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There’s no question that RC365 Holding (LSE:RCGH) has bags of investment potential. It’s a growth stock I’ve been paying close attention to following its promotion from penny stock territory in June
Demand for its fintech services (like payment gateway solutions, IT support and online security) could rocket as the digital revolution carries on. Its focus on fast-growing China and Hong Kong could give it even more scope for success too.
But the explosion in RC365’s share price has left me feeling nervous. Chatter around its foray into artificial intelligence has led to a stampede of fresh buyers. At 122p per share I feel that there’s a big gap between the company’s current value and what it fundamentally deserves to be trading at. In this scenario a share price correction might be around the corner.
With this in mind, here are three penny stocks I’d rather buy right now.
Kodal Minerals
Lithium producer Kodal Minerals is also well placed to capitalise on a new technical revolution — the mass adoption of electric vehicles (or EVs).
The business is constructing the Bougouni mine in Mali to supply the market with mountains of the silvery-white metal. Studies have shown the asset contains 21.3m tonnes of it.
Kodal has a $100m financing agreement in place with China’s Hainan Mining to get the project off the ground and last week received a $3.5m tranche of cash to aid development.
Developing any mine comes with a high degree of risk. Setbacks can leave revenue forecasts in tatters and push costs through the roof. But the Hainan agreement takes a lot of peril out of buying Kodal shares. I think it’s a good buy for the EV revolution.
Renold
Buying shares in industrial chains maker Renold is another way that investors can ride the upcoming commodities boom. Metals producers can’t get to work without the chains, gears and couplings that are integral in modern mining machines.
The world is on the cusp of a fresh commodities supercycle thanks to things like the booming green economy, emerging market urbanisation and growing supply chain investment.
I can invest in mining companies to capitalise on this opportunity. Or I can buy shares in businesses that provide them with products and services. This can significantly reduce the risk I face.
Mechanical breakdowns are a constant threat that can affect future sales. But Renold’s strong track record on this front helps to soothe my nerves.
Strix Group
It’s likely that many have never heard of Strix Group. But there’s a strong chance that they use its products, perhaps even several times a day.
The company manufactures safety controls that are used in kettles. In fact it’s the world’s biggest manufacturer of this technology with a market share of 56%, excluding Russia.
And it’s pushing into emerging markets to increase its take (it opened a factory in Guangzhou, China in 2021). This could send long-term earnings significantly higher.
Investors need to carefully consider the high levels of debt the company currently has. But I’m encouraged by the steps Strix is taking to bolster cash generation and repair the balance sheet. I think the firm is worth close attention today.
