Investing in penny shares has long been an investment strategy for speculators who wish to take advantage of very low-priced shares. Although definitions of penny shares differ depending on who you ask, we are going to define them as shares under 25p.

Clearly, investing in penny shares should generally be assumed to be relatively high risk as most companies whose shares are traded in pennies tend to be more speculative. But the other side of the coin is that there can be spectacular gains to be made if the company comes good.

One of the best examples of this is the stock market star ASOS. The shares could be bought for 3.25p each in August 2003 and these peaked at 7730p in March 2018. In other words, an investment of £1,000 in 2003 would have increased in value to £2,378,443 during this period!!  Although this may be an extreme example, and the shares would have had to be retained for a long period, it does demonstrate the enormous potential of penny shares.

Last year, we tipped Avacta as one of our shares for the year of 2020. Recommended at 17.5p on 8 January 2020, the shares peaked at 202p in May, representing an increase of over 1150%. Thus, an initial investment of £1,000 would have risen in value to £11,542!

Looking at some of our recent penny share tips, we would highlight the following gains made to the close of business on 27 January 2021.

Date tipped: 08/12/20
Price: 24.5p
Price 27/01/21: 36p
Gain: 46.9%

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Date tipped: 08/12/20
Price: 7.0p
Price 27/01/21: 10.5p
Gain: 50%

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Date tipped: 27/11/20
Price: 15.75p
Price 27/01/21: 20.05p
Gain: 27.3%

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Date tipped: 17/12/20
Price: 1.7p
Price 27/01/21: 2.15p
Gain: 26.5%

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What is worth noting is that these gains have been made in a matter of weeks thus generating short-term profits for anyone who followed our advice and bought the shares. We hope to bring more penny share tips to you going forward, many of which will have the potential for short-term profits! Keep watching our Penny Share Picks.