ASX Penny Stocks To Watch In October 2024

The Australian Securities Exchange (ASX) is home to a diverse range of companies, including penny stocks – small-cap stocks with a share price below A$1.00. While these stocks may carry higher risk, they can also offer significant growth potential. This article highlights three ASX penny stocks to watch in October 2024, focusing on their financial health, earnings growth, and investment appeal.


1. **Austin Engineering (ASX:ANG)**
Austin Engineering, with a market cap of A$310.07 million, specializes in mining attachment products and related services. Its revenue streams are diversified across the Asia-Pacific, North America, and South America regions. The company has demonstrated robust financial growth, with earnings increasing by 317.3% over the past year and a net profit margin improvement from 2.7% to 9.4%. Despite shareholder dilution, Austin maintains a strong balance sheet with short-term assets exceeding liabilities and cash surpassing total debt.


2. **Michael Hill International (ASX:MHJ)**
Michael Hill International operates jewelry stores and offers related services across Australia, New Zealand, and Canada, with a market cap of A$196.22 million. The company faces challenges as a penny stock, with an unprofitable status and negative return on equity. However, it shows potential through stable weekly volatility and a satisfactory net debt to equity ratio of 23.2%. Recent sales growth of 4.3% in the first fourteen weeks of fiscal year 2025 indicates operational resilience, particularly in Australian and Canadian markets.


3. **Xanadu Mines (ASX:XAM)**
Xanadu Mines Limited focuses on the exploration and development of mineral projects in Mongolia, with a market cap of A$125.27 million. As a pre-revenue company, Xanadu has recently announced an updated Mineral Resource Estimate and Maiden Ore Reserve for its Kharmagtai copper-gold project in Mongolia. Despite being unprofitable and having less than one year of cash runway, Xanadu's short-term assets exceed its liabilities, and the company is debt-free.


In conclusion, while penny stocks carry higher risk, they can offer significant growth potential. By evaluating financial health, earnings growth, and investment appeal, investors can uncover undervalued opportunities in the ASX penny stock sector. Austin Engineering, Michael Hill International, and Xanadu Mines are three ASX penny stocks to watch in October 2024, each with its unique strengths and challenges. As always, thorough research and careful consideration are essential before making any investment decisions.