The Woodbois share price is soaring in 2021. Is it a penny share to buy now?

first_img Our 6 ‘Best Buys Now’ Shares I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. The Woodbois share price is soaring in 2021. Is it a penny share to buy now? Alan Oscroft | Thursday, 13th May, 2021 | More on: WBI Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Enter Your Email Address Image source: Getty Images. Simply click below to discover how you can take advantage of this.center_img See all posts by Alan Oscroft Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Get the full details on this £5 stock now – while your report is free. FREE REPORT: Why this £5 stock could be set to surge Are you on the lookout for UK growth stocks?If so, get this FREE no-strings report now.While it’s available: you’ll discover what we think is a top growth stock for the decade ahead.And the performance of this company really is stunning.In 2019, it returned £150million to shareholders through buybacks and dividends.We believe its financial position is about as solid as anything we’ve seen.Since 2016, annual revenues increased 31%In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259Operating cash flow is up 47%. (Even its operating margins are rising every year!)Quite simply, we believe it’s a fantastic Foolish growth pick.What’s more, it deserves your attention today.So please don’t wait another moment. Until Wednesday, I’d never heard of Woodbois Limited (LSE: WBI). But then I saw the results of the company’s latest fundraising, and examined the Woodbois share price. At around 6p, it’s a penny share for sure. But it’s climbed 87% so far in 2021 and it’s up from 3.3p a year ago.Woodbois is a forestry and timber company, operating in Africa. And on Tuesday, it had announced a plan to raise up to £5m via a share placing, to fund a number of different developments. At 6p per share, it was a little below the market price of around 7.5p on the day.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…The company wants to extend its carbon sequestration business by buying and reforesting land in Gabon. In the same country, it also plans to expand its forestry concessions with a new 56,000 hectare acquisition. A production capacity expansion is on the cards too, for a recently purchased veneer line. And Woodbois aims to capitalise on waste products with a new blockboard facility. It all sounds impressive, but will it result in a lengthy bull run for the Woodbois share price?On Wednesday, Woodbois told us the placing had generated gross proceeds of £6m. Investors were really keen, it seems. And that’s often not the case with companies on penny share prices. Penny shares might look like obvious bargains, but companies tend not to start off that way. No, a penny share is usually a result of a previously highly-rated share hitting hard times. And the Woodbois share price is still way below its 50p levels of 2011.Is the Woodbois share price attractive now?So what about Woodbois as an investment now? The company has been through a major restructuring, after having accumulated hefty debt. In August 2020, Woodbois converted the bulk of that debt to equity, reducing it by 85%. On the upside, that gives the company an opportunity for a fresh start. But against that, a fresh start doesn’t help unless the problems that created the mess in the first place are actually rectified.The Woodbois share price might only be around 6p. But if we don’t see a fundamental turnaround on the back of the balance sheet reset, shareholders could still face the same possible worst outcome — a loss of 100%. So far, Woodbois has reported a gross profit for the 2020 full year of a modest $1.2m. But it’s not yet cash flow positive, though it does say it’s on track to achieve it.Profit, but no positive cashflowFor the first quarter of the current year, revenue grew by 44% over the previous quarter, to $4.6m. And at 6 April 2021, the company had a cash balance of $1.2m and working capital of $6.2m, with bank loans of $8.3m.It looks like what happens next could depend very much on the proposed projects to be funded by the new cash raise. If it comes off and we see a breakthrough to positive cashflow, I reckon the Woodbois share price could take a jump upwards. But the longer we see cash burn, the greater the chance of things heading south again. I don’t like risky penny shares and won’t be buying.last_img


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