Stocks and Shares ISA investors who haven’t maxed out their allowance need to keep an eye on the clock. There’s less than a week to go for these individuals (like me) to make full use of their £20,000 contribution room for the 2020–21 tax year. This is why I’m scanning the market for top penny stocks to buy.
Of course investors don’t have to buy UK shares before the end of 5 April. But do they need to have sunk their money inside the tax wrapper before that time. Here are three penny stocks I’m thinking of buying with my just-in-time contribution:
A penny stock for cannabis bulls
I think investing in the medical cannabis market could make UK share pickers a lot of money. Demand looks set to soar as laws surrounding its usage begins to loosen. I also expect sales of the drug to increase as the number of health conditions it is used to treat grows. Don’t just take my word for it though. Researchers at Valuates Reports reckon the global medical cannabis industry will be worth $30.5bn by 2026. This is up from $12.9bn in 2020. All this explains why I think investing in Zoetic International (LSE: ZOE) could be a good idea. The business manufactures cannabidiol (or CBD) oil products which it sells in the US and Europe. Be warned, though, that this industry is highly regulated. Law changes could therefore cause serious operational problems that could knock profits.
Screen star
I’m also thinking about buying Ocean Outdoor (LSE: OOUT) for my Stocks and Shares ISA. I think this penny stock — whose outdoor screens allow businesses to advertise their products across Northern Europe — could soar in value in the very near future. This is because the amount companies spend on advertising rises strongly during the early stage of economic recoveries. I think that the huge amounts Ocean Outdoor has spent to expand its geographic footprint should pay off handsomely. But remember that such an aggressive strategy is high risk and the share price could suffer if trading in new markets fails to live up to expectations. The business also has to compete with other forms of outside advertising and other media categories including newspapers, mobile Internet, and television. This could result in a lowering of its prices on top of rising costs.
African Queen
Another penny stock on my radar today is Old Mutual (LSE: OMU) I bought shares in Prudential last year because rising wealth levels, strong population growth, and low life insurance product penetration in Asia are likely to result in huge profits in the years ahead. Old Mutual operates in sub-Saharan markets in Africa where the same conditions are in play. And this 175-year-old company has the clout to make the most of this enormous opportunity. That said, companies of this nature always run the risk that larger-than-expected claim costs can see them fail to be covered by the premiums it’s charged. And this can have a devastating impact on the bottom line.
