As of Q1 2025, some shares delivered eye-catching returns, particularly for buyers who took an opportunity on penny shares.
Over 16 of those low-priced names recorded double-digit good points, with some greater than doubling in simply three months.
A N1 million invested firstly of the yr in some instances yielded over N1 million return.
Nonetheless, it is very important observe that as properly, some buyers misplaced as a lot as N300,000 for each N1 million funding.
In context, a penny inventory is usually outlined as a inventory that trades at a low worth, normally below N5 per share.
Notable shares embody AIICO, SCOA, UPDC, Neimeth, Tantalizer, Jaizz {Bank}, C & I Leasing, Champion Breweries, Cutiz, Mutual Profit Assurance Plc, and many others.
A N100,000 funding in a penny inventory buying and selling at N2.00 per share buys 50,000 models, a quantity that immediately offers retail buyers a psychological sense of possession and affect. Distinction that with blue-chip names like Seplat, Airtel Africa, or Geregu Energy, the place the identical N100,000 can barely safe between 18 and 100 models.
Furthermore, many of those shares function in sectors present process transformation insurance coverage, prescription drugs, leasing, or meals companies. They current alternatives for early entry into turnaround tales or undervalued performs lengthy earlier than institutional cash pays consideration.
For a lot of retail gamers, particularly these new to the market or buying and selling with restricted capital, the mathematics is persuasive.
In contrast to larger, extra secure shares, they usually lack analyst protection and have low day by day buying and selling exercise. Dividends are uncommon, making them unattractive for buyers on the lookout for regular revenue.
Nonetheless, the numbers communicate volumes. Right here’s how a N1 million funding carried out in simply three months throughout chosen Nigerian penny shares:
SCOA was one of many high gainers in Q1 2025, rising by 116.99% because the share worth moved from N2.06 to N4.47. If you happen to had invested N1 million in January, it could be value about N2.2 million by March.
Key level for buyers: The share worth has not moved a lot because the firm launched its outcomes. That might imply a lot of the excellent news is already mirrored within the worth.
Good Product Nigerian Plc started the yr with a share worth N0.20 and since then has proven relative volatility closing at N0.39 in Q1. This implies its buyers that took a place with N1 million would have seen the holding gaining N950,000.
Since then, the share worth has gained a further 16% to N0.42 as of the closing of buying and selling mid-April. The inventory has traded a complete quantity of two million shares valued at N566,765 over the interval.
Trying on the firm’s financials, it seems the rally is pushed by elements apart from {financial} efficiency. The corporate’s 2023 {financial} statements present that post-tax elevated to N6.6 million from N6 million in 2022 and paid dividend of 8 kobo.
A N1 million funding in UPDC at first of 2025 would now be value round N1.87 million roughly 628,931 shares in Q1 reflecting an 87% acquire in simply over three months. Since then, the inventory has added one other 11.59%.
However the inventory comes with a caveat: liquidity danger. Solely 4.89% of its 18.56 billion excellent shares can be found for public buying and selling, properly under NGX’s Important Board free float requirement. That makes the inventory extremely delicate to purchasing and promoting stress.
Nonetheless, curiosity is selecting up. From January to mid-April, UPDC noticed 335 million shares change palms in over 6,000 offers, rating it the twenty fifth most traded inventory on the NGX.
Other than SCOA SMURFIT and UPDC, a N1 million funding in different penny shares such would have given buyers return above N400,000 in capital good points above the inflation charge; and a constructive actual return.
Regardless of their repute for danger, penny shares have clearly proven they’ll ship outsized returns, particularly for retail buyers priced out of blue-chip names or cautious of macro headwinds.
For the knowledgeable and nimble investor, Q1 2025 proved {that a} N1 million wager on the correct penny inventory may generate good points properly above inflation, mounted revenue returns, and even many large-cap equities.
Nonetheless, the message is obvious: it is a recreation for individuals who do their homework, watch the market intently, and settle for that the experience won’t at all times be easy.
For now, penny shares stay one of many few locations the place small cash can nonetheless dream massive.
