‘Nearly’ penny stocks! A dirt-cheap growth share to buy today

I’m searching for great penny stocks that could help me supercharge my wealth over the next decade. Here’s one that trades just above the limit of £1.

| 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.

Today, I’m searching for the best cheap stocks to buy for my portfolio. Here’s a brilliant bargain that trades just above penny stock territory.

A top share for tough times

The British economy is beginning to seriously toil as inflation leaps and the cost of living crisis worsens. The threat to many UK shares is growing and it could be time for me to take action.

One way I can do this is to buy some classic counter-cyclical shares. These are the companies whose products and services grow in demand as economic conditions become difficult.

Insolvency specialist Begbies Traynor Group (LSE: BEG) is one such UK share I think could protect me from the rising threat. And latest data from the Insolvency Service illustrates why.

Insolvencies soar

According to the government body, there were 2,114 company insolvencies in March. That was more than double the 999 recorded in the same month in 2021. It was also 34% more than the pre-pandemic levels recorded in March 2019.

Rising interest rates mean businesses are having to pay more for their borrowings. On top of this, soaring power costs and sinking consumer spending is also pushing many companies over the edge.

So firms like Begbies Traynor are becoming increasingly busy. Their activity is likely to keep rising too as inflation continues to rocket and the Bank of England responds by hiking rates.

The Office for Budget Responsibility certainly thinks price rises have some way to go. It thinks consumer price inflation will peak at 8.7% in 2022.

Growth hero

It seems increasingly likely that severe inflationary pressures will stretch into 2023 too. So it’s also perhaps no wonder that City analysts expect Begbies Traynor’s long record of annual earnings growth to roll on.

Current forecasts suggest that earnings will rise 24% in the current fiscal year (to April). They expect the bottom line to grow an extra 10% and 3% in financial 2023 and 2024 too.

Acquisitions keep coming

Begbies Traynor’s long record of earnings growth shows it’s not just a great stock to buy for right now however. The business has been extremely active on the acquisition front to give earnings an extra kick. Its track record on this front is pretty solid too as its recent profits history shows.

Pleasingly, Begbies Traynor has kept momentum going here, acquiring MAF Finance Group and Daniells Harrison Surveyors in the current fiscal year. The business has plenty of financial headroom with which to pursue further attractive opportunities too.

Begbies Traynor currently trades on a price-to-earnings (P/E) ratio of around 11 times. I think this is a bargain given the ‘nearly’ penny stock’s excellent growth prospects in the near term and beyond.

Profits could suffer if its acquisition-led growth strategy fails to deliver the goods. Begbies Traynor could also see earnings slow during strong economic periods. Still, at 107p per share, I think this growth stock might be too cheap for me to miss.

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

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 »