I’m going to slightly stretch the usual definition of penny shares today. But I hope you’ll understand when I explain why.
Typically, in the UK we think of a penny stock as one with a share price of less than a pound, and a market cap of under £100m.
And that’s exactly what the two I’m looking at today were like when I last examined them in late 2023. Since then, they’ve both risen. And one has crept up to a bit over £100m. But not by a lot.
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Nearly penny share
My, erm, nearly penny share is the CT UK High Income (LSE: CHI) investment trust. After recent gains, the market cap almost squeezes in at £106m. And the share price only just qualifies, at 95p.
But I think there could be more to come, and I reckon 95p is still too cheap.
Among the trust’s top 10 holdings, Shell is at number one. There’s long-term risk with oil, but when I see a price-to-earnings (P/E) ratio of only around eight, my eyes sparkle.
Billionaire investor Warren Buffett is still big on oil, and he usually knows good value when he sees it.
Big dividends
Phoenix Group Holdings is in there, with its stunning 10.9% forecast dividend yield.
There’s NatWest Group too. And that’s possibly my favourite FTSE 100 bank right now, with a 5.5% yield.
As well as holding some of my top Footsie picks, the trust’s shares can be bought at a discount of 2.3%. It was 6% not long ago, which suggests investors are getting back in.
A small trust like this shares the risks of the stocks it holds. And those risks tend to be magnified as investment trust shares can fall to a big discount if those holdings fall.
But on the other hand, we get diversification thrown in.
Mining growth
Anglo Asian Mining (LSE: AAZ) has a £72m market cap and a 64p share price at the time of writing.
Again, it’s one I’ve been watching since late last year. And, after a long share price slide, it’s finally been picking up a bit.
FY 23 results were a bit disappointing, as revenue for the year fell to $45.9m, from $84.7m. Anglo Asian produces gold, copper and silver, and the lower revenue was due to lower production.
The firm posted a $32m loss before tax, following a 2022 profit of $7.5m. The balance sheet fell to a net debt of $10.3m at 31 December.
Look ahead
The reason I’m optimistic? Some key resources should come on-line in the current year, with the Gilar mine looking like a major asset. First ore is expected by the end of 2024. And the firm has doubled the capacity of a flotation processing plant “in anticipation of processing richer ores from Gilar.“
With a lot of miners at this stage of development, there’s very much a ‘jam tomorrow’ aspect. And I wonder if new cash might be needed before any return to profit.
But Anglo Asian has been generally profitable, which boosts my confidence.
