2 penny stocks to buy

Rupert Hargreaves takes a look at two penny stocks he’d buy for his portfolio as ways to invest in the UK pandemic recovery.

| 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.

As the UK economy continues to recover from the pandemic, I’ve been looking for penny stocks to buy that may profit from the recovery

I’ve been focusing on these smaller businesses as I think they have more potential. Smaller companies took a bigger hit than their larger peers at the beginning of the pandemic, but I believe their recovery will be more substantial. 

Of course, there’s no guarantee this will happened. It’s only my opinion. As such, this strategy’s unlikely to be suitable for all investors. Still, I’m comfortable with the level of risk involved.

So here are two penny stocks I’d buy for my portfolio today as recovery investments. 

Penny stocks on offer

The first stock on my list is the pub operator Marston’s (LSE: MARS). With 1,500 pubs across the country as well as a 40% holding in Carlsberg Marston’s Brewing Company, the group is a bellwether for the UK hospitality industry. 

According to its latest trading update for the 42 weeks to 24 July, business across its estate since the economic reopening has been “better than our expectations.” Between 12 April and 24 July, sales were 90% of 2019 levels.  

These figures show the company still has some way to go until it’s fully recovered, but it’s definitely heading in the right direction. That’s why I’d buy it for my portfolio of penny stocks.

And as consumer confidence continues to improve, I think shares in Marston’s should begin to reflect this improving confidence. 

However, a significant risk hanging over the company’s potential is the threat of another lockdown. This could destabilise its recovery and would almost certainly hurt consumer confidence, delaying the group’s return to normality. 

Customers return

Another hospitality business I’d buy for my portfolio of penny stocks is City Pub (LSE: CPC). While not technically a penny stock, this firm’s market capitalisation of £121m certainly places it in the small-cap bracket. That’s why I’m interested in the enterprise as a recovery play. 

The last time the company updated the market was ahead of its annual general meeting at the end of June. At that point, management informed investors that trading was 90% of 2019 levels at the 42 pubs it had reopened. 

Considering this update and assuming the firm has seen the same high demand as Marston’s in July, I don’t think it’s unreasonable to assume the group is well on the way to recovery. This is why I’d also buy the shares for my portfolio of penny stocks. 

However, like Marston’s, the most considerable risk to City Pub’s recovery is Covid. Another lockdown or a new variant could decimate both trade and consumer confidence. In these situations, I’d be forced to reconsider my opinion of the business and its recovery potential over the next few years. 

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.

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Marstons. 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

US Stock

The Nvidia share price falls! Here’s what I think happens next for the S&P 500

Jon Smith reviews the overnight results from Nvidia and explains why this could stall the S&P 500 performance through to…

Read more »

Investing Articles

Down 15% today, is this FTSE 100 share too cheap for me to miss?

JD Sports' share price has tanked after the FTSE 100 share released another profit warning. Is this the opportunity I've…

Read more »

Investing Articles

Up 8% today, is this FTSE 100 growth stock a slam-dunk buy for me?

Halma's share price is soaring thanks to another headline-grabbing trading update. Is the FTSE 100 stock now too good for…

Read more »

Investing Articles

With a P/E ratio of just 10.5 is now a brilliant time to buy a cut-price FTSE 250 tracker?

Harvey Jones says a recent dip in the FTSE 250 leaves the index trading at bargain levels. One stock in…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

To build a passive income flow, I’d follow this Warren Buffett approach

Warren Buffett has set up passive income streams most people can only dream about. Our writer sees some practical lessons…

Read more »

Growth Shares

As the boohoo share price falls, could it become a penny stock in 2025?

Jon Smith outlines some of the recent problems involving the boohoo share price and considers if things could get even…

Read more »

Young Asian woman with head in hands at her desk
Investing Articles

Here are the worst-performing FTSE 100 shares over the last 5 years

These five FTSE 100 shares have been complete duds over the last half decade. But is there potential for a…

Read more »

Investing Articles

Nvidia stock has tripled this year! Can it keep rising?

Nvidia's latest sales update showed strong growth and the stock's been on a tear so far in 2024. So is…

Read more »