I’m looking at penny stocks to buy in August. Not all such stocks are super-high-risk. The three I’ve got my eye on have different risk profiles, but they’re far from what I’d call out-and-out gambles.
First up is a £128m-cap housebuilder and regeneration specialist whose portfolio has a gross development value of £3.2bn.
Discount bargain
Inland Homes (LSE: INL) acquires brownfield land in south and south-east England. Its expertise is in the often-complex task of obtaining planning permission for such sites. Once secured, it builds open-market and affordable homes, or sells surplus consented land to other developers.
In its recent half-year results, the company reported an EPRA net asset value (NAV) of 97.8p a share. The share price (56p, as I write) stands at a discount of over 40%.
Changes in the residential housing market or planning regulations could represent downside risk or upside potential for INL. I think the discount share price offers me a degree of protection against the downside risk. And also — along with that £3.2bn development value of its portfolio — considerable upside potential.
Premium penny stocks to buy
By contrast to Inland Homes, the shares of my other two penny picks are trading at a premium to their NAVs. However, I can see good reasons why I should be willing to pay these prices.
Primary healthcare property investor and developer Assura (LSE: AGR) uses a variant of EPRA NAV called net realisable value (NRV). As last reported, its NRV stood at 59.6p a share. With its shares at 76.5p, again, as I write, the premium is 28%.
As an NHS partner of choice, Assura enjoys long leases and a reliable rent roll. I think the market is right to value these things highly. The company identifies adverse changes to government policy as the highest-impact risk it could face. This could certainly be damaging for my investment if it happened, but I’m prepared to accept the risk.
$7.3trn market disruptor
Chaired by Innocent Drinks co-founder Richard Reed, Agronomics (LSE: ANIC) is a venture capital investor in companies in the nascent ‘clean foods’ industry. Its portfolio includes businesses like global leader in cell-cultured seafood BlueNalu.
Based on the year end (31 December) balance sheet and a subsequent fundraising, I put NAV in the region of 11p a share. Meanwhile, the share price is more than double that at 23.75p, as I write. However, the current intrinsic value of the portfolio companies could be significantly higher than the mooted NAV, because of their continuing progress since 31 December.
There’s a risk the clean foods industry may not be as effective in disrupting the $7.3trn global meat, poultry and seafood market as proponents think. However, the potential’s exciting, I like Agronomics’ portfolio approach, and the premium share price doesn’t put me off.
My penny stocks to buy
One thing the three stocks share that I also like is they play well to the post-pandemic theme of ‘build back better’ and the desire for a cleaner, healthier and more sustainable world.
Inland’s benchmark-setting and award-winning “sustainable communities and homes,” Assura’s “outstanding spaces for health services in our communities,” and Agronomics’ “solutions to improve sustainability, as well as addressing human health, animal welfare and environmental damage,” could all help improve the world… and hopefully my wealth!
