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The best penny stocks on the ASX in 2024 (updated monthly)

Our proprietary algorithm picked 10 penny stocks that are worth watching in the year ahead.

Important note

Unfortunately there's no one magic stock or ETF that's 'best' for everyone. Instead, you should look at your own individual needs and investment strategy to decide what stock is right for you. Further, nobody can say for certain which direction a share will go as past performance is no guarantee of future results. So keep in mind these are stock ideas only and should not be taken as personal financial advice.

It's been a turbulent time for markets.

While the economy is still dominated by rising interest rates, stubbornly high inflation and the possibility of a recession, global equities and commodities have fared relatively well so far in 2024.

Yet with markets focusing on the profitable big end of town, this could be an opportunity to snap up some penny stocks instead.

We've come up with a few penny stocks that are worth keeping an eye on in 2024.

Our best penny stocks methodology

To help you identify the latest penny stocks, we used Finder's proprietary algorithm to find ASX-listed companies that have strong fundamentals based on price performance, profit, revenue and dividends.

We also used filters to exclude companies that did not meet the following requirements:

  • Listed on the ASX for 5 years or more
  • A share price of under $1

Important: Our list of highlighted stocks aren't necessarily the best penny stocks for you or your personal situation. Investing in penny stocks is typically highly speculative and can be very risky. We do not guarantee the performance or returns of any investment. You should do your own research and consult an industry professional when in doubt.

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The algorithm was last updated on 3 June 2024.


Connexion Media (CXZ.AU)

Connexion Mobility Ltd develops and commercializes fleet management software for the automotive industry in Australia, the United States, Canada, and Mexico. Its product portfolio includes OnTRAC, which manages the courtesy transportation program; and the Connexion platform designed with OEM-agnostic functionality to franchise and multi-franchise.
  • Market cap: A$27.008 million
  • YTD performance: 87.5%
  • 1-year performance: 57.9%
  • 5-year performance: 275%
  • Headquarters: Australia

Aspire Mining (AKM.AU)

Aspire Mining Limited engages in the exploration and development of metallurgical coal assets in Mongolia. The company holds 100% interest in the Ovoot coking coal project that consists of one mining license located in north-western Mongolia.
  • Market cap: A$121.833 million
  • YTD performance: 108.7%
  • 1-year performance: 293.45%
  • 5-year performance: 1900%
  • P/E ratio: N/A
  • Headquarters: Australia

Elixir Petroleum Ltd (EXR.AU)

Elixir Energy Limited operates as a natural gas and hydrogen exploration and development company in Australia, Mongolia, and the United States. The company holds 100% interest in the Nomgon project, a coal bed methane production sharing contract covering an area of approximately 30,000 square kilometers located to the north of the Mongolian/Chinese border.
  • Market cap: A$119.068 million
  • YTD performance: -19.23%
  • 1-year performance: 81.04%
  • 5-year performance: 483.34%
  • P/E ratio: N/A
  • Headquarters: Australia

Alara Resources (AUQ.AU)

Alara Resources Limited engages in the exploration, evaluation, and development of mineral resources in Oman. The company explores for copper, zinc, silver, and gold deposits.
  • Market cap: A$49.664 million
  • YTD performance: 244.45%
  • 1-year performance: 181.82%
  • 5-year performance: 463.64%
  • P/E ratio: N/A
  • Headquarters: Australia

Cauldron Energy Ltd (CXU.AU)

Cauldron Energy Limited operates as a mineral exploration and development company in Australia and Argentina. It explores for uranium, gold, and sand deposits.
  • Market cap: A$42.157 million
  • YTD performance: -32.55%
  • 1-year performance: 391.53%
  • 5-year performance: 391.53%
  • P/E ratio: N/A
  • Headquarters: Australia

Fenix Resources (FEX.AU)

Fenix Resources Limited engages in the exploration, development, and mining of mineral tenements in Western Australia. The company operates in two segments: Iron Ridge Mine and Trucking Joint Venture.
  • Market cap: A$258.947 million
  • YTD performance: 38.3%
  • 1-year performance: 51.17%
  • 5-year performance: 1060.72%
  • P/E ratio: 5.4167
  • Headquarters: Australia

4DS Memory (4DS.AU)

4DS Memory Limited, a semiconductor company, engages in the research and development of non-volatile memory technology in Australia. The company develops interface switching ReRAM technology for gigabyte storage class memory in mobile and cloud.
  • Market cap: A$142.884 million
  • YTD performance: -36%
  • 1-year performance: 207.7%
  • 5-year performance: 233.34%
  • P/E ratio: N/A
  • Headquarters: Australia

Ardea Resources (ARL.AU)

Ardea Resources Limited engages in the evaluation, exploration, and development of mineral properties in Australia. The company explores for nickel, cobalt, scandium, gold, PGEs, and copper deposits.
  • Market cap: A$117.85 million
  • YTD performance: 40.75%
  • 1-year performance: 83.88%
  • 5-year performance: 228.54%
  • P/E ratio: N/A
  • Headquarters: Australia

American Rare Earths Ltd (ARR.AU)

American Rare Earths Limited engages in the exploration and development of mineral resources in Australia and the United States. The company explores for rare earth, scandium, and cobalt deposits.
  • Market cap: A$123.356 million
  • YTD performance: 167.05%
  • 1-year performance: 104.35%
  • 5-year performance: 2036.37%
  • P/E ratio: N/A
  • Headquarters: Australia

Energy Resources Of Australia Ltd (ERA.AU)

Energy Resources of Australia Ltd produces and sells uranium in Asia. It holds an interest in the Jabiluka Mineral Resource.
  • Market cap: A$885.933 million
  • YTD performance: -88.05%
  • 1-year performance: 37.94%
  • 5-year performance: 37.94%
  • P/E ratio: N/A
  • Headquarters: Australia

Should you invest in penny stocks in 2024?

Penny stocks are smaller, less established businesses which are often impacted by volatility. In a period like we have today where markets are punishing unprofitable companies with investors fearing a recession, it might seem like it is a bad time to be buying penny stocks.

And for anyone who hasn't got a stomach for volatility this might be true. Although there are a few caveats to this.

Just because a market is volatile, it doesn't necessarily make it a bad time to invest, especially for those who are buying for the long term. After all, the share price and business performance don't always align over the short term.

So over the long term owning shares that are cheaper, in businesses that are growing can be beneficial to your long-term wealth.

If you're looking at investing during a downturn, just look at the global financial crisis (GFC). While many businesses didn't survive, others thrived, taking advantage of a changing landscape. In the US, companies including Netflix, LEGO and Mailchimp took the opportunity to expand and have since become global leaders.

In Australia, the commodity boom off the back of the GFC helped power many of our penny stocks, especially in the mining and resources sector.

Also it's worth pointing out that not all shares follow the market. In fact many businesses can have differing performance to how the market is going. Again though, this will rely on buying the right business.

Finally some businesses perform stronger in a recessionary period. Service providers, repair services, small luxury items, consumer staples and commodities can be recession resistant.

How penny stocks perform in a bear market

Penny stocks are highly volatile and are often seen as riskier investments. But that doesn't mean all penny stocks fall in a bear market.

Historically, penny stocks have larger swings in both bull and bear markets. This means that when times are good, investors increase their holdings. However, when the market turns and the sentiment is low, these investments fall further than blue chip shares do.

But just like large caps, how the business performs and its share price vary based on its own circumstances and the sector it is in.

I’ll trade in things I believe have a lot of hype… I’ll have a very firm stop loss and a price I take a profit at. And once I take the profit, I take it and move on. I’m done. I’m not re-entering… Or if it hits my stop loss, I sell and take the loss. I’ve taken lots of losses and I’ve taken lots of profits.

Fred Schebesta

Fred Schebesta
Founder, Author

How do penny stocks stack up to blue chips?

On the opposite side of the scale to penny stocks are blue chip stocks. In comparison to penny stocks, blue chip stocks are large listed companies that have been around for a long time and have an extensive, stable financial track record.

Some of Australia's biggest and most well-known companies are considered blue chip stocks, such as the Big Four banks, Telstra, BHP.

While penny stocks in most cases pay no dividends, blue chips stocks almost always do.

The downside of buying blue chip stocks is they traditionally have a slower growth rate compared to smaller stocks.

If investors are chasing larger capital growth, they traditionally do not look at blue chip stocks.

Ask an expert: How do you pick the right stocks?

Jessica Amir

Jessica Amir
Market strategist, Saxo Bank

Investing can be simple if you keep in mind that a business's value is often estimated by its future earnings. For example, in the week the NSW/VIC border reopened, travel stocks rallied as investors betted that company earnings in the sector would lift. So, when picking a stock consider:

  1. Is the company in a growth area?
  2. Does it have a solid history of company growth and is the company likely to be around in 10–15 years?
  3. Is it growing or likely to grow its revenue (and/or cash flow)? Remember that earnings growth drives share price growth.

Type of investor suited to penny stocks

Penny stocks are highly speculative investments. The odds of you losing all your money are greater than gaining multi-bagger returns.

As such, these investments usually are tailored towards the following:

  1. Experienced investors
  2. Investors with high risk tolerance
  3. Hedge funds and other professional investors
  4. Those with a long-term horizon who are willing to ride out short-term volatility
  5. Investors who are happy to take a bit of a gamble for potential extra reward

Pros

  • Lower share price
  • Today's penny stock could be tomorrow's winner
  • Potential for multi-year returns as the company grows
  • Not necessarily riskier businesses, just smaller companies

Cons

  • Higher risk especially compared to blue chips
  • Liquidity issues
  • Increasing volatility
  • Prone to scams
  • On average have more losers than winners
  • The business might have a short history

Are penny stocks good for beginners?

Australian penny stocks can be a good way for investors to ease into the market.

Like with everything else in life, you get what you pay for. So investors who choose to put their money in mature blue chip stocks can do so, but it will cost them more for the privilege.

On the other side is penny stocks, which as the name suggests are significantly cheaper per share.

However, there is a downside – these companies are far riskier compared to the more established players.

None of us can see into the future. What happens next is anyone's guess. However, we do know some big themes that currently drive the market:

  1. Technological innovation impact
  2. Global economic recovery dynamics
  3. Stable interest rates

Technological innovation impact

In 2024, penny stock trends are likely to be influenced by advancements in technology. Companies focusing on innovative solutions, such as artificial intelligence, clean energy, and biotechnology have attracted attention from investors seeking growth opportunities. Australian market could see increased volatility as these sectors continue to evolve.

Global economic recovery dynamics

As the world navigates through significant developments (geographical tensions), penny stocks may be influenced by the global economic landscape. Sectors tied to recovery efforts, such as travel, hospitality, and infrastructure have experienced shifts in demand in 2024. Investors closely monitor these trends, looking for penny stocks positioned to benefit from the broader economic resurgence.

Stable interest rates

Finder's outlook for 2024 suggests that interest rates remain stable. While this provides a sense of predictability, it also presents a mixed signal for penny stocks. On one hand, the lack of rate cuts may limit some potential market stimulus, but on the other, stability can be reassuring for investors looking for a predictable environment.

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FAQs

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, options or any specific provider, service or offering. It should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involve substantial risk of loss and therefore are not appropriate for all investors. Past performance is not an indication of future results. Consider your own circumstances and obtain your own advice before making any trades.

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