10 ASX penny stocks for traders to watch

ASX penny stocks: what you need to know

Penny stock investing requires a high degree of due diligence, as they represent smaller propositions that usually come with a far higher risk-to-reward ratio.

In the UK, a penny stock is defined as any share worth less than £1 each. In the US it’s any under US$5 (circa AUD$7).

In Australia, many classify penny stocks as those under one Australian dollar per share, while some use the definition loosely to describe any company with smaller share prices.

It’s also worth noting that penny stocks can have high-value market caps if large numbers of shares have been issued.

ASX penny stocks: further important information

ASX penny stocks are often thinly traded. This means that, unlike the blue-chip shares of the ASX 200, where every stock usually has a wall of potential buyers, there may not always be enough buyer demand when investors want to sell.

In addition, penny stocks are often loss-making, using any money available to invest in growth. This makes them highly speculative investments. Moreover, they usually receive little to no analyst coverage, making truly informed trading decisions difficult.

They can also even lack in-depth trading records. And some penny stocks are notorious for diluting stock value by issuing additional shares.

These risk factors mean that for most investors, penny stocks should only form a small percentage of one’s portfolio. And for those closer to retirement who are investing over short timeframes, they arguably should be avoided altogether.

Of course, despite these significant risks, ASX penny stocks hold a unique advantage. The right pick can be massively more lucrative than an investment in more established peers.

However, it’s important to be aware of the echo chamber of success. Skyrocketing penny stocks are extremely likely to hit mainstream news, but the success stories are significantly outnumbered by the failures. Moreover, once an ASX penny stock hits the headlines, it's often too late to partake in its success.

But many of the largest blue-chip stocks on the ASX began trading as penny stocks. For example, the largest stock on the ASX, BHP, used to be a penny stock back in 1999. Afterpay was a penny stock as recently as 2017. International market titans Apple and Amazon also once qualified as penny stocks for investors with the foresight and luck to invest early.

What are the best ASX penny stocks to watch?

The following ASX penny stocks have been selected due to their substantial share price returns over the past three months. While they may not necessarily represent the best long-term growth investments, they have garnered significant investor interest.

1. Aldoro Resources
2. Caprice Resources
3. Ausquest Ltd
4. Otto Energy
5. Cosmos Exploration
6. Green Critical Minerals
7. Heavy Minerals
8. Wellard Ltd
9. Greenvale Energy
10. Holista CollTech Ltd

Aldoro Resources (ASX: ARN)

Aldoro Resources Ltd is an ASX-listed mineral exploration and development company with a diverse portfolio of critical mineral projects. The company’s flagship asset, the Narndee Igneous Complex in Western Australia, is prospective for nickel-copper-platinum group elements (Ni-Cu-PGE) mineralisation, with notable prospects such as VC01 and Area32.

Additionally, Aldoro is advancing the Kameelburg REE and niobium Project in Namibia, targeting carbonatites rich in rare earth elements and niobium. The Wyemandoo Project, located within the Windimurra Igneous Complex, focuses on lithium-rubidium-tungsten mineralisation in pegmatite dyke and sill swarms, while also holding potential for Ni-Cu-PGE-gold along its western margin. The Niobe Project, part of the Mount Farmer pegmatite swarm, is being explored for lithium, rubidium, and tantalum resources. 

Investors may find Aldoro Resources appealing due to its strategic focus on critical minerals essential for emerging technologies and renewable energy solutions. The company’s diversified project portfolio across different minerals and geographic locations enhances its potential for discovery and development success.

Aldoro’s commitment to advancing exploration activities and identifying high-value mineral resources positions it well to capitalise on the growing demand for critical minerals in the global market.

At the time of writing, Aldoro’s share price return over the last three months is 354.5%.

Caprice Resources (ASX: CRS)

Caprice Resources Limited is an Australian mineral exploration company focused on discovering and developing gold and base metal deposits.

The company’s flagship asset, the Island Gold Project, is situated in the Murchison region of Western Australia, a prolific gold-producing area. Caprice has conducted extensive exploration activities, including drilling programs that have identified high-grade gold mineralisation, highlighting the project’s potential.

Additionally, the company holds interests in the Northampton Project, targeting base metals such as lead, zinc, and copper, further diversifying its exploration portfolio.

Recent developments include Caprice’s strategic focus on advancing the Island Gold Project, with ongoing drilling campaigns aimed at expanding known mineralised zones and identifying new targets. The company’s systematic exploration approach and commitment to unlocking the project’s value have garnered attention within the investment community.

Investors may be interested in Caprice Resources due to its exposure to gold, a traditional safe-haven asset, and its proactive exploration strategy in a region with a rich mining history. The potential for significant discoveries and resource growth positions Caprice as a company to watch in the junior mining sector.

At the time of writing, Caprice’s share price return over the last three months is 222.2%.

AusQuest Ltd (ASX: AQD)

AusQuest Limited is an Australian exploration company dedicated to discovering mineral deposits across Australia and Peru.

The company’s exploration portfolio includes projects targeting commodities such as copper, nickel, gold, and zinc. AusQuest’s strategy involves identifying and securing large-scale exploration opportunities with the potential for significant mineral discoveries.

Collaborations with major mining companies, including strategic alliances, have been a cornerstone of AusQuest’s approach, providing technical expertise and financial support to its exploration activities.

In recent times, AusQuest has focused on advancing its key projects, conducting geophysical surveys and drilling programs to test high-priority targets. The company’s ability to attract partnerships with industry majors underscores the quality and potential of its project portfolio.

Investors may be drawn to AusQuest due to its diversified commodity exposure and strategic alliances, which mitigate exploration risks and enhance the potential for discovery success. The company’s commitment to systematic exploration and its presence in mineral-rich regions position it well for future growth and value creation.

At the time of writing, AusQuest’s share price return over the last three months is 218.2%.

Otto Energy (ASX: OEL)

Otto Energy Limited is an oil and gas exploration and production company with a focus on North America.

The company’s portfolio includes interests in conventional oil and gas assets in the Gulf of Mexico and onshore Louisiana, USA. Otto Energy’s strategy centres on acquiring and developing assets with near-term production potential and leveraging its technical expertise to optimise asset performance. The company’s existing production provides cash flow to support ongoing operations and exploration activities.

Recent business developments for Otto Energy include efforts to enhance production efficiency and evaluate new investment opportunities to expand its asset base. The company’s focus on conventional oil and gas plays in a stable regulatory environment offers a balanced risk-reward profile.

Investors may be interested in Otto Energy due to its established production, strategic focus on cash-generating assets, and potential for growth through targeted acquisitions. The company’s operational presence in proven hydrocarbon regions and commitment to disciplined capital management make it a noteworthy player in the mid-tier oil and gas sector.

At the time of writing, Otto Energy’s share price return over the last three months is 205.6%.

Cosmos Exploration (ASX: C1X)

Cosmos Exploration Limited is a mineral exploration company focused on discovering and developing precious and base metal deposits in Australia. The company’s flagship project, the Byro East Project in Western Australia, is prospective for nickel-copper-platinum group elements, with geological settings analogous to major mineralised provinces.

Cosmos Exploration employs modern exploration techniques to identify and evaluate targets within its project areas, aiming to unlock value through systematic exploration.

In recent developments, Cosmos Exploration has undertaken geophysical surveys and initial drilling programs at the Byro East Project to test identified anomalies and assess the project’s mineral potential. The company’s proactive exploration approach and focus on underexplored regions have positioned it to potentially make significant discoveries.

Investors may find Cosmos Exploration appealing due to its exposure to high-demand commodities like nickel and copper, which are essential for the transition to renewable energy technologies. The company’s strategic project locations and commitment to rigorous exploration methodologies enhance its prospects for value creation in the mineral exploration sector.

At the time of writing, Cosmos’ share price return over the last three months is 203%.

Green Critical Minerals (ASX: GCM)

Green Critical Minerals Limited is an Australian mineral exploration and development company with a focus on critical minerals essential for renewable energy technologies and sustainable applications.

The company’s flagship project, the McIntosh Graphite Project, is located in Western Australia and is renowned for its high-quality flake graphite deposits. In addition to graphite, Green Critical Minerals holds interests in various projects targeting base metals, nickel-copper-platinum group elements (Ni-Cu-PGE), rare earth elements, tungsten, and topaz, reflecting a diversified portfolio aimed at supporting the global transition to green energy. 

Recent developments have highlighted the company’s progress in advancing its graphite initiatives. Notably, Green Critical Minerals reported that Very High Density (VHD) graphite produced from its McIntosh project achieved an industry-record density of 2,071 kg/m³, surpassing standard requirements for nuclear and electrode graphite.

This breakthrough underscores the project’s potential to supply premium graphite for high-tech applications. Additionally, the company appointed a global executive to lead sales and marketing efforts, signaling a strategic move to commercialise its products.

Investors may find Green Critical Minerals attractive due to its focus on materials integral to energy storage and efficiency, positioning it well within the burgeoning renewable energy sector.

At the time of writing, Green Critical Minerals’ share price return over the last three months is 180%.

Heavy Minerals (ASX: HVY)

Heavy Minerals Limited is an Australian exploration company specialising in the identification and development of mineral sands deposits rich in valuable heavy minerals.

The company’s primary asset, the Port Gregory Garnet Project in Western Australia, is notable for its high-quality garnet resources, which are essential in abrasive blasting and waterjet cutting industries. Heavy Minerals’ strategic focus on garnet aligns with the increasing global demand for industrial abrasives, offering a sustainable alternative to traditional silica sand.

In recent months, Heavy Minerals has advanced its exploration efforts at Port Gregory, conducting drilling programs to delineate resource estimates and assess the project’s economic viability. The company’s commitment to environmental stewardship and sustainable mining practices enhances its appeal to socially conscious investors.

With the industrial sector’s growing emphasis on efficient and eco-friendly materials, Heavy Minerals’ positioning in the garnet market presents a compelling opportunity for investors seeking exposure to niche commodities with robust demand fundamentals.

At the time of writing, Heavy Minerals’ share price return over the last three months is 168.2%.

Wellard Ltd (ASX: WLD)

Wellard Limited is an agribusiness company based in Australia, primarily engaged in the export of livestock, including cattle and sheep, to international markets.

The company operates a fleet of specialised livestock vessels, ensuring the safe and humane transport of animals, and has established a significant presence in key markets across Asia and the Middle East. Wellard’s integrated supply chain encompasses procurement, quarantine, and shipping, allowing for efficient operations and quality assurance throughout the export process.

Recently, Wellard has focused on streamlining its operations to enhance profitability and adapt to changing market dynamics. The company has undertaken strategic initiatives to optimise its fleet utilisation and reduce operational costs, aiming to improve financial performance.

Investors may be interested in Wellard due to its established market position, expertise in livestock logistics, and potential to capitalise on the growing demand for protein in emerging economies. The company’s efforts to enhance operational efficiency and navigate regulatory environments position it as a resilient player in the agribusiness sector.

At the time of writing, Wellard’s share price return over the last three months is 167.9%.

Greenvale Energy (ASX: GRV)

Greenvale Energy Limited is an Australian company focused on the exploration and development of unconventional oil and gas resources, particularly oil shale deposits.

The company’s flagship Alpha Torbanite Project in Queensland aims to produce high-quality oil from torbanite, a type of oil shale known for its rich hydrocarbon content. Greenvale Energy’s strategy involves leveraging innovative extraction technologies to unlock the potential of this resource, contributing to domestic energy supply and reducing reliance on traditional fossil fuels.

In recent developments, Greenvale Energy has progressed its feasibility studies and pilot programs at the Alpha project, aiming to demonstrate the commercial viability of torbanite oil production. The company’s commitment to environmental sustainability includes exploring carbon capture and utilisation options to mitigate emissions associated with oil shale processing.

Investors may find Greenvale Energy appealing due to its focus on alternative energy sources and potential to supply domestic markets with locally produced oil, aligning with energy security and sustainability objectives.

At the time of writing, Greenvale’s share price return over the last three months is 164.5%.

Holista CollTech Ltd (ASX: HCT)

Holista CollTech Limited is a research-driven company specialising in health and wellness products, with a focus on natural ingredients and supplements.

The company’s product portfolio includes dietary supplements, ovine collagen, and food ingredients aimed at promoting health and addressing lifestyle-related health concerns. Holista CollTech leverages proprietary technologies to develop innovative solutions, such as low-glycemic index formulations and natural antimicrobials, catering to the growing consumer demand for health-conscious products.

Recently, Holista CollTech has expanded its market reach through strategic partnerships and distribution agreements, enhancing its presence in key markets across Asia and North America. The company’s focus on research and development has led to the introduction of new products targeting immune health and metabolic wellness, aligning with current health trends.

Investors may be drawn to Holista CollTech due to its commitment to innovation in the health sector, potential for global market expansion, and ability to address emerging consumer health needs with natural and scientifically backed products.

At the time of writing, Holista CollTech’s share price return over the last three months is 150%.

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