Isn’t it a risk buying penny shares to hold for 10 years? I mean, they can show huge swings, sometimes in just days.
Well, I won’t buy any share if I don’t think I’d want to keep it for 10 years, no matter what the price. In fact, the share price is one of the things I pay the least attention to.
So are there any priced below a pound, in companies with market-caps of £100m or less, that look like long-term keepers? Here are three that might make the cut.
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Nano technology
Nanoco (LSE: NANO) shares have had a tough five years. And they’re way down from the heights of 2013.
Nanoco does what’s called quantum dot technology, used in solar cells, among other things.
It’s been a ‘jam tomorrow’ growth stock for some time. And it’s an example of the risk we face when we buy into new technology stocks. But interim results in March make me think the jam might be here soon.
The firm says the final valuation for its commercial product materials is underway. And it expects orders by the end of 2023.
Nanoco has sold some intellectual property. So it looks like it’s on a decent financial footing now.
It’s risky, and I might wait to see those orders happen before I’d buy. But if it turns profitable, I could see this as a 10-year holding.
Tiles and floors
Topps Tiles (LSE: TPT) sells tiles and flooring products. And the share price has lost 50% in five years.
Judging by its first-half update, Topps seems to be doing fine. For me, it’s a value play, as I rate the shares as oversold.
A price-to-earnings (P/E) ratio of 15 might not look cheap. But forecasts suggest it could halve in the next few years.
The dividend yield is above 7%, and again that would rise in the coming years if the analysts are right.
There’s clearly a risk that Topps Tiles shares could remain depressed, or even fall further, if interest rates rise again. And another rise does seem inevitable.
Interim results are due on 23 May. Might we see an upbeat response from investors?
Back in fashion?
I think 2023 might be a good year to get back into Superdry (LSE: SDRY). The retailer fell out of fashion big time, and the shares are down more than 90% in five years.
Forecasts have a loss down for this year. But they show a nice turnaround coming, which could drop the P/E to just nine in a couple of years.
Liquidity has been a problem. But a new equity issue has just raised a gross £12m. If that’s enough to keep it going until it’s back to profit, I think this might even be one of the UK’s best penny stock buys.
CEO Julian Dunkerton has just bought nearly a million shares, and that’s also a good sign.
A loss this year might make it too much of a risk right now. So it might be wise to wait a bit. But if I buy, it will again be for at least a decade.
