Penny stocks can experience periods of intense share price volatility. Whats more, smaller market-cap stocks can also have much weaker balance sheets than larger businesses. This can make them much more vulnerable to economic and industry downturns.
Buying penny shares, however, could also give investors access to a growth hero of tomorrow. And this has the potential to turbocharge the returns made over the long term.
To Invinity and beyond
Investing in shares that play a role in the ‘green economy’ is one way investors can try to make big profits over the next decade.
I’ve sought to do this by buying renewable energy stock The Renewables Infrastructure Group. I have also invested in TI Fluid Systems, which makes lots of components for use in electric cars. I’m considering buying shares in penny stock Invinity Energy Systems (LSE: INV) too.
This UK share makes energy storage technology that ensures a constant stream of power supply. Energy production from renewable sources can fluctuate wildly according to when the wind blows and the sun shines. Invinity’s tech then can help prevent power outages from occurring.
Demand for the stock’s product, therefore, could rise strongly as the number of renewable energy farms across the world grows. But I like Invinity in particular because of its focus on vanadium flow batteries (VFBs).
Vanadium batteries
Lithium-ion batteries are the most widely used and therefore represent a threat to other technologies like VFBs. However, I’m backing interest in Invinity’s batteries to snowball given their superior durability, safety and long-term cost effectiveness.
Latest trading news from the company this week was highly encouraging on this front. Revenues soared almost 700% year-on-year in 2021, to £3.2m. And its sales pipeline had soared 152% between 2 November and 25 May to stand at 714.2 MWh.
Invinity plans to supercharge production over the next couple of years to keep sales soaring too. It’s why broker VSA Capital thinks revenues will rise more than fourfold to £14.1m in 2022 and then to £20.6m next year.
Risk vs reward
It’s important to acknowledge that Invinity isn’t tipped to turn a profit over the next 18 months at least. This can create higher risk for an investor, as share placings or taking on debt can be used by loss-making companies to soothe liquidity problems.
On balance, though, this is something I’d be happy to accept with Invinity. In my opinion, the potential rewards investors could receive more than make up for this risk.
Research suggests that the global VFB market will be worth $592.4m by 2026. That’s more that double the $237.5m that the industry is estimated to be worth today. If everything goes to plan then Invinity Energy Systems could have a big role to play in this rapidly growing market.
The post A top penny stock to buy in July appeared first on The Motley Fool UK.
Our 5 Top Shares for the New “Green Industrial Revolution”
It was released in November 2020, and make no mistake:
It’s happening.
The UK Government’s 10-point plan for a new “Green Industrial Revolution.”
PriceWaterhouse Coopers believes this trend will cost £400billion…
…That’s just here in Britain over the next 10 years.
Worldwide, the Green Industrial Revolution could be worth TRILLIONS.
It’s why I’m urging all investors to read this special presentation carefully, and learn how you can uncover the 5 companies that we believe are poised to profit from this gargantuan trend ahead!
Access this special “Green Industrial Revolution” presentation now
More reading
Why 2022 could turn out a great year for buying growth shares
Should I buy PayPal stock in July?
2 great FTSE 100 stocks to own heading into a recession
The Lloyds share price is down. Where will it go next?
Waiting for a stock market recovery? I’m not
Royston Wild has positions in TI Fluid Systems and The Renewables Infrastructure Group Limited. 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.