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. Jatcorp
2. Structural Monitoring Systems
3. Zelira Therapeutics
4. Beforepay Group
5. Dusk Group
6. Eildon Capital
7. Mayfield Group Holdings
8. Fat Prophets Global Property Fund
9. LaserBond
10. Desane Group Holdings

Jatcorp (ASX: JAT)

Jatcorp Ltd is an Australian company that specialises in the production and distribution of dairy products, plant-based beverages, and nutritional supplements. The company focuses on the development, manufacturing, and export of high-quality, premium food and wellness products, with a significant emphasis on infant formula, health supplements, and organic products. Jatcorp serves both domestic and international markets, with a strong presence in China and other Asian countries. The company is also involved in the research and development of innovative health products, aiming to capitalise on the growing demand for wellness-oriented consumer goods.

At the time of writing, Jatcorp’s share price return over the last three months is 108%.

Structural Monitoring Systems (ASX: SMN)

Structural Monitoring Systems PLC develops advanced structural health monitoring (SHM) technologies. The company’s primary innovation, Comparative Vacuum Monitoring, is used to detect and monitor cracks and defects in critical structures – particularly in the aerospace and aviation industries. This real-time, non-destructive testing technology enhances safety and reduces maintenance costs by enabling early detection of potential structural issues. Structural Monitoring Systems operates in industries where structural integrity is crucial, such as aerospace, defence, and infrastructure, positioning itself as a leader in the SHM field. With its technology widely adopted by major global players, the company continues to drive advancements in safety and efficiency for critical structural applications.

At the time of writing, Structural Monitoring Systems’ share price return over the last three months is 91.9%.

Zelira Therapeutics (ASX: ZLD)

Zelira Therapeutics Ltd is a global biopharmaceutical company that focuses on the research, development, and commercialisation of cannabinoid-based medicines. The company is involved in developing proprietary formulations and conducting clinical trials to target a range of therapeutic areas, including pain management, sleep disorders, anxiety, and autism spectrum disorder. Zelira operates in multiple markets, including the United States and Australia, and has a strong portfolio of revenue-generating products along with a robust pipeline of potential new therapies. The company aims to deliver innovative treatments that improve the quality of life for patients while advancing the medical use of cannabinoids.

At the time of writing, Zelira Therapeutics' share price return over the last three months is 63.3%.

Beforepay Group (ASX: B4P)

Beforepay is an Australian fintech company that offers a “pay-on-demand” service, allowing users to access a portion of their earned wages before their payday. This service is designed to provide financial flexibility to users by enabling them to access funds when needed rather than waiting for their scheduled pay cycle. Beforepay operates as a financial wellness platform, helping individuals manage their cash flow and avoid high-cost credit options like payday loans. The company generates revenue through a fixed transaction fee charged to users rather than interest rates or other traditional lending mechanisms.

At the time of writing, Beforepay’s share price return over the last three months is 51%.

Dusk Group (ASX: DSK)

Dusk Group Ltd is a leading Australian retailer specialising in home fragrance products, including candles, diffusers, essential oils, and related accessories. The company is known for its premium, high-quality products that are designed to enhance the ambience of living spaces. Dusk operates through a network of retail stores across Australia and also offers its products online. The company emphasises unique, in-house-designed products and regularly introduces seasonal collections and limited-edition items. Dusk has built a strong brand presence in the home fragrance market, appealing to customers who seek both luxury and affordability.

At the time of writing, Dusk’s share price return over the last three months is 21.4%.

Eildon Capital (ASX: EDC)

Eildon Capital Ltd is an Australian investment company focused on funding solutions and generating returns through a diversified portfolio of real estate and private equity investments. The company specialises in acquiring high-yielding residential, commercial, and industrial properties, as well as participating in property development projects. Eildon Capital also explores private equity opportunities, targeting businesses with strong growth potential. By leveraging its expertise in property and investment management, the company aims to provide shareholders with stable income and capital appreciation, emphasising long-term value creation and sustainable growth.

At the time of writing, Eildon Capital's share price return over the last three months is 20.1%.

Mayfield Group Holdings (ASX: MYG)

Mayfield Group Holdings Ltd is an Australian company specialising in the design, manufacture, and servicing of electrical and power infrastructure solutions. It provides products like switchboards and control panels, mainly for industrial and utility sectors, including mining, energy, water, and transport. Renowned for quality, innovation, and safety, Mayfield delivers tailored solutions for critical infrastructure. Beyond manufacturing, the company offers engineering, project management, and maintenance services, ensuring full support throughout the product life cycle. Mayfield’s growth strategy includes expanding its offerings and exploring new markets, prioritising customer satisfaction and long-term partnerships.

At the time of writing, Mayfield Group Holdings’ share price return over the last three months is 13.6%.

Fat Prophets Global Property Fund (ASX: FPP)

Fat Prophets Global Property Fund is an investment fund offering exposure to a diversified portfolio of global real estate assets. Managed by Fat Prophets, a leading financial services firm, the fund aims to deliver income and capital growth through investments in REITs, listed property companies, and direct property across various regions and sectors. The fund focuses on high-quality assets with strong growth potential, emphasising diversification to manage risk and optimise returns. Investors benefit from the management team’s expertise 

in global real estate trends, providing a balanced approach to property investment with potential for long-term gains.​

At the time of writing, Fat Prophets Global Property Fund’s share price return over the last three months is 5.3%.

LaserBond Ltd (ASX: LBL)

LaserBond Ltd is an Australian company creating advanced surface engineering technologies. The company focuses on extending the lifespan and performance of industrial components through proprietary processes like laser cladding and thermal spraying, which enhance resistance to wear, corrosion, and heat. Serving industries such as mining, manufacturing, and energy, LaserBond helps reduce maintenance costs and downtime by improving equipment durability. In addition to surface engineering services, the company manufactures and refurbishes high-performance components. LaserBond is committed to innovation, continuously advancing its technologies and expanding its market presence through organic growth and strategic partnerships.

At the time of writing, LaserBond's share price return over the last three months is 5.1%.

Desane Group Holdings Ltd (ASX: DGH)

Desane Group Holdings Ltd is an Australian property investment and development company focused on strategic real estate projects, primarily in New South Wales. Its portfolio includes commercial, industrial, and residential properties, with a focus on acquisitions, development, management, and leasing to capitalise on growth opportunities in the Australian market. Known for its expertise in identifying properties with strong potential for appreciation and income generation, Desane also emphasises sustainable, community-oriented developments. This strategic approach has established Desane as a respected player in the Australian real estate sector.

At the time of writing, Desane Group Holdings’ share price return over the last three months is 3.4%.

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