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2 penny stocks that could hit 100p before year end

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Penny stocks in most cases carry a higher level of risk when I invest. Given the small market-cap (sub-£100m) there isn’t much trading activity. This can mean that even a relatively small buy or sell order can dramatically move the price.

Yet if I buy a penny stock that starts to attract attention and outperforms, I can benefit from a rapid share price move higher. Here are two I think could hit 100p later this year.

Help at hand

Mind Gym (LSE:MIND) is a “human capital and business improvement specialist”. This sounds a bit woolly to me! In normal terms, it goes into a business and helps to improve efficiency by making workers feel valued. The company benefits from more productive staff, and the staff feel more important.

I feel this niche area could do really well this year and beyond. Businesses are becoming more and more conscious of retaining staff, especially those working from home. There’s also a lot of pressure to show that management do care about workers. By hiring Mind Gym, it helps to tick the box.

It already boasts about FTSE 100 companies it works with, ones that have big budgets.

The current share price is 80p, so I’d need to see a 25% uplift this year to hit 100p. Given that the stock is down 44% over the past year, it was trading at 100p last September. It’s not an unrealistic level to bounce back to, if finances continue to improve post-pandemic.

The pandemic is one reason why the stock is at depressed levels, as the business had to pivot to delivering sessions online. From looking at how the transition went, I don’t feel it was a great move. A risk going forward is that we see less in-person demand for Mind Gym if more companies transition to working from home.

A lithium hotshot

The second penny stock on my radar is CleanTech Lithium (LSE:CTL). Energy stocks related to lithium continue to be popular, and this is an example of an extraction supplier at the beginning of the production chain.

CleanTech says it “holds hold licences rights over three substantial lithium projects, located in the lithium triangle, the world’s centre for battery grade lithium production”.

As a result, there’s significant upside potential for the share price this year if we get some encouraging project updates on the commercial prospects. The current share price of 72p reflects a 97% jump since the IPO last March. On that trajectory, 100p is a very viable target price later this year.

The big risk I see here is that the share price could be inflated on speculation. The business has zero income. Combined with administrative costs, the last half-year report showed a loss of £1.4m. Granted, the firm isn’t going out of business tomorrow, but it does need to start getting revenue through the door soon before investors get concerned.

I think both penny stocks have solid potential. Due to the higher risk, I’m looking to allocate a small amount of money to each company.

The post 2 penny stocks that could hit 100p before year end appeared first on The Motley Fool UK.

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Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.