Penny stocks have continued to show resilience and growth in 2024.
As of the close of trading on Friday, December 13, 2024, 23 of these low-cost shares, often valued below N5.00, recorded year-to-date (YTD) gains above Nigeria’s November 2024 inflation rate.
The top ten standout performers include Tantalizers Plc, RT Briscoe, Veritas Assurance, Cornerstone Insurance, Guinea Insurance, Sovereign Insurance, WAPIC, Deap Capital, TIP Initiatives, and Consolidated Hallmark.
These stocks have not only outpaced inflation but also demonstrated impressive growth during challenging economic conditions.
Nigeria’s headline inflation rate surged to 34.60% in November 2024, up from 33.88% in October 2024, marking the highest level in 26 years.
On a year-on-year basis, the headline inflation rate rose by 6.40% from 28.20% in November 2023.
Such high inflation significantly erodes the purchasing power of money, making it vital for investors to focus on real returns, which adjusts nominal returns for inflation.
In an inflationary environment, nominal returns; the actual percentage gain or loss on an investment, can be misleading.
Real returns, which account for inflation, provide a more accurate picture of the true increase in purchasing power.
This distinction is particularly critical as traditional asset classes like bonds and cash equivalents often struggle to deliver positive real returns during inflationary periods.
Against the backdrop of the current inflation rate, these penny stocks have not only weathered the economic storm but have also surpassed the rising inflation:
Guinea Insurance is one of the top-performing penny stocks in 2024, with a YTD share price gain of 110.34%, making it the 5th best-performing penny stock on the Nigerian Exchange (NGX).
While its beta of 0.830 suggests lower market volatility, appealing to risk-averse investors, this feature must be weighed against its historical underperformance in 2023, when the share price recorded a 45% YTD gain compared to 2024’s impressive performance.
Ranked 4th among the top-performing penny stocks of 2024, Cornerstone Insurance achieved a remarkable 123.57% YTD gain, reinforcing its reputation for consistent growth following a 133.33% gain in 2023.
Trading just 6% below its 52-week high, reflects much of its recent growth, potentially limiting short-term upside.
Trading just 6% below its 52-week high, reflects much of its recent growth, potentially limiting short-term upside.
Veritas Kapital Assurance Plc is currently the 76th most valuable stock on the NGX, with a market capitalization of N17.2 billion.
As of December 13, 2024, it has achieved a 245.95% YtD gain, making it the 3rd best-performing penny stock on the NGX, following an 85% YtD gain in 2023.
However, the company does not have stable dividend payout records, which could be viewed as disincentive, especially for income-focused investors.
RT Briscoe is currently the 2nd best-performing penny stock on the NGX, recording an impressive 264.18% Year-to-Date (YtD) gain as of December 13, 2024.
This turnaround reflects improved company operations, potentially enhancing investor confidence and positioning RT Briscoe for further growth.
Tantalizers Plc is the best-performing penny stock on the NGX with a remarkable gain of 268% as of December 13, 2024.
On December 16, it closed at N1.85 per share, reflecting a slight 0.5% gain over its previous close of N1.84. However, it remains 5.64% below its 52-week high of N1.95, also set on December 16, 2024.
Trading activity has been robust, with a three-month trading volume of 499 million shares, indicating strong liquidity and market interest.
Despite the impressive share price performance, investors should approach Tantalizers Plc with caution. The positive momentum appears to be driven by other factors rather than solid fundamentals.
Without clear signs of an operational turnaround or improved profitability, the current price surge may not be sustainable over the long term.
Additional Top-Performing Penny Stocks in 2024:
These stocks have delivered impressive gains in 2024, reflecting strong investor interest in penny stocks despite underlying market conditions.
Investors are advised to assess each company’s fundamentals, market trends, and liquidity to determine sustainability before taking positions.