3 Penny Stocks with Strong Fundamentals and Zero Debt for Your Watchlist

Penny stocks offer a high-risk, high-reward proposition. They can be a suitable option for experienced investors who are willing to do thorough research and manage risk actively.

Here is a list of three penny stocks that you can add to your watchlist. We have picked these stocks from the Equitymaster screener.

However, investors should be cautious, considering many aspects including liquidity challenges.

Penny stocks offer a high-risk, high-reward proposition. They can be a suitable option for experienced investors who are willing to do thorough research and manage risk actively.

We have kept a three-year track record of profitability in mind, a zero debt to equity ratio and track record of dividend payments. The stocks selected are also priced under Rs 100. This apart we have considered stocks with a 3-year average ROCE of more than 10%.

#1 Advani Hotels and Resorts

First on our list is Advani Hotels and Resorts.

Advani Hotels & Resorts (India) owns and operates the 'Caravela Beach Resort Goa'; an independent, 201-key, 5-Star Deluxe golf resort on the Arabian Sea. The Caravela is located on a 23-acre estate with a 275-meter-long beachfront of Varca Beach, South Goa.

Radhakishan Damani, has maintained a 4.2% stake in the Advani Hotels and Resorts since 2016, a sign of confidence in the business.

The company has reported decent profits in the last three years.

Financial Highlights of Advani Hotels and Resorts

Source: Equitymaster

The company has an average ROCE of 50% over the last three years. The company also has a zero debt. This makes it a zero debt high ROCE company.

Advani Resorts has paid dividends twice this year of Re 1 per share in February and Rs 0.9 per share in May.

The company's future is tied to the tourism industry. The Government of India and various states support tourism development via various schemes. The Government of Goa has implemented helpful policies to boost tourism growth.

The rising number of cruise ships visiting Marmagao port, just 40 minutes from the company's resort, presents additional opportunities. The management is optimistic about the company's prospects.

To know more check the Advani Hotels and Resorts fact sheet and latest quarterly results.

#2 Adtech Systems

Adtech Systems is a leading solution provider in electronic security/ surveillance industry. The company provides products with intelligent solutions like EAS, CCTV, ESL, and display security.

Financial Highlights of Adtech Systems

Source: Equitymaster

The company's debt to equity ratio is zero. It has a decent three-year average ROCE of nearly 13%.

The company has paid a dividend of 10% for FY25 on a face value of Rs 10.

As per the management, the outlook for the current financial year is promising. The retail, commercial and industrial verticals are all showing positive outlook.

Adtech Systems has added few products like tablet business solutions, electronic shelf labels, smart lock solutions, in line with customer demands.

The company has also ventured into RFID for retail inventory management applications. The RFID portfolio has a promising future with new tie-ups being envisaged with industry leaders.

To know more check the Adtech Systems fact sheet and latest quarterly results.

#3 Delta Corp

Next on our list is Delta Corp.

Delta Corp is India's leading and only listed company engaged in the casino gaming industry.

It operates a diversified portfolio including offshore casinos, land-based casinos, online gaming platforms and luxury hospitality properties.

The company's gaming operations are concentrated in key regions like Goa, Sikkim, and Daman.

Financial Highlights of Delta Corp

Source: Equitymaster

The company has a three-year average ROCE of 15.6% and has paid dividends for many years. The last dividend was a 125%. The company's debt to equity ratio is zero.

To unlock the next wave of growth, the company is investing Rs 4.5 bn in a state-of-the-art vessel to replace Kings Casino, doubling its capacity to 4,000. It's slated for launch at the end of this year.

In addition, the launch of DeltinOne, the company's digital guest experience app, should give a boost to customer experience.

To know more check the Delta Corp fact sheet and latest quarterly results.

Should you consider penny stocks?

Penny stocks are generally considered suitable only for investors with a high-risk appetite.

Investors should do careful research of their own and evaluate the fundamentals, track record of these companies.

While there are risks, investors in the past have also generated sizeable returns in penny stock investment.

Investors should evaluate the company's fundamentals, corporate governance, and valuations of the stock as key factors when conducting due diligence before making investment decisions.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...