without jeopardizing a sizable portion of your investment funds.
Due to the scale at which these companies operate, they are prone to enormous risks. These stocks rely heavily on market conditions to increase in value. Apart from the standard risks associated with market-linked securities, penny stocks carry additional risks. These include the following:
1. Volatility is high.
2. Businesses that are unproven
3. Inadequate liquidity
4. "Pump and dump" targets
5. Increased chance of bankruptcy and fraud
6. Financial records of a limited liability company
Diversification is an excellent way to safeguard your portfolio. Pursuing only the safest blue chips will result in low returns. Penny stocks carry a higher risk but also a higher potential reward. If you want to make significant profits in the market, you must be willing to take on the risk of investing in penny stocks.
With promising optimism in the rising EV industry, let’s look at some penny stocks you can consider investing in 2022.
1. Wardwizard Innovations and Mobility Ltd is a market leader in the electric vehicle (EV) segment, marketed under the Joy e-bike brand. The company has been providing a more environmentally friendly alternative to traditional gas-powered bikes through Joy e-bikes. It currently has a footprint in over 25 major cities across India and aspires to expand this footprint in both length and breadth.
2. Rattanindia Enterprises, formerly RattanIndia Infrastructure, is a firm that specialises in the development of thermal power generation projects. It has also recently entered the electric vehicle market, and its stock has been steadily rising, generating strong returns for investors. The stock has risen more than 700 percent in the fiscal year 2021-22 (FY22).
3. Ideanomics (IDEX) - For those interested in investing in the electric vehicle (EV) revolution, Ideanomics (IDEX) is one of the most actively traded EV penny stocks on this list. This software company has a market capitalization of $1.43 billion and an average share price of between $3 and $3.50 over the last year.
4. Ault Global Holdings - Ault Global Holdings describes itself as a "diversified holding company focused on the acquisition of undervalued assets and disruptive technologies with global ramifications." To that end, it is also a player in the electric vehicle (EV) market. In the spring of 2021, it secured a deal worth $10.5 million to provide residential EV chargers. Since November 2020, Ault's stock price has been increasing, though it has fluctuated since May 2021. Nonetheless, its most recent earnings report demonstrates that the company, while still small, is growing rapidly. Revenue, net income, and net profit margin all increased by the triple digits year over year.
5. Electrameccanica is a company devoted entirely to electric vehicles. Indeed, its ticker symbol refers to the company's primary product, a single-seat electric vehicle. In terms of its stock, it is trading higher today than it was in the fall of 2020. However, prices spiked last November and have since fallen, though they remain higher than the October low. As of June 2021, its revenue was just $298,000. However, this business was founded in 2015, and the $298,000 in revenue represents a year-over-year increase of more than 2,000 per cent.
All the buzz surrounding electric vehicle stocks is justified. Electric vehicles (EVs) are gradually displacing internal combustion engine (ICE) vehicles. As previously stated, the transition to 100 percent electric vehicles will create opportunities for not only EV manufacturers, but also for a number of other players in the EV space. You simply need to invest in the right electric vehicle stocks, which have the potential to make you a fortune.