NGX Penny Stocks: The Risky Bet That Might Pay Off Again This September

As of August 2025, your N1 million bet on Nigeria’s penny stocks at the start of the year could have doubled or even quintupled.  

Mutual Benefits Assurance, ABC Transport, Smart Products, AIICO Insurance, McNichols Plc, Sovereign Trust Insurance, and Royal Exchange all delivered gains that turned N1 million into between N2 million and N5 million.  

Of the 43 low-priced stocks trading under N5, 29 have outpaced inflation, delivering real returns. 

In addition, 26 of them outperformed the broad market index (ASI), which returned 36% YtD as of August 2025. The index closed at 140,295.50 points, up from 102,926.40 at the beginning of the year 

The appeal of penny stocks lies in their affordability. Their low entry price makes them accessible to small retail investors at a time when inflation is squeezing purchasing power and blue-chip shares are moving out of reach.  

In this sense, these “tiny tickers” show that small money can still dream big. 

Digital sub-brokers and trading apps have further lowered the barrier.  

Today, anyone with a smartphone and as little as N100 can buy into the NGX. A N5,000 stake can fetch thousands of units, creating a new generation of younger, tech-savvy investors who prefer trading from their phones.  

This trend is reshaping market participation and should serve as a wake-up call to traditional brokers yet to fully migrate online. 

But the risks remain just as real. Thin liquidity, limited analyst coverage, and sharp price swings are inherent risks. 

That’s why fundamentals matter.  It is important to examine whether a rally aligns with a company’s financial performance. Without that, investors may be riding on sentiment alone.  

Liquidity is another key factor; without enough volume, getting in or out of a position can be difficult. 

As we enter September, this mix of affordability, digital access, and recent performance makes penny stocks a tempting option once again.  

For investors with a strong risk appetite, they could prove to be another unlikely source of strong returns.  But it pays to separate the solid names from the speculative hype. 

Some of them, especially in insurance, are proving that their rallies are not just sentiment-driven. 

• Mutual Benefits Assurance remains the best performer, with a 485% gain as of yesterday. It is also liquid (15th most traded) and profitable, with H1 2025 profits up 374%. 
• Universal Insurance is up 89% YtD and ranks most liquid among the penny stocks and 3rd most liquid on the NGX. Its 2024 audited results show the company is profitable.  So, it appears to be a good bet. 
• Linkage Assurance and AIICO Insurance also offer a blend of liquidity, affordability, and profitability, making them standout names. 

On the other hand, not all penny stock rallies tell the same story.  

• Chams Holdings and Regency Alliance have seen strong price moves and active trading but reported profit declines in their latest results.  
• Smart Products Nigeria has gained 260% YtD, but with only 748 million shares traded in three months, it ranks among the least liquid penny stocks and the 128th most traded stocks on NGX. Worse still, it remains unprofitable, raising questions about how sustainable the rally is. 

The lesson is clear: penny stocks can deliver strong gains, but without liquidity and fundamentals, the risks are magnified.  

Heading into September, investors should focus on names that combine affordability with trading activity, profitability and dividends. 

Universal, Mutual Benefits, Linkage, and AIICO fit that profile, but caution remains the rule of the game.