Should I buy these 4 penny stocks in my ISA?
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These UK shares all trade below the £1 marker. Should I buy these penny stocks for my Stocks and Shares ISA today?
#1: Bargain penny stock
We all love a good bargain. In fact, the tremendous growth of Aldi, Primark and B&M over the past decade (to name just a few low-cost retailers) is testament to how consumers now demand more bang for their buck. This growing need for value is why I believe Card Factory is an attractive buy for the years ahead. It’s true this penny stock has a hell of a lot of debt on its books. But with its 1,000-odd stores about to reopen in the coming days, hopefully the company can get to work repairing its financial position. I’d happily add this UK share to my ISA today. Though, like my colleague Rupert Hargreaves, I wouldn’t invest huge sums until its balance sheet shows signs of serious improvement.
#2: An improving stock
Long-running fears over oilfield services provider Lamprell and its survival have shrunk significantly in recent months. Thanks to huge cost-cutting, the company now has cash on the balance sheet. It’s also enjoyed a stream of new contract wins, thanks to its healthy project pipeline. Finally, the business has created the Lamprell Renewables division which it hopes will let it grab a slice of the green energy market. I’m yet to be convinced this penny stock has turned the corner though. Capital expenditure levels in oil and gas remain hard to call as Covid-19 rolls on, meaning contract awards could slow to a trickle again. The move towards renewable energy sources also poses dangers for a firm whose fortunes remain so closely tied to fossil fuel demand. I’m afraid this UK share still carries far too much risk for my liking.
#3: Regeneration star
I’d very happily buy U+I Group shares for my ISA though. I’ve previously argued that rising costs, increasing regulation and reduced tax benefits make buy-to-let an unattractive way to use up excess cash. This is why buying this particular penny stock is such a good idea. It allows investors to profit from rising rents in the UK without those drawbacks. That said, regeneration expert U+I’s urban properties tend to be mixed use. Thus demand for its office and retail spaces could suffer from the rise of home working and e-commerce respectively.
#4: Another property powerhouse
The severe Covid-19 crisis in Germany that’s led to fresh lockdowns makes Sirius Real Estate a risk too far for many UK share investors. This penny stock owns and operates business parks, industrial sites and office blocks in the Central European nation. And so the earnings outlook for the next couple of years for this UK share remains highly uncertain. But as someone who invests for the long term, I’m still thinking of adding the company to my own portfolio. Germany has long been the continent’s number one economy and I’m expecting a strong recovery from the pandemic. This should underpin strong demand for Sirius’s assets.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Card Factory. 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.