2 potentially exciting penny stocks this Fool likes!

Sumayya Mansoor explains why she’s bullish on these two penny stocks and feels they may not remain small caps in the longer term.

| 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.

Young Asian man drinking coffee at home and looking at his phone

Image source: Getty Images

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.

Two penny stocks I plan to buy when I next have some spare cash are DP Poland (LSE: DPP) and Revolution Beauty Group (LSE: REVB).

Here’s why!

DP Poland

The business franchises the famous Domino’s Pizza brand in emerging markets Poland and Croatia.

DP Poland shares are up 50% over a 12-month period from 8p at this time last year, to current levels of 12p.

From a bullish view, demand for fast food in Poland and Croatia is soaring. Emerging markets present an opportunity for the firm to capitalise on rising personal income levels, as well as current low market penetration.

The business has recorded excellent performance in recent times. In fact, it recorded its best ever quarter, the final quarter for 2023. Like-for-like sales in this period increased a whopping 27.5%.

For the year as a whole, the business posted an update in January. Like-for-like sales in Poland and Croatia rose by an impressive 19.4% and 16.4%.

From a bearish view, the fast food industry is intensely competitive. I’m sure others will be looking to capitalise on this potentially lucrative emerging territory. Plus, current inflationary pressures are an ongoing risk as they could take a bite out of profit margins.

Overall, the DP Poland continues to open new locations. Furthermore, it’s investing heavily in marketing and technology to zero in on a dominant market position. A healthy looking balance sheet should stand it in good stead. One of my biggest worries with small cap shares is a lack of cash, which can often lead to trouble.

Revolution Beauty Group

Personal care and beauty business Revolution Beauty Group has been on a great growth journey, and went public back in 2021. The business sells a number of brands direct to consumers via e-commerce, as well as in retail stores.

The shares are up just over 12% during a 12-month period from 24p at this time last year, to current levels of 27p.

According to data published by Statista, the beauty and personal care market is only set to continue to grow at a rapid rate. This could be good news for the business.

Revolution has a lofty aim of hitting £1bn worth of sales by 2030. A new management team, brought in due to an accounting and reporting scandal, are looking to deliver fresh impetus to the business to hit this target.

Last month’s trading update shed further light on recent trading, and full-year expectations. The business said EBITDA growth should come in at low double-digit figures, which is an upgrade on the previous forecast. It looks like the firm’s strategic review to drive efficiencies, margins, and profitability is already working.

From a bearish view, I’m going to keep an eye on beleaguered fast fashion firm boohoo‘s growing influence on the business. It currently holds close to 30% worth of shares in the business. boohoo’s well documented struggles are something I’m hoping that Revolution can avoid in the future.

Overall, a positive journey to date, fresh impetus, and strategic review looking like it’s bearing fruit. These, along with a burgeoning market place help build my investment case.

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.

Sumayya Mansoor has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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

US Stock

The Nvidia share price falls! Here’s what I think happens next for the S&P 500

Jon Smith reviews the overnight results from Nvidia and explains why this could stall the S&P 500 performance through to…

Read more »

Investing Articles

Down 15% today, is this FTSE 100 share too cheap for me to miss?

JD Sports' share price has tanked after the FTSE 100 share released another profit warning. Is this the opportunity I've…

Read more »

Investing Articles

Up 8% today, is this FTSE 100 growth stock a slam-dunk buy for me?

Halma's share price is soaring thanks to another headline-grabbing trading update. Is the FTSE 100 stock now too good for…

Read more »

Investing Articles

With a P/E ratio of just 10.5 is now a brilliant time to buy a cut-price FTSE 250 tracker?

Harvey Jones says a recent dip in the FTSE 250 leaves the index trading at bargain levels. One stock in…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

To build a passive income flow, I’d follow this Warren Buffett approach

Warren Buffett has set up passive income streams most people can only dream about. Our writer sees some practical lessons…

Read more »

Growth Shares

As the boohoo share price falls, could it become a penny stock in 2025?

Jon Smith outlines some of the recent problems involving the boohoo share price and considers if things could get even…

Read more »

Young Asian woman with head in hands at her desk
Investing Articles

Here are the worst-performing FTSE 100 shares over the last 5 years

These five FTSE 100 shares have been complete duds over the last half decade. But is there potential for a…

Read more »

Investing Articles

Nvidia stock has tripled this year! Can it keep rising?

Nvidia's latest sales update showed strong growth and the stock's been on a tear so far in 2024. So is…

Read more »