2 penny stocks to buy now

I’m looking to bolster my shares portfolio without spending a fortune. Here are two top penny stocks I think could help supercharge my returns on a shoestring.

| 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.

Searching for penny stocks to buy can be a great way to identify the growth heroes of the future. Here are two such low-cost UK shares I think are terrific buys for my portfolio following recent market volatility.

Vertu Motors

What it does: Sells new and used vehicles (and provides after-sales services) through its 160 showrooms.

Friday’s closing price: 58.4p per share

I believe revenues at motor retailer Vertu Motors (LSE: VTU) could rocket as demand for electric vehicles (EVs) increases.

According to Uswitch, the number of EVs on British roads leapt tenfold between 2015 and 2020 (to 447,359 units). Uptake of these low-carbon vehicles has boomed all over the world as worries over the climate crisis have intensified. And EV sales have been boosted more recently by soaring petrol and diesel prices.

I’m concerned about how supply chain issues could damage profits at businesses like Vertu. This threatens to keep nudging vehicle prices higher — a dangerous scenario as the cost of living crisis worsens — and could also result in stock shortages.

However, Vertu Motors has so far been able to navigate these problems effectively. And this fills me with encouragement. Adjusted pre-tax profits soared to a record level of £80.7m in the 12 months to February. This was helped by gross margins rising to a fatty 12% as unit shortages boosted prices.

Today Vertu Motors trades on a forward price-to-earnings (P/E) ratio of just 7.7 times. I think this fails to reflect the penny stock’s excellent growth opportunities during the EV explosion.

Kingspan Group

What it does: A supplier of construction products with a focus on the ‘green’ economy.
Friday’s closing price: 75.9 euro cents per share

I believe Kingspan Group (LSE: KGP) could thrive over the next decade too as the drive for energy efficiency picks up.

Kingspan sells a huge range of building materials but is perhaps best known as a titan in the field of insulation products. Sales of these products are rising as companies and consumers try to reduce their carbon footprints and cut power bills.

Indeed, emergency callout specialist Homeserve has witnessed “early signs of a shift of emphasis” towards green home improvements. It said last week that people are beginning to switch away from kitchen and bathroom upgrades, for example, towards cost-saving improvements like insulation and fitting solar panels.

Penny stock Kingspan is about more than just insulation, however. It supplies products that improve the amount of natural light entering a building, reducing the need for lighting. Other solutions include the management of water and wastewater and boosting a structure’s ventilation.

Sales at Kingspan would take a hit if inflation keeps soaring and the construction industry slows. However, I think this threat is more than reflected by the company’s recent share price slump. As a long-term investor I think Kingspan could be a brilliant dip buy for me right now.

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 recommended Homeserve and Vertu Motors. 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

5 steps to start buying shares with under £500

Learn how this writer would start buying shares with a few hundred pounds in a handful of steps, if he…

Read more »

Young happy white woman loading groceries into the back of her car
Investing Articles

The FTSE 100 offers some great bargains. Is this one?

Our writer digs into one FTSE 100 share that has had a rough 2024 to date, ahead of its interim…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

£9,000 of savings? Here’s my 3-step approach to aim for £1,794 in passive income

Christopher Ruane walks through the practical steps he would take to try and turn £9,000 into a sizeable passive income…

Read more »

Group of young friends toasting each other with beers in a pub
Investing Articles

I’d buy 29,412 shares of this UK dividend stock for £150 a month in passive income

Insiders have been buying this dividend stock, which offers an 8.5% yield. Roland Head explains why he’d choose the shares…

Read more »

Red briefcase with the words Budget HM Treasury embossed in gold
Investing Articles

Could the new UK budget spell growth for these 6 FTSE stocks? I think so!

Mark David Hartley considers six UK stocks that could enjoy growth off the back of new measures announced in the…

Read more »

Investing Articles

With a 6.6% yield, is now the right time to add this income stock to my ISA?

Our writer’s looking to boost his Stocks and Shares ISA. With this in mind, he’s debating whether to buy a…

Read more »

Dividend Shares

This blue-chip FTSE stock just fell 12.5% in a day. Is it time to consider buying?

Smith & Nephew is a well-known, blue-chip FTSE stock with a decent dividend yield. And its share price just dropped…

Read more »

Investing Articles

At 72p, the Vodafone share price looks to be at least 33% undervalued to me

Our writer looks at a number of valuation measures to determine whether the Vodafone share price reflects the fair value…

Read more »