Top 10 Penny Stocks to Watch on JSE in 2023

If you’re new to the stock market or you don’t have a lot of disposable income, then it’s worth checking out the so-called “Penny Stocks”. Any stock that trades for less than $5 is usually referred to as a penny stock. These stocks belong to small businesses and that can be a double-edged sword. Buying shares from such small companies is easy enough but selling them can turn into a challenge due to the low amount of available liquidity. The clear upside is that investors can see massive growth in a short period of time but the risk of the stock dropping to zero is also there.

JSE stands for the Johannesburg Stock Exchange and it’s the biggest stock market in Africa. Penny stocks are mainly traded OTC (over the counter) but you can find many of them on exchanges. The JSE is no exception.

The JSE is Africa’s biggest exchange, with a vast market depth due to its attraction of listings from global firms. Several major companies also list on the JSE and are included in the JSE All-Share Index, making the exchange a popular investment destination for those seeking returns in Africa’s growing markets.

The Johannesburg Stock Exchange makes it easy to find exactly what you’re looking for with its tiered structure. There’s the main board where some of the most popular stocks reside but you won’t see any penny stocks on it. To find those, you’ll have to visit AltX, a dedicated section on JSE filled with small and mid-cap stocks. Since their market capitalization is much lower than those on the main board, your chances of finding penny stocks on AltX are much higher. JSE also has a third section called the debt market, where traders can find different types of bonds, including government ones.

There is a number of penny stocks available for trading on the JSE. New and experienced traders alike would be wise to do some research before investing in one. Here are 10 penny stocks on the JSE that you should keep an eye on throughout 2023.

Labat Africa Group – The company is engaged in marketing and designing integrated circuits through its subsidiary.

Lesaka Technologies – A leading provider of secure and affordable transaction channels between formal businesses and un-banked and under-bank individuals.

AH-Vest Ltd. – A South African manufacturer of condiments and tomato sauce.

Ellies Holdings – A diversified manufacturer and distributor of electronic products related to television reception including satellite and terrestrial aerial range.

Advanced Health Ltd – The Company provides short-procedure surgical facilities and services in day hospitals in South Africa and Australia.

4Sight Holdings Ltd – A company dealing in artificial intelligence solutions with machine learning, big data, cloud, and business intelligence solutions.

Buka investments Ltd – A franchisor that markets and distributes its own independent health and beauty brands to franchised beauty salons, large retailers, independent beauty salons, and selected pharmacies.

Buffalo Coal Corp. – A coal mining company with two mines in Kwa-Zulu Natal, South Africa, that specializes in producing thermal and metallurgical coal.

Jasco Electronics Holdings – An integrator of intelligent technology solutions & managed services that delivers technologies across communications, security, fire safety, power, and component manufacturing.

Visual International Holdings Ltd – A property development company that focuses on all aspects of property development involved with residential, commercial, and retail projects.

In order to start trading penny stocks on JSE, you’ll first have to find a broker and register. Do your own search and choose a broker that suits your needs. Once you’ve made your decision, create an account (prepare your ID and bank details) and confirm your payment details. After you’ve created an account with the brokerage, you’ll have to fund it with a credit/debit card or a bank transfer.

All that is left now is to find the penny stocks you’re interested in and buy them on the platform. Most penny stocks on the JSE will be found on the AltX section where lower market cap companies reside. There are some exceptions though, as some penny stocks can also be found on the main board. These penny stocks are usually of no interest to traders for one main reason – their market caps are much higher and well over $250 million USD, giving them much less room for growth. If you’re buying a stock with a market capitalisation of $2 billion, you might as well go for something more reliable than penny stocks.

As we’ve mentioned earlier, penny stocks can be a risky investment. They offer an amazing opportunity for growth but also for great losses. We advise you to invest only funds that you can afford to lose. With that out of the way, here are some tips to remember when trading penny stocks:

Do Your Research

You’ve probably heard this one before but always gather plenty of information before investing. Trading well-established blue chip companies is much easier in the sense that there is plenty of information. Penny stocks come from small companies, many of which are a few years old, and finding details about them can be challenging.

Don’t Be Fooled

Penny stocks are cheap, but that’s not a good enough reason to go all in on them. Cheap stocks are more affordable but that doesn’t mean there’ll be as much demand. Due to the low liquidity, it can be easy to get in on penny stocks but it can prove difficult to get out. If the price of a penny stock is shockingly low, there might be a good reason for it.

Stick to Your Plan

Before you get into buying penny stocks, it’d be wise to create a strategy. Make a plan with concrete goals, decide the price you want to sell on, and avoid holding any longer than necessary. Penny stocks can be the subject of high volatility and huge swings in their price are not uncommon so always exercise caution.

Cut Emotions

As a wise man once said, don’t get attached to your stocks! Whether you’re making gains or accumulating losses, it’s easy to fall in love with your stocks. Avoid trading with your emotions and follow your plan. Don’t make excuses in your mind to “hold long enough until it recovers” or anything similar. Carefully consider your current position and decide if it’s worth staying any longer.

Conclusion

Penny stocks can drive your investment sky-high or land it underground, making them risky. Unlike shares by famous companies, legitimate penny stocks can be hard to find. The reason for this is that current and reliable information for many of these companies is quite limited. Penny stocks offer traders a huge opportunity for growth but they don’t pay dividends so make sure you don’t make a habit of holding them for too long. Novice traders should always exercise caution when considering these stocks, especially when there is potential for great returns.

Disclaimer: Our content is intended to be used for informational purposes only. It is very important to do your own research before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find on this article and wish to rely upon, whether for the purpose of making an investment decision or otherwise. Klips does not put available shares or any other underlying asset, but CFD derivatives based in underlying assets.