Aren’t all penny shares cheap? Well, a low price might not mean value. A penny share can still lose the same amount as one priced in pounds, and that’s 100%.
But these three, I think, look like good value. And they might not stay that way for too long.
Property slump
When we think property slump, we think housebuilders. Or we maybe think estate agents, or REITs. But I also think about the humble brick, and that brings to mind Ibstock and Michelmersh Brick Holdings (LSE: MBH).
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Michelmersh shares are under the £1 mark, but only just, and it’s the first of my penny share picks.
The price has gained a bit in 2023, and it might not be a penny stock for long. But that comes after a fall from a 2021 peak, and over five years it’s pretty much flat.
So are the shares really cheap? Well, the company seems to think so. It’s been on a share buyback since March. And that alone might be enough to push the price above 100p.
Results for 2022 showed a 15% rise in revenue. Adjusted profit before tax gained 17.5%, with earnings per share up 13.7%.
A long housing slump might hit demand in the next year or so. But it hasn’t caused much harm yet.
Lithium demand
The demand for lithium pushed a lot of stocks up in 2021. Most fell back, but I see Zinnwald Lithium (LSE: ZNWD) shares are taking off again in 2023.
They’re still down 20% in five years, at 13p, at the time of writing. It makes me think this might still be a good time to buy.
This carries the most risk of my three picks. And I’d say it might only be for those who like a bit of growth share thrill from time to time.
There’s no profit here yet, so that makes valuation tricky.
The key question is how much cash it might need before we see the first profit. We have just had a fundraising, so things seem liquid for now.
What draws me most to Zinnwald is it’s the kind of stock I think I’d have bought back when I was young and less risk-averse.
Equipment rental
HSS Hire (LSE: HSS) shares are down 40% in five years. But they started to pick up in April, so are we in for a bull run?
FY22 results just posted show gains across the board, with revenue up 10.7%.
That led to adjusted earnings per share (EPS) of 2.41p, more than double 2021’s figure. On a share price of 13.5p, as I write, that’s a price-to-earnings (P/E) ratio of just 5.6.
The 0.54p dividend for the year means a 4% yield, and that looks strong. Analysts expect more growth in the next few years too.
On the face of it, HSS looks good. But it’s in a tough market right now, and and we can’t yet tell how the firm’s turnaround will go in the next few years. On what I see though, it looks cheap.
