What are ESG penny stocks and have you heard of them? If the answer is no, don’t worry we’re here to help. The term ESG itself stands for ‘environmental, social, and governance.’This has become a major trend among a long list of penny stocks to buy. However, there are certain aspects to consider.
For one, ESG penny stocks include a range of companies that work on principled guidelines to ensure the best outcome for shareholders and environmental concerns. One of the leaders in market research and financial products, MSCI, issues ratings for ESG companies ranging from CCC to AAA. This is a rating based on the company’s commitment to environmental, social, and governance-based causes.
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So we cannot confuse renewable energy penny stocks with ESG penny stocks for this reason. However, there are a lot of green energy stocks that are big players in the ESG market. Sound confusing? While it may be for now. However, given that this is a relatively new trend, it looks like the market may catch on shortly.
One thing to consider is that the amount of capital flowing into ESG related funds, went from $5.4 billion in 2018 to $21.4 billion in 2019, and last year, brought in a staggering $51.1 billion. This data, according to a report done by Morningstar; illustrates just how fast this area of the stock market is growing. And with so many penny stocks to watch working in the ESG space, the opportunity is tangible. Considering this, let’s take a look at three ESG penny stocks to watch as markets push up today.
3 ESG Penny Stocks to Watch
Torchlight Energy Resources Inc. (NASDAQ: TRCH)
Denison Mines Corp. (NYSE: DNN)
NexGen Energy Ltd. (NYSE: NXE)
Torchlight Energy Resources Inc. (NASDAQ: TRCH)
Torchlight Energy Resources is a penny stock that we’ve been following for the past few months. For some context, it is an exploration and production company working in the oil and gas industry. Since January of this year, shares of TRCH stock have been extremely volatile. And, there is one major reason for this. Toward the end of last year, Torchlight announced that it would be acquired by Canadian-based Metamaterial.
While these two companies share almost no similarities, the deal basically offered Metamaterial an easy way to get listed on a large U.S. exchange. This also includes the benefits of not having to undergo an IPO.
While Torchlight is an energy penny stock, Metamaterial produces high-performance materials and those made from nanocomposites. While the merger was supposed to be completed months ago, the dates have continued to be pushed back. This is not uncommon, however, it is slightly frustrating for investors.
While the acquisition now sits in limbo, it seems as though it is waiting on the Securities and Exchange Commission (SEC), to give the green light. While Torchlight does have prospects to offer investors, the majority of the bullish sentiment behind it right now is based on this merger. And because speculation is always high with penny stocks, this sentiment makes all too much sense. However, without an end date in sight, it may be best to just keep an eye on TRCH for now.
Denison Mines Corp. (NYSE: DNN)
Moving out of oil and gas momentarily, Denison mines explores and develops uranium mines. Its operations are focused in the Athabasca Region of Northern Canada. Right now, its flagship property known as the Wheeler River Uranium Project, is the largest undeveloped uranium project in Northern Saskatchewan. Because it has a 90% interest in this facility, the potential with DNN is palpable.
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Yesterday, Denison Mines announced that it had offered to acquire 100% interest in JCU Exploration Company. JCU holds a large portfolio of uranium mining projects in Canada, including the remaining 10% interest in the Wheeler River project. In the deal, Denison will offer a cash payment of CA$40.5 million upon the closing date of the deal. In the energy industry, acquisitions are extremely common.
Because this has a clear reason behind why it is occurring, investors are seeing more potential in the future of Denison Mines. And, only a few weeks ago, the company announced that it would receive roughly $5.3 million in connection with the termination of a UPC management services agreement. So, with this extra funding, Denison should have more capital on hand to complete the above transaction.
“As the manager of UPC since inception, Denison has worked hand-in-hand with the UPC Board for nearly two decades to manage the world’s pre-eminent physical uranium investment vehicle.”
The President and CEO of Denison Mines, David Cates
So, as DNN stock continues to move in an interesting direction, is it worth watching?
NexGen Energy Ltd. (NYSE: NXE)
Up around 10% by early morning on May 5th, NexGen Energy Ltd. is another player in the Canadian uranium mining industry. Its assets are focused similarly to DNN; in the Athabasca Region of Saskatchewan, Canada. The company owns a 100% interest in the Rook I mine, which is where the famed Arrow Deposit was discovered a few years ago.
Back in March, NexGen announced the exercise of $22.5 million in over-allotment options in connection with a recent bought-deal financing deal. This comes on the back of several other financings undergone recently, bringing the total gross proceeds for the company to roughly $172.8 million. NexGen states that it will use these funds mainly for the development of the Rook I project as well as for general and corporate needs.
In addition to this, the company also recently announced the appointment of Harpreet Dhaliwal as its new CFO. Dhaliwal is a highly regarded executive with years of experience in the uranium mining sector.
The CEO of NexGen, Leigh Curyer, stated that “on behalf of the Board and the entire NexGen team, I would like to welcome Harpreet to the organization. Harpreet’s experience in the mining industry in the CFO role is well established and she joins NexGen at an exciting time in the Company’s stage of development.” Considering all of these exciting announcements, NXE could be an interesting addition to your penny stock watchlist.
ESG Penny Stocks Continue to Present Opportunity
With so many ESG penny stock to watch, how can we pick the best ones for our portfolios? Well, the short answer is that doing as much research as you can, is the best way to have a chance at profitability. Because the ESG market is so new, there is a large range of penny stocks to buy.
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But, being selective and committing to trading without emotion, will ultimately help out in the long run. In addition, getting an education that teaches you how to trade penny stocks can be extremely beneficial. Considering all of this, it’s worth noting that ESG penny stocks continue to present opportunity.
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