These penny stocks rallied over 1,000% in 2022 so far; do you own any?

At least four penny stocks soared over 10 times despite the ongoing volatility in the domestic equity markets in the ongoing calendar year. According to market watchers, the ongoing geopolitical crisis between Russia and Ukraine and consequent hike in commodity prices, heavy selling by overseas investors and rise in interest rates by global central banks weighed sentiment.

With a rally of 2,812 per cent, Kaiser Corporation emerged as the top gainer on the list. Shares of the company rallied to Rs 81.25 on June 29 from Rs 2.79 on December 31 last year. In general, any stock which is available under single-digit can be termed as a penny.

Before going ahead, here is a disclaimer that penny stocks are highly risky in nature. Therefore, readers should consult their financial advisors before taking any positions in such stocks.

Gallops Enterprises is the next player on the list. Shares of the company skyrocketed 1,723 per cent to Rs 83.15 from Rs 4.56 during the same period. It was followed by Hemang Resources which jumped to Rs 46.25 from Rs 3.09, indicating a rise of 1,396.76 per cent on a year-to-date basis.

Data further highlighted that some other players like Alliance Integrated Metaliks, Beekay Niryat and BLS Infotech also rallied over 500 per cent during the same period.

Kolkata-based investor Soumya Malani said, “Gullible retail investors should avoid penny stocks. For investing in any stocks, one should focus on the good promoter, scalable business model, some competitive advantage which its peer is lacking would be the one to watch out for.”

“It would be better if we set a checklist of like what not to buy while investing in penny stocks. Some of the simple steps to avoid the junk penny stocks include never 'buy' a company with a “sun-setting” business model, avoiding companies with low promoter shareholdings or with reducing shareholding pattern of promoters, don't go for stocks with frequent equity dilution, abstaining from picking stocks which have got a past bad track record, questionable background. Stay away from companies which have hardly any sound financial but often comes up with bonus and stock splits. Avoid inconsistent companies with bad financial, negative cash flows, high debts and unrelated diversification,” he said.

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