2 cheap penny stocks to buy as inflation soars

I’m looking for the best UK shares to buy as global inflation levels soar. Here are two top penny stocks on my watchlist right now.

| 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.

Piggy bank being carried by balloon

Image source: Getty Images

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.

I believe getting exposure to gold is a good idea as inflation surges. One way I’m thinking of doing this is by buying metal producer Petropavlovsk (LSE: POG). This penny stock offers exceptional value for money as it currently trades on a forward P/E ratio of 5.1 times.

Gold prices just hit their highest since mid-November at around $1,842 per ounce. They’re now within striking distance of August 2020’s record high of $2,069 and could be preparing for a fresh run.

I think Petropavolvsk could be a great UK share to ride this boom. And from a long-term perspective, I think there’s much to like too, as the company steadily increases output from its low-cost Pokrovskiy Pressure Oxidation (POX) production hub in Russia.

Should you invest £1,000 in Ishares Public Limited Company - Ishares Core Ftse 100 Ucits Etf right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Ishares Public Limited Company - Ishares Core Ftse 100 Ucits Etf made the list?

See the 6 stocks

Gearing up for a gold rush

It’s been said that central bank interest hikes could damage gold prices and, by extension, profits at firms like Petropavlovsk. This has the potential to smack precious metals values and make it more expensive to hold assets like gold.

This is a possibility I need to consider. But I’m also aware that such tightening might actually have little effect on bullion prices. The World Gold Council (WGC) says: “While rate hikes can create headwinds for gold, history shows their effect may be limited.”

Besides this, the WGC also reckons that real rates (interest rates adjusted for inflation) will remain “depressed” even if central banks act again. It says that this is important “since gold’s short- and medium-term performance tends to often respond to real rates.”

Another top penny stock to own

I’m also considering buying Jubilee Metals Group (LSE: JLP) today for a couple of good reasons. First of all, this mining share also specialises in precious metals production, in this case the haulage of platinum group metals (PGMs) from the ground. These so-called hard currencies also attract massive safe-haven interest from investors when inflation soars.

As someone who invests for the long term however, it’s Jubilee Metals’ important role in the green economy which is attracting my attention. PGMs are bought in massive quantities by the auto industry where they are loaded into catalytic converters to reduce emissions. These materials are required in larger and larger quantities in trucks and passenger vehicles because environmental legislation is becoming steadily tougher.

The growing popularity of green hydrogen could also supercharge demand for Jubilee Metals’ product. Platinum is well-suited as a hydrogen fuel cell catalyst due to its ability to withstand high temperatures and complex chemical changes. It’s why the World Platinum Investment Council predicts that green hydrogen could boost annual platinum demand by up to 600,000 ounces by 2030.

Jubilee Metals trades on a forward P/E ratio of just 8.6 times today. Worsening economic conditions could hit demand for its semi-cyclical products hard and Jubilee’s profits too. But all things considered, I believe the possible rewards of me owning this penny stock far outweigh the risks.

But what does the head of The Motley Fool’s investing team think?

Should you invest £1,000 in Ishares Public Limited Company - Ishares Core Ftse 100 Ucits Etf right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Ishares Public Limited Company - Ishares Core Ftse 100 Ucits Etf made the list?

See the 6 stocks

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

Man smiling and working on laptop
Investing Articles

3 FTSE 250 shares with low P/E ratios and sky-high dividend yields!

Searching for the best bargains that London has to offer? Here's a handful from the FTSE 250 I think are…

Read more »

Investing Articles

Why is Apple stock lagging the S&P 500 in 2025?

Our writer is wondering whether now might be an opportune time to snap up shares of the largest company in…

Read more »

Investing Articles

Here’s how an ISA investor could build a £20k passive income with UK shares

Looking to make a five-figure passive income in retirement? Here's how a blend of UK shares and cash savings could…

Read more »

Investing Articles

£10,000 in savings? Here’s how an investor can target £3,560 in annual passive income

Paul Summers explains how an investor could target making thousands of pounds in passive income by holding great dividend stocks…

Read more »

Young Asian man drinking coffee at home and looking at his phone
Investing Articles

Up 490%, Lion Finance Group is a new name on the FTSE 250… but what is it?

Many investors won’t be familiar with Lion Finance Group, but the FTSE 250 stock has surged 490% over five years.…

Read more »

Growth Shares

I think this is the most punished FTSE stock in the market right now

Jon Smith talks through a FTSE company that has endured problems but is one he believes has a brighter future…

Read more »

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

Stock market correction! 1 growth share down 53% to consider buying now

This writer highlights a growth stock that has hit a rough patch in recent weeks. Here's why it might be…

Read more »

Investing Articles

Here’s why the Tesco share price has dropped 18% in a month!

Tesco's share price has lost nearly a fifth of its value since mid-February. Is this FTSE 100 dividend stock now…

Read more »