The positive inflation news coupled with increased investor interest towards small cap and cyclical stocks opened many opportunities in Penny Stocks to Buy
The encouraging inflation data lifted hopes of rate cuts coming soon with rate sensitive sectors already giving a thumbs up and all major indices surged.
A scrutiny of the Penny Stocks List reveals the following stocks having long term growth potential.
SRG Global Limited (ASX: SRG)
SRG Global Limited in its market updates for FY24 on 23 July 2024 highlighted its impressive operating cashflow and a robust EBITDA to Cash Conversion ratio exceeding 115%.
Furthermore, SRG Global Limited reported a strong margin performance for the fiscal year. The strategic transformation of the company, with around 70% annuity style earnings, demonstrates a solid recurring revenue profile and offers promising long-term sustainable growth opportunities.
In FY24, the company maintained a net cash position of $17.8 million, a significant improvement from the Net Debt position of $17 million in FY23.
Prior to this, on 3 July 2024, SRG Global Limited announced that it had secured multiple contracts with existing clients in the Health, Building, and Resources sectors across Australia. The new works secured totalled to $225 million, including contracts for specialist facade systems design, supply, and installation with Built at the Chifley South development in Sydney, New South Wales, structures contract with Multiplex at the Joondalup Health Campus Development in Perth, WA. Also including the ongoing mine site infrastructure sustainment works for Talison Lithium at the Greenbushes mine site in WA, and an Engineered curtain wall facade and structures contract with PACT Constructions for the Hancock Prospecting corporate headquarters redevelopment in Perth, WA.
Due to significant recent contract wins and strong industry demand for its services, SRG is poised to begin work on several new projects, with completion expected by 2025 & 2026. The company currently holds a record $2 billion of work in hand and has a long-term opportunity pipeline valued at $6.5 billion. Consequently, SRG has set its FY24 EBITDA guidance at $98 million to $99 million, with FY25 EBITDA projected to be 10% higher than FY24.
Sovereign Metals Limited (ASX: SVM)
Sovereign Metals Limited (ASX: SVM) recently announced having entered into a Memorandum of Understanding (MoU) with The Palladium Group (Palladium), a US-based development organization involved in various projects in Malawi, including the Feed the Future Malawi Growth Poles Project (Growth Poles), valued at US$50 million and scheduled to run from 2023 to 2028.
Under this collaboration, Sovereign and Palladium aim to integrate smallholder farmers into the growing agriculture value chains.
In May 2024, Sovereign had initiated a Pilot Mining and Land Rehabilitation Program at its Kasiya Rutile-Graphite Project in Malawi. The program's dry mining trial has been successfully completed concluding that it can be efficiently mined using standard mobile excavators and trucks, demonstrating operational alternatives as part of ongoing PFS Optimisation Study.
Furthermore, the company shared the results of downstream testwork conducted at ProGraphite GmbH, an independent consultancy based in Germany. The testwork demonstrated that Kasiya's spherical graphite purification process achieved an impressive 99.99% loss-on-ignition (LOI), indicating extremely low levels of residual impurities.
Prior to this, the Rutile-Graphite Project (Kasiya) underwent testing at four different laboratories, all of which successfully produced high-grade graphite concentrate (94.9%-97.8% TGC) with high flotation recoveries (91.2%-97.2%). The testwork consistently yielded excellent results using a conventional flowsheet across all laboratories.
As of 31 March 2024, the company maintained a cash position of $36.6 million.
Sovereign, one of the Top Penny Stocks, with its recent positive test work results validates the company's capability to produce world-class graphite, potentially positioning it favorably within the graphite market.
Source - Company's Report
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