I’m searching for the best cheap UK shares to buy following recent market volatility. There’s plenty of choice for value investors like me and today I’m searching for top-quality growth shares. With this in mind here are three great penny stocks I’d buy following recent share price weakness. Each trades on a rock-bottom forward price-to-earnings (P/E) ratio of below 10 times.
Severfield
Severfield’s share price closed at its cheapest since November 2020 in recent days. And despite some light dip-buying, the fabricated steel manufacturer still looks mega cheap on paper. Severfield now trades on a P/E ratio of 9 times. It’s a reading I believe more than reflects the dangers it faces as soaring inflation and sanctions on Russia threaten the global economy.
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You see, I think Severfield’s profits could rocket over the next decade as infrastructure spending heats up. The business sells it structural steel in Europe and in India, too, a market where urbanisation rates are soaring and wealth levels are increasing rapidly. Severfield’s steel is used in a wide variety of applications from bridges and train stations to hospitals and stadiums.
Pan African Resources
I think gold prices could continue to run higher as inflation rockets, the tragic events in Ukraine escalate, and Covid-19 cases rise sharply in parts of Europe and Asia. This is why I’d use Pan African Resources’ (LSE: PAF) fall from 14-month highs as a chance to invest (though its still up almost 40% on a five-year basis). Recent weakness leaves the South African gold producer trading on a prospective P/E ratio of just 6.3 times.
Bullion prices have retraced back below $2,000 per ounce following a recent surge towards new record highs. But many analysts are tipping a fresh charge as the macroeconomic and geopolitical landscape worsens, with some even predicting a rise to $3,000.
I’d buy Pan African Resources to try and capitalise on this opportunity. This is a risk though as asset prices prices can of course go up as well as down. Any appreciation in the US dollar, for instance, could pull precious metal prices lower and with it the share prices of mining shares like this.
Photo-Me International
Photo-Me International also trades on a rock-bottom earnings multiple today (in this case a figure of 7.7 times). This penny stock is perhaps best known for the photo booths found in shopping centres, train stations and other public places. It is therefore vulnerable to a fresh shock to the global travel industry that diminishing consumer spending power and rising aviation costs present. In this scenario, demand for passport photos would fall through the floor.
However, as a long-term investor I think Photo-Me’s an attractive buy at current prices. The business operates some 45,000 self-service machines across the globe. These include photo booth, washing machines and food vending machines. And demand for these sorts of technologies is tipped to soar due to changing consumer habits following the coronavirus and soaring retail staff costs. Allied Market Research thinks the self-service technology market will expand at a compound annual growth rate of 10.6% between 2021 and 2030.
