3 of the best penny stocks to buy for the new bull market

Looking for UK shares to buy for the new bull market? I think these are three of the best penny stocks for the eventual economic upturn.

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.

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.

UK share prices soared in value in the decade following the 2008–09 banking crisis. The FTSE 100 more than doubled in value nine years after that stock market crash. The FTSE 250 more than trebled. A vast number of penny stocks soared in price during the bull market too, and a lot of British stock investors made a fortune in the process.

It’s possible that the economic recovery could be bumpy as the Covid-19 crisis rolls on. So share investors need to continue doing proper research during this rocky period. But I believe the prices of UK shares — which have largely remained flat since last spring — will eventually recover strongly from the 2020 stock market crash. History shows us that stock markets have always bounce to new highs following social, economic, and political crises.

Here are four of the best penny stocks — that is companies whose shares cost less than £1 each — that I’d buy for the new bull market.

#1: A top penny stock for the ad market rebound

The budgets that businesses allocate for advertising and marketing usually pick up fast when economic conditions improve. And this plays into the hands of media companies as their ad revenues pick up strongly. This is why I think events and marketing specialist Centaur Media could be one of the best shares to buy for the new bull market. Indeed, latest financials showed that trading has continued to improve in recent months.

Beware, though, that the growing trend of businesses bringing their marketing activities in-house could pose long-term problems for this UK share. Centaur Media’s shares trade at 37p apiece.

Chart showing an upwards trend, possibly in the FTSE 100

#2: Life jacket

Curiously, demand for life insurance and assurance products isn’t as resilient as people’s commitment to buying general insurance is when times are tough. This was shown in Hansard Global’s latest financials which revealed new business premiums fall nearly 5% in the six months to December.

But as consumer confidence picks up during the economic rebound so does spending on these financial products. This likely bodes well for this penny stock’s share price over the next 12 months. Remember, though, that the rapidly-evolving regulatory landscape across the globe could harm profits later down the line. Hansard Global’s shares sell for 50p a pop.

#3: Profits set to race ahead

I also think Surface Transforms is a great penny stock to buy for the new bull market. This UK share manufactures ceramic brake discs that are used by mainstream automotive OEMs and smaller specialist carbuilders. Spending on cars by individuals and businesses usually picks up swiftly when broader economic conditions improve. So I reckon this engineer should see profits pick up strongly in the next couple of years. Beware, though, that severe exchange rate fluctuations is a not-significant risk to Surface Transforms’s profits. The auto parts giant trades at 70p per share.

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.

Royston Wild 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

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »