In 2024, penny stocks have remained resilient and have increased in value.
The year-to-date (YTD) gains of 23 of these inexpensive shares, which are frequently valued around N5.00, exceeded Nigeria’s November 2024 inflation rate as of the closing of trade on Friday, December 13, 2024.
Tantalisers Plc, RT Briscoe, Veritas Assurance, Cornerstone Insurance, Guinea Insurance, Sovereign Insurance, WAPIC, Deap Capital, TIP Initiatives, and Consolidated Hallmark are among the top 10 exceptional performers.
In addition to outpacing inflation, these equities have shown remarkable growth even in the face of difficult economic situations.
Nigeria’s headline inflation rate reached its highest level in 26 years in November 2024, rising from 33.88% in October to 34.60%.
The headline inflation rate increased from 28.20% in November 2023 to 6.40% on an annual basis.
Investors must concentrate on real returns, which correct nominal returns for inflation, because such high inflation severely reduces the purchase power of money.
Real Returns on Investments and Inflation
Nominal returns, or the actual percentage gain or loss on an investment, can be deceptive in an inflationary climate.
A more realistic view of the actual rise in purchasing power is given by real returns, which take inflation into consideration.
Given that conventional asset classes, such as bonds and cash equivalents, frequently fail to produce positive real returns during inflationary times, this distinction is especially important.
Although the performance of individual stocks might vary greatly, stocks generally have the ability to outpace inflation and provide positive real returns.
If a stock’s growth does not exceed inflation, it may post negative real returns. It is crucial for investors to comprehend the overall return of equities, which includes both dividend yields and capital gains.
This dynamic was demonstrated in 2023, when certain companies outperformed the 28.93% inflation rate and generated positive real returns, while others did not.
For instance, Prestige Assurance Plc produced a total return of 23.84% in 2023 within the penny stock category.
Nonetheless, Prestige Assurance had a real return of -5.09% while inflation closed at 28.93%. This emphasises how inflation can cause even positive nominal returns to transform into negative real returns.
Larger-cap equities, such as Cadbury Plc, on the other hand, showed impressive success in 2023, with a trailing total return of +62%.
Cadbury achieved a real return of 33.17% after accounting for inflation, demonstrating its capacity to generate significant growth over the time frame.
These penny stocks have not only survived the economic storm but have also outperformed the growing inflation rate in light of the current inflation rate:
Guinea Insurance: +110.34% year to date
With a year-to-date share price gain of 110.34%, Guinea Insurance is the fifth-best-performing penny stock on the Nigerian Exchange (NGX) and one of the best-performing penny stocks in 2024.
Cornerstone Insurance: +123.57% year-to-date
With a stellar year-to-date return of 123.57%, Cornerstone Insurance—ranked fourth among the top-performing penny stocks of 2024—solidified its reputation for steady growth after a 133.33% rise in 2023.
Its recent gain is reflected in its current price, which is only 6% below its 52-week high and may limit short-term upside.
VERITASKAP: +245.95% year to date
With a market valuation of N17.2 billion, Veritas Kapital Assurance Plc is presently the 76th most valuable stock on the NGX.
After an 85% year-to-date gain in 2023, it has now achieved a 245.95% year-to-date gain as of December 13, 2024, placing it as the third best-performing penny stock on the NGX.
However, the company’s inconsistent dividend payout history may be a turnoff, particularly for investors who prioritise income.
RT Briscoe: +264.18% year to date.
As of December 13, 2024, RT Briscoe has achieved an outstanding 264.18% Year-to-Date (YtD) gain, placing it as the second-best-performing penny stock on the NGX.
This reversal indicates better business operations, which could boost investor confidence and set up RT Briscoe for future expansion.
Tantalisers: +268% Year-to-date
On the NGX, Tantalisers Plc is the top-performing penny stock, having gained an astounding 268% as of December 13, 2024.
It closed at N1.85 per share on December 16, up just 0.5% from its closing price of N1.84. It is still 5.64% below its 52-week peak of N1.95, which was also reached on December 16, 2024.
With a three-month trading volume of 499 million shares, trading activity has been active, demonstrating high market interest and liquidity.
Investors should exercise cautious when dealing with Tantalisers Plc, even with the remarkable share price performance. Rather than strong fundamentals, other things seem to be driving the bullish momentum.
The business continued its trend of losing money in 2023 and 2022, reporting a pre-tax loss of N231.56 million in the first nine months of 2024.
The current price increase might not be long-term viable if there are no obvious indications of an operational recovery or increased profitability.
Other Top-Rated Penny Stocks for 2024:
- Sovereign Insurance: Up 102.38% Year-to-Date
- WAPIC: Up 97.06% Year-to-Date
- Deap Capital: Up 96.55% Year-to-Date
- TIP Initiatives: Up 95.65% Year-to-Date
- Consolidated Hallmark: Up 88.44% Year-to-Date
Despite the underlying market conditions, these stocks have produced excellent gains in 2024, indicating strong investor interest in tiny stocks.
Before making investments, investors are urged to evaluate the sustainability of each company by looking at its liquidity, market trends, and fundamentals.
