I’m searching for the best penny stocks to buy for my UK shares portfolio in the New Year. Here are three on my watchlist.
A top lithium stock
Investing in lithium stocks has considerable long-term potential as electric vehicle (EV) adoption takes off. The silvery-white metal is of course a critical component in the batteries that make them run.
Africa-focused Kodal Minerals (LSE:KOD) is one such stock on my radar today. It’s developing the Bougouni mine in Mali, which contains a whopping 31.9m tonnes of lithium.
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The company aims to complete construction and start production in 2024. And it’s fully funded to get the project off the ground following a $100m cash injection last January from Hainan Mining. The deal, which saw the Chinese miner take a 51% stake in the project, helps reduce risk for shareholders.
Positive development news at Bougouni could lift Kodal’s share price through the roof. Though remember that bad news on this front would have the opposite effect. I’ll be paying close attention in the months ahead.
Cyber star
Buying shares in Israel-based businesses is a risky play today as the geopolitical landscape deteriorates. As a result I’m not planning to invest in BATM Advanced Communications (LSE:BVC) just yet.
But I’ll consider adding the company (which is headquartered near Tel Aviv) to my portfolio if the situation in the Middle East cools. It provides network and cyber security services as well as biomedical solutions.
Indeed, I’m especially excited about its BATM’s Networking and Cyber division as the digital revolution rolls on. A rise in state-sponsored cyber attacks, along with the increasing use of artificial intelligence (AI) for disruptive purposes, should also boost sales at the unit.
The penny stock recorded $32m of cyber security orders between June and December. I’m expecting it to have another big year in 2024.
Home comforts
Building materials suppliers like Michelmersh Brick Holdings (LSE:MBH) also have excellent long-term investment potential. The country’s housing stock is the oldest in Europe and requires constant updating. This provides a steady flow of revenue from the repair, maintenance and improvement (RMI) sector.
At the same time, Britain will need to accelerate construction of new homes to soothe a housing shortage and meet the needs of its growing population. So product demand from property developers also looks poised to soar over the next decade.
But at the moment I’m not tempted to buy Michelmersh shares. It warned in November that “contraction in the construction industry has continued” and this may remain the case in 2024 as the UK economy flatlines.
I’ll be keeping an eye on inflation data in the new year though, alongside Bank of England commentary on future interest rates. Signs that rates may come down sharply may signal a time to buy the brickmaker. This scenario would likely see its share price post more impressive gains on hopes of a housing market turnaround.
