I’m searching for the best penny stocks to add to my Stocks and Shares ISA this month. Here are three I’d like to buy if I have spare cash to invest.
Andrada Mining
Buying small-cap mining shares can be extremely risky for investors. Difficulties at the exploration, development and production stages can be common. And they can create a huge financial strain, leading to more debt being taken on, or shareholders being tapped for cash.
Yet buying smaller mining firms can have enormous upside as well. Andrada Mining (LSE:ATM) is one particular UK share I’m looking at.
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This is because its assets in Namibia give investors exposure to metals that will play a critical role in growing green technology and consumer electronics markets. We’re talking about tin, lithium, tantalum and copper.
Andrada is already producing tin from its Uis mine, and it is rapidly scaling up production to meet rising demand. The firm has described the asset as a “globally significant” source of lithium and tin. On top of this, the penny stock owns various exploration projects in the country.
Helium One Global
Helium demand also looks set to surge over the next decade. It’s widely used in sectors including electronics, telecoms, computing and nuclear energy. So trends like increasing digitalisation and demand for low-carbon power should drive consumption northwards.
At the same time supply growth is failing to catch up. This is why Helium One Global (LSE:HE1) could prove a wise investment. Prices of the essential gas — which this penny stock is due to begin drilling for in Tanzania during the third quarter — might be about to soar.
The firm’s Rukwa project boasts one of the largest helium deposits on the planet. And it owns two other highly promising assets in the country. Helium One is well capitalised following a £9.9m fundraising in December. But remember that unexpected costs could heap pressure on its balance sheet later on.
Alternative Income REIT
For more risk-averse investors, Alternative Income REIT (LSE:AIRE) might be a more attractive option. This penny stock owns a variety of different properties including hotels, retail parks, gyms and care homes.
Revenues in one or two of its sectors can struggle during economic downturns. But the broad range of industries it operates in helps reduce the impact of this on shareholder returns. So does the company’s exposure to traditionally stable sectors like healthcare and education.
Small-cap shares rarely provide investors with passive income. Any cash they have left over is typically ploughed back into the business to generate future growth.
But Alternative Income’s status as a real estate investment trust (REIT) means it can be relied on to provide regular dividends. Sector rules dictate that such shares pay a minimum of 90% of rental profits out to their shareholders.
It means the business has a strong record of paying above-average dividends. Its trailing dividend yield sits at 8.4%.
