It’s a fact that penny stocks can be prone to periods of higher volatility than more expensive UK shares. But this doesn’t put me off shopping for low-cost stocks like this. As a long-term investor I’m still confident that by buying quality I’ll still make great returns on the stocks I buy regardless of their initial cost.
So here are four top penny stocks on my radar today.
#1: Make tasty returns
DP Eurasia offers UK share investors the best of both worlds. The business — which is the master frachisee of the Domino’s Pizza brand in Turkey, Russia, Azerbaijan, and Georgia — provides exposure to fast-growing emerging markets. It also provides an opportunity to get in on the online food delivery craze. According to Statista this industry will be worth $154.3bn on a global basis versus $111.3bn in 2020. I think it’s a top stock to buy despite intense competition from local operators Getir and Yemeksepeti.
#2: A model penny stock
The Covid-19 crisis prompted a spike in the number of hobbyists as people found themselves locked down. Miniature train, car, and model kit maker Hornby saw demand for its products surge as a result (revenues jumped 28% in the 12 months to March 2021). It’s true that the penny stock operates in extremely competitive markets that threaten to damage future earnings. The rising popularity of online printing is another threat to the company. But I think the great quality of its products will allow it to retain the edge and keep growing profits over the long term.
#3: Playing the value theme
I also like the look of Card Factory a lot. Like Hornby, this penny stock also operates in a fiercely competitive arena. And nowadays it doesn’t only have to bat back the threat from Clinton Cards and WH Smith; the emergence of online-only rivals Moonpig and Thortful also threatens future profits. There’s one big advantage that Card Factory has, however, and that is its focus on the value end of the market. Consumers love a bargain, perhaps more than ever, and I think this will stand this UK retail share in good stead.
#4: An e-commerce star in the making?
Grabbing a slice of e-commerce is one of the hottest games in town right now. I myself bumped up my exposure to online retail by buying logistics and warehousing service providers Tritax Big Box REIT and Clipper Logistics. And I reckon investing in Raven Property Group shares could be another great way to ride this theme. Why? Well this penny stock owns and rents out warehouse complexes in Russia. And data shows that online retail here is soaring at an incredible rate. E-retail sales here soared 58% in 2020, according to Data Insight. Be aware, though, that the rising use of renewable energy could hit Russia’s oil-reliant economy hard over the long term. This could in turn damage profits growth at Raven.