2 UK penny stocks I’d buy without delay

Here are two top penny stocks I’m thinking of buying today. I think they could deliver terrific shareholder profits on a long-term basis.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Today I’m hunting for the best low-cost UK shares to buy for my shares portfolio. Here are two quality penny stocks I think could help me generate terrific investment returns.

A precious metals powerhouse

Mining for raw materials is rarely plain sailing. Exploring, developing, and then extracting metals can throw up a wide variety of problems. These, in turn, push up costs and hammer revenues. The danger is particularly high for small-cap companies which operate on much tighter budgets than industry behemoths like BHP Group or Rio Tinto.

That being said, I think penny stock Sylvania Platinum (LSE: SLP) could still be a top stock for me to buy now. Okay, this platinum group metal (or PGM) producer has itself suffered from lower ore grades and increased costs of late. But the company trades on a forward price-to-earnings (P/E) ratio of below four times. This suggests to me that, at current prices of 98p per share, Sylvania’s valuation more than reflects such problems and their potential impact on future profits.

Secondly, Sylvania has no debt on the balance sheet and a decent cash pile with which to continue working at its world-class South African assets. This puts it in a much stronger position that some other small-cap mining stocks. And finally, I believe that PGM prices should remain pretty strong. The car industry is gobbling up increasing amounts of the metals for which they are used to reduce emissions. Concerns over runaway inflation should also support prices for some time yet as central banks keep rates locked around recent lows.

A penny stock I’d buy for the CBD boom

Zoetic International (LSE: ZOE) is another great penny stock I’d happily buy for the years ahead. This is despite the highly-regulated environment in which the cannabidiol (or CBD) oil product manufacturer operates in. Recent law changes around the use of the drug for medicinal purposes have turbocharged demand for UK shares like Zoetic. But the topic remains a contentious one and any u-turn by regulators could sink its share price.

Still, for the time being, the regulatory outlook is ultra encouraging for CBD specialists such as this. Legislators are taking increasing notice of studies showing the medicinal benefits of using cannabis-based products to treat a range of ailments. In fact, research is showing that CBD products can effectively treat a growing list of conditions. This is further encouraging lawmakers to loosen rules and boosting the sales opportunities for healthcare stocks like Zoetic International.

Today this penny stock (which is set to change its name to Chill Brands) trades at around 37p per share. I think its retreat back below the penny stock limit of £1 in recent months presents me with an attractive dip-buying opportunity.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild 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.

More on Investing Articles

Investing Articles

Here’s the best-performing FTSE 100 stock of the last 10 years

Private equity firm 3i has outperformed the rest of the FTSE 100 over the last 10 years. And its big…

Read more »

Fans of Warren Buffett taking his photo
Investing Articles

Here’s why Warren Buffett is selling shares (and why I’m not)

Warren Buffett cited tax considerations as his reason for selling shares in Apple. But this isn’t something most UK investors…

Read more »

Investing Articles

What on earth is going on with the AstraZeneca share price?

The AstraZeneca share price has fallen 30% from its peak in August. Dr James Fox explains what’s going on with…

Read more »

Investing Articles

2 high-yield FTSE 100 shares I’d consider buying for passive income…and one I’d avoid

Some FTSE 100 stocks have eye-popping dividend yields. But will the passive income actually be dished out? Paul Summers takes…

Read more »

Smart young brown businesswoman working from home on a laptop
Investing Articles

These 2 former stock market darlings are trying my patience! Time to sell?

Harvey Jones thought he was getting a bargain when he snapped up these too much-loved FTSE 100 dividend growth stocks.…

Read more »

Investing Articles

Here’s how I’d use £3,000 to target a second income that grows each year

Our writer explains the approach he'd take to trying to build a second income that gets bigger over time, by…

Read more »

Elevated view over city of London skyline
Investing Articles

Is it time to buy this incredible FTSE dividend share?

Christopher Ruane examines one FTSE 100 share with a phenomenal dividend history. Does a steep share price fall this year…

Read more »

Concept of two young professional men looking at a screen in a technological data centre
Investing Articles

This FTSE 100 share has just crashed another 20%. Its P/E is now just 9.9 so should I buy?

Harvey Jones was tempted to buy this FTSE 100 share after it crashed in October. Now it's crashed again, it…

Read more »