I’m searching for the best cheap UK shares to buy for my Stocks and Shares ISA. Here are three brilliant bargains (including two top penny stocks) I’m considering investing in for 2022.
A renewable energy stock on my radar
Things are looking extremely sunny for renewable energy stock US Solar Fund (LSE: USFP) as we move into 2022. Industry analysts are expecting demand for green electricity to pick up the pace as the battle against climate change steps up.
In a recent report, Deloitte, for example, said that it expects growth in the US renewable sector to accelerate next year. It reckons the industry will grow as “concern for climate change and support for environmental, sustainability, and governance (ESG) considerations grow and demand for cleaner energy sources from most market segments accelerates”.
Government support for green energy specialists is particularly helpful in the States. This is another reason why I like US Solar Fund specifically — the assets it’s invested in are located in California, North Carolina, Utah and Oregon. I’d buy this penny stock even though the intermittent nature of solar power generation can often cause profits turbulence.
A great inflationary hedge
I’m also thinking of buying Solgold (LSE: SOL) to protect my portfolio from the ravages of inflation. This is because the precious metal the penny stock produces attracts greater buyer interest when fears over paper currencies rise, in turn pushing prices higher.
Latest data from the World Gold Council shows how investment in gold-backed ETFs is hotting up. But it’s not just individual investors who are ramping up their exposure to the safe-haven metal. Developed central banks have added to their gold reserves for the first time since 2013, the WGC notes, with Ireland and Singapore making their first purchases since 2008 and 2000 respectively.
The World Gold Council recently suggested that gold purchases from central banks could hit 450 tonnes in 2021. That’s up considerably from the 255 tonnes they collectively snapped up last year. I think there’s a good chance bank policymakers will keep bulking up their assets in 2022 and beyond too.
Another dirt-cheap UK share
Tharisa (LSE: THS) is another precious metals producer I think stands to gain from the inflation boom. Like gold, platinum group metals (PGMs) also rise in value when inflation increases. They could also keep moving northwards if the Covid-19 crisis continues to roll on.
Conversely, though, values of the PGMs Tharisa produces could rise if the economic outlook brightens. This is because industrial demand for the dual-role metals would likely improve. In this way I think Tharisa’s a great way for me to hedge my bets.
Of course there’s no guarantee that gold or PGM prices will rise. They could reverse for a variety of reasons, spelling trouble for Tharisa and Solgold’s top lines. What’s more, profits could take a hit if production problems occur. This is an ever-present threat to companies like these. As things stand today, though, I think both are highly attractive from a reward-to-risk perspective.
