As any investor knows, stock-screen is a complex process whereby you must decide which features you value most. While some investors want stocks that offer high profits, other prefer those with low debt – but, it’s possible to have the best of both worlds.
Of thousands of American stocks with a market value exceeding $250 million, there are just under 400 that provide stockholders with a 25% or more return on equity. About a quarter of those stocks have debt that does not exceed 10% of their corporate net worth. Here, we will look at some debt-free stocks that would make for a wise investment opportunity.
Terra Nitrogen
This company is a fertilizer manufacturer that sells for about $110 per share. It has a dividend of $10 and an 8.7% dividend yield. According to investor John Dorfman, the sustainability of this success is questionable. Still, fertilizer seems to be a stable business, as the global population grows and land is increasingly limited. Over the past year, Terra Nitrogen has earned a 47% return on equity and is currently debt-free.
Insperity
Insperity is a provider of human resources and business solutions. The company continues to see impressive growth, earning $105 million over 2015 and having no debt.
Francescas Holdings
Francescas Holdings is a retailer that operates 600 boutiques worldwide, selling clothing, accessories, gifts, and jewelry. Each store is different, as the company aims for a more independent look rather than a chain store environment. Over the past year, Francescas Holdings has earned a 31% return on equity and currently has no debt. Â
Ituran
Ituran is an innovative company that manufactures systems for tracking and recovering cars that have been stolen. The Israel-based company sells its systems worldwide in Brazil, Argentina, and the US. Its return on equity is almost 30%, and Ituran remains debt free.
Michael Kors
Michael Kors remains one of the biggest fashion manufacturers in the retail world. The company is based in London, and sells its shoes, accessories, and clothing globally in Canada, the US, Europe, and Japan. The company has very little debt and offers a return on equity of almost 40%.
Thor Industries
This company manufactures recreational vehicles across Indiana and Ohio, and sells its products across Canada and America. By the end of 2015, the company earned $183 million and had no debt. With lower fuel prices across these countries, we can expect to see further growth from Thor.
While high-profit, low-debt stocks may seem too good to be true, they are out there. They make for smart investments, and are pretty reliable for stockholders. Consider adding some of these stocks to your portfolio to diversify and encourage better returns. You can expect to build a winning portfolio with some of these stocks on hand.
GMDC
The mining and processing enterprise Gujarat Mineral Development Corporation (GMDC) Ltd. The business sells more lignite commercially than anyone else in India. It provides lignite for a range of industries, including captive electricity, textiles, chemicals, and ceramic bricks.
Although GMDC’s profits have decreased over the years, it has continued to operate consistently. With the exception of the most recent year, it has never posted losses for any fiscal year dating back to 2001.
See the company’s finances over the previous five years in the table below.
NALCO
Another PSU on the list – National Aluminum Company (NALCO).
Nalco’s dividend history goes back to 1995. The government owned company has maintained its dividend payout consistency by declaring dividends throughout all these years.
The company has almost nil debt. Its debt to equity ratios has stayed nil or 0.01% throughout the years.
Coming to sales and profits, have a look at the table below to see Nalco’s financials over the years.
How should one go about investing in penny stocks?
- Before purchasing penny stocks, one should always conduct their own research because they are intrinsically riskier than blue-chip or multi cap stocks.
- On the plus side, they offer a tremendous opportunity for progress. Good penny stocks frequently become multibaggers in a short period of time. On the other hand, there is a significant risk involved.
- Not all penny stocks have a history of doing well. That is the explanation why people with low risk tolerance shouldn’t invest in penny stocks.
- A person should not set aside more than 5%–7% of their overall investment portfolio for penny stocks.
- To differentiate the men from the boys in individual stocks, you need a very solid framework. A structure that not
Top list of Penny Stock Debt Free Companies
A growing number of penny stocks have eliminated all or most debt from their corporate balance sheets. These companies can offer investors generous dividends and attractive valuations, making them some of the best investments.
Here is a list of ten penny stock debt-free companies that are worth investigating:
- GT Advanced Technologies (GTAT)
- Inovio Pharmaceuticals (INO)
- BioTime (BTX)
- Acacia Communications (ACAC)
- Soothe Inc. (SOOT)
- Averian Medical Systems, Inc. (AVRS)
- InterCloud Systems, Inc.(ICLOUD)
- Lumentum Holdings Ltd.(LITE)
- Golden Pass Capital Corp.(GPCO)
- Manta Corp.(MANT)
- Avant-Garde Resources, Inc. (AVGO)
- American National Bank Holdings, Inc. (AMBK)
- First Horizon National Corporation (FHN)
- CenturyTel Systems, Inc. (CTL)
- MBIA, Inc. (MBI)
- Royal Bank of Canada (RBC)
- TD Ameritrade Holding Corp.(TD Ameritrade)
- Wells Fargo & Company, NA (WFC)
Penny Stock in a Debt-Free Company with Zero Credit
Some penny stocks are debt-free companies that have little or no credit history. They can make obtaining loans for the company complex, but they can also make investing in the stock more attractive to investors.
One such company is Advanced Micro Devices Inc. (AMD), which designs and manufactures processors and related technologies for personal computers, tablets, smartphones, servers, gaming devices, and other embedded systems. The company had a net income of $2 billion in 2013 and was free of debt at the time of publication.
At first glance, AMD might not seem like a good candidate for investment because of its high debt burden. However, the debt was incurred in the past decade when the company acquired other stock shares. Since then, AMD has reduced its liabilities by restructuring these debts and exiting some businesses. As a result, AMD’s net debt was $3 billion at the end of 2013 and is expected to be down to $1 billion by 2018.
Debt-free status makes AMD an attractive investment for several reasons:
- First, AMD’s operations are profitable, and its shares are trading at a discount to their underlying value.
- Second, AMD has strong fundamentals – including market share gains in key markets – which will likely continue.
- Third, AMD has a strong management team with experience in both technology development and financial management. These skills will help steer the company through future challenges while maintaining profitability.
Analysis of the Debt Free Penny Stock Screener Market Research
Debt-free penny stock screener market research typically focuses on the company’s financial performance, management team, and overall stability. However, the company’s credit score is another critical consideration when researching a debt-free penny stock to buy.
To determine a company’s credit score, analysts will look at a variety of factors, such as:
- Financial metrics (e.g., cash flow, debt levels)
- Credit history (e.g., past due accounts, amount of credit outstanding)
- The ratio of total assets to total liabilities
- Efficiency ratios (e.g., net profit margin, operating margin)
Given a good credit score when investing in debt-free penny stocks to buy, do homework and seek out reliable sources of information before investing in any securities. Debt-free companies with high credit scores are likely to be more stable. They have lower risks, making them ideal investments for anyone looking for solid returns without taking on too much risk.
How to Find Profitable Debt Free Penny Stock screener
There is a Debt free penny stock screener with Zero Credit out there that is debt-free with zero credit. The company, based in the United States, has been around since 2006 and is currently traded on the NASDAQ under the symbol “PWRD.”Â
The company’s products are natural gas and oil drilling services. They have consistently grown over the years, reaching a market cap of $2.2 billion as of March 2018.
Make sure to read independent financial analysts’ reports on the company to understand its current situation and prospects. Once you have a good understanding of PWRD, start looking at its stock price. You can find PWRD’s stock price on several online platforms, such as Yahoo Finance and Morningstar. Be sure to track its price movement over time to determine whether it’s worth investing in this debt-free penny stock screener.
Debt Free Penny Stocks Below Under 50 Rs 2022
There is no shortage of debt-free companies in the market today. In fact, various companies are currently stock trading at less than 50 Rs 2022.
These companies have zero or low debt levels and can thus offer investors high safety and liquidity.
Some of the best penny stocks to buy with zero or low debt levels that you can invest in include:
GVK Limited (GVK): This company has an accumulated deficit of Rs 2,421 crore as on March 31, 2019. However, it has zero liabilities and a net worth of Rs 19,358 crore. GVK is expected to report consolidated revenue growth of 10% for the fiscal year 2019-2021. The stock is currently being traded at Rs 20.50 per share, which is discounted.
Radiance Health Sciences Inc (RHSI): RHSI is a Canadian healthcare technology company that develops and provides software solutions for managing and delivering healthcare services. The company has a market cap of Rs 1,601 crore and is currently trading at Rs 26.90 per share.
Swastika Infrastructure Development Corp (SIDC): SIDC is an infrastructure development company specializing in developing real estate projects in India and Southeast Asia. Currently, Rs 1,485 market worth is trading at Rs 12.30/share.
Health Net Inc (HNT): Health Net Inc is an American healthcare provider that provides services in the United States and Canada. The estimated global market value is Rs 8,371 crore and is currently trading at Rs 83.10/ stock share.
The Financials
Tesla, Inc. (TSLA) is a company that stands out from the rest due to its lack of debt and heavy reliance on cash flow. The company has never taken on any debt, and as of March 2019, had $2.6 billion available in cash and equivalents. Tesla’s success is mainly attributable to its rapid product development cycle, which allows it to release new products quickly and thus remain competitive.
Powered by this strong liquidity position, Tesla has maintained a low credit rating despite its high debt-to-cash ratio of 0.5x. It’s largely due to Tesla’s strong operating cash flow, which totaled $4.7 billion in 2018 and was projected to be even higher in 2019. In addition, Tesla can reduce expenses by automating many processes and reducing headcount over the past few years.
Because Tesla does not rely on borrowed money or capital markets for financing, it can continue investing in R&D and other strategic initiatives even in the event of future economic volatility or market downturns. Furthermore, its strong balance sheet and liquidity position could offer generous stock options to employees at relatively low dilution rates compared with many other companies.
FAQs on Penny Stocks
1) Is investing in penny stocks worth it?
Investing in penny stocks can be a risky affair. They are extremely volatile and have low liquidity. Moreover, there is very little information available about them. This makes it difficult to analyze them.
However, fundamentally strong penny stocks have the potential to give multibagger returns. In fact, there are several large-cap stocks that were penny stocks once.
You can start you’re search with Equitymaster’s stock screener to find the best multibagger penny stocks.
Specifically, look for companies with strong balance sheet, high promoter holding, high quality of the business, strong cash flows and cheap valuations.
2) How long should I hold penny stocks?
When it comes to holding stocks, there are two approaches which an average investor can follow. One where the investor buys a certain number of shares and keeps it for the long-term for months, years or even 5-10 years.
And another approach when the trader takes advantage of the volatility of the market and completes a deal in the same trading session or within a short span.
It depends entirely on your risk appetite in the stock market. For a good penny stock to deliver multibagger returns, a time period of 2-3 years is suitable.
3) Can you make money fast with penny stocks?
Yes and no.
Yes, if you successfully carry out a short-term trade on a fundamentally strong penny stock. You can take advantage of the volatility of the market and can complete a deal in the same trading session or within a short span.
No, if you carelessly bet your money on a penny stock without conducting thorough research.
Conclusion
In today’s market, penny stocks are all the rage. Many investors believe that these types of stocks offer a high potential for returns, especially if the company in question is debt-free. If you’re looking to invest in a penny stock with no credit risk, you may want to consider investing, which I have highlighted as a debt-free penny stock with excellent potential for future growth.
