We recently compiled a list of the 10 Best Fundamentally Strong Penny Stocks to Invest In. In this article, we are going to take a look at where Zijin Mining Group Company Limited (OTC:ZIJMF) stands against the other fundamentally strong penny stocks.
As per Royce Investment Partners, small caps saw a rebound in Q3, exhibiting a strong advance on both an absolute and relative basis. As per the investment management firm, the Russell 2000 Index saw an increase of ~9.3% in Q3 2024, surpassing the large-cap Russell 1000 Index (which rose ~6.1%) and the mega-cap Russell Top 50 Index (which increased ~4.2%). The investment firm believes that small caps see a long road back to the top, with large caps holding a commanding lead through the initial 9 months of 2024.
On a YTD basis, the Russell 2000 saw an increase of ~11.2% compared to the respective gains of ~21.2% and ~27.3% for the Russell 1000 and Russell Top 50, in the third quarter of 2024. The investment firm said a confluence of factors might support small-caps in sustaining market leadership. The still-growing US economy, together with a more typical interest rate environment, might support small-cap leadership.
Investment Themes in the US
As per Russell Investments, the US equity-market leadership reversed during Q3 2024, with small-cap stocks surpassing the returns delivered by their large-cap counterparts. Also, the value factor outperformed the growth factor. This means there was a significant pivot from the first 2 quarters of 2024, during which market returns were dominated by the US large-cap growth stocks— the Magnificent 7, to be precise.
Russell Investments highlighted that, from Q2 2024 to Q3 2024, there was a moderate change in the US average daily turnover, with $578.8 billion in Q3 2024 as compared to $581.5 billion in Q2 2024. Q3 2024 saw a shift in investor focus from high-flying tech stocks to more traditional sectors. Small-cap and value stocks surpassed the performance of large-cap and growth stocks, thanks to the broader market rotation. Moreover, utility stocks saw significant traction due to higher investments in energy infrastructure in a bid to support the elevated demand from AI and data centers.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Expectations for 2025
Wall Street experts believe that the shifts in monetary policy, sectoral innovation and developments, a favorable interest rate environment, and supportive regulatory environment are expected to fuel growth in small and emerging stocks over the next year.
As per Francis Gannon, Co-Chief Investment Officer, and Managing Director of Royce Investment Partners, earnings form the foundation for long-term performance. This means that earnings tend to support the broader market over the long term. He noted that the Russell 2000 saw a near-record number of companies having no earnings, with a total of ~44.6% (as of September end). Despite this, the earnings growth for the small-cap companies that have them has been estimated to be higher than large-cap ones in 2025.
Chuck Royce, Founder and Senior Advisor at Royce Investment Partners, believes that the lower rates are expected to help the M&A activity. The potential buyers have been waiting for the US Fed to act before they go ahead with acquisitions. He believes that many small-caps want to get merged. Therefore, there are expectations of more strategic buyouts moving forward.
Our Methodology
To list the 10 Best Fundamentally Strong Penny Stocks to Invest In, we used Finviz and Yahoo screeners to extract stocks trading under $5. Next, we selected the companies that have reliable 3-year revenue and 3-year net income growth rates. Finally, the stocks were arranged in ascending order of their hedge fund holdings, as of Q2 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A man, dressed in protective gear, holding a golden nugget freshly extracted from an underground mining shaft.
Zijin Mining Group Company Limited (OTC:ZIJMF)
Stock Price as of 4 November: $2.1585
3-Year Revenue Growth: ~12.4%
3-Year Net Income Growth: ~30.3%
Average Upside Potential: Over 100%
Number of Hedge Fund Holders: N/A
Zijin Mining Group Company Limited (OTC:ZIJMF) is a mining company that is engaged in the exploration, mining, processing, refining, and sale of gold, non-ferrous metals, and other mineral resources in Mainland China and internationally.
Wall Street analysts opine that Zijin Mining Group Company Limited (OTC:ZIJMF)’s well-diversified product portfolio of precious and base metals and diversified operations should continue to act as potential tailwinds. Fitch Ratings expects that the company’s product diversification will further enhance with the ramp-up of its newly acquired lithium assets from 2025 and onwards. The firm also expects Zijin Mining Group Company Limited (OTC:ZIJMF) to stick to its acquisitive strategy to achieve a long-term goal of becoming a top miner globally by 2030.
In mid-April, Fitch Ratings highlighted that the company’s EBITDA is expected to remain strong as a result of higher gold and copper output. The production output additions are expected to be contributed by the expansion of existing projects like Julong in Tibet and Timok in Serbia and newly acquired projects.
On 9th October 2024, Zijin Mining Group Company Limited (OTC:ZIJMF) and Gold Source International Holdings Company Limited (a wholly-owned subsidiary of the company) entered into a share purchase agreement with Newmont Corporation and Newmont Golden Ridge Ltd (a wholly-owned subsidiary of Newmont, the Target Company). It was proposed that Gold Source International will acquire 100% of the equity interest in the target company, which is being held by Newmont for the purchase price of US$1 billion. The Akyem Gold Mine has favorable mineralisation conditions and significant potential for exploration and reserve increment.
Wall Street remains optimistic about this transaction, which aligns with Zijin Mining Group Company Limited (OTC:ZIJMF)’s development strategy and is beneficial for strengthening the resource reserves of the company’s gold segment, increasing its mine-produced gold output and supporting the realization of the targets of the company’s production volume plan for upcoming 5 years.
As per Wall Street analysts, the shares of Zijin Mining Group Company Limited (OTC:ZIJMF) have an average price target of $19.49.
Overall ZIJMF ranks 9th on our list of the best fundamentally strong penny stocks to invest in. While we acknowledge the potential of ZIJMF as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than ZIJMF but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.