Buy the dip! 2 penny stocks I’d snap up in March

Recent market volatility has left plenty of top UK shares trading at rock-bottom prices. Here are two penny stocks on my watchlist today.

| 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.

I’m searching for some bargains to buy following recent market volatility. Here are two penny stocks that have caught my eye.

Poised to rebound?

The Accrol Group Holdings (LSE: ACRL) share price has sharply unravelled over the past year. The toilet and kitchen roll manufacturer’s lost 63% of its value in that time as rising input costs have smacked earnings and profit warnings have materialised.

But could now be a good time for long-term investors like me to invest? The problem of soaring input costs could continue well into 2022. However, the pace at which City analysts think earnings might rebound in the near future still makes it an attractive dip-buy, at least to me.

The number crunchers expect full-year earnings to drop 89% in the outgoing financial year (to April 2022). But they’re expecting profits to  rebound almost 500% in the period starting in May as costs normalise and sales to hospitality rebound. This leaves Accrol trading on a rock-bottom forward price-to-earnings growth (PEG) ratio of around 0.1

I like Accrol because its private label products sell much more cheaply than major brands like Andrex and Charmin. Thus it’s well placed to capitalise on the rising importance of value in the minds of modern consumers. The penny stock’s products can be found in most major supermarkets and discount retail chains, giving Accrol a massive opportunity to ride this retail trend.

Another penny stock I’d dip-buy

Foresight Sustainable Forestry Company (LSE: FSF) is a UK share you probably haven’t heard of. It only began trading on the London Stock Exchange in November and didn’t exactly get off to a flyer. It slumped in its first week of trading and, although recovering closer to its IPO price of 100p, it remains at a discount at 91p.

I think this stock could play an important role in Britain’s green economy, even though that disappointing IPO echoed the scepticism that still surrounds timber stocks. Foresight Sustainable Forestry Company raised £130m with its flotation, missing its target by a cool £70m.

It has two important roles to fulfil as the battle against climate change intensifies. It will help plant the trees needed to help the UK meet its net zero targets (the government plans to plant 75,000 acres of trees each year). And the timber it eventually produces will help service a growing market for sustainable building products. The trust reckons demand for timber products worldwide will quadruple between 2012 and 2050.

Investing in newly-created companies like this can be considered risky. After all, there aren’t stacks of trading reports available to help inform my investment decision. However, from what I’ve seen, I think this company has plenty of potential to deliver solid returns. I’ll do some more research here with a view to investing some of my own cash.

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

After it crashed 25%, should I buy this former stock market darling in my Stocks and Shares ISA?

Harvey Jones has a big hole in his Stocks and Shares ISA that he is keen to fill. Should he…

Read more »

happy senior couple using a laptop in their living room to look at their financial budgets
Investing Articles

How’s the dividend forecast looking for Legal & General shares in 2025 and beyond?

As a shareholder, I like to keep track of the potential dividend returns I could make from my Legal &…

Read more »

artificial intelligence investing algorithms
Investing Articles

Could buying this stock with a $7bn market cap be like investing in Nvidia in 2010?

Where might the next Nvidia-type stock be lurking in today's market? Our writer takes a look at one candidate with…

Read more »

Investing Articles

Is GSK a bargain now the share price is near 1,333p?

Biopharma company GSK looks like a decent stock to consider for the long term, so is today's lower share price…

Read more »

Snowing on Jubilee Gardens in London at dusk
Investing Articles

Could December be a great month to buy UK shares?

Christopher Ruane sees some possible reasons to look for shares to buy in December -- but he'll be using the…

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

Sticking to FTSE shares, I’d still aim for a £1,000 monthly passive income like this!

By investing in blue-chip FTSE shares with proven business models, our writer hopes he can build sizeable passive income streams…

Read more »

Growth Shares

BT shares? I think there are much better UK stocks for the long term

Over the long term, many UK stocks have performed much better than BT. Here’s a look at two companies that…

Read more »

British Pennies on a Pound Note
Investing Articles

After a 540% rise, could this penny share keep going?

This penny share has seen mixed fortunes in recent years. Our writer looks ahead to some potentially exciting developments in…

Read more »