2 of the best penny stocks to buy in a Stocks and Shares ISA

Penny stock investing is a great way to find top UK shares ignored by the broader market. Here are two low-cost stocks I’d buy for my ISA.

| More on:

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.

British Pennies on a Pound Note

Image source: Getty Images

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.

Penny stocks can experience periods of higher volatility than other, more expensive UK shares. Trading volumes of these low-cost companies tend to be much smaller than pricier stocks. Therefore, the buying or selling of a significant number of their shares can have a serious impact on the price.

As a long-term investor however, I’m not put off by the prospect of any short-term price volatility. This is because I do proper research to identify quality before buying UK shares of any price. This way I can be confident that, over an extended time horizon, any penny stocks I buy will rise in value just like any other stock. And I can potentially make lots of money in the process.

With this in mind, here are two top penny stocks I’m thinking of buying for my Stocks and Shares ISA today.

A gaming great

Online gambling has gone from strength to strength in recent years. City analysts don’t think this phenomenon is anywhere close to running out of road either, which is great news for Gaming Realms (LSE: GMR).

This UK penny stock designs and licences casino games for mobile devices, putting it in one of the box seats for the next decade. Fortune Business Insights reckons the internet betting market will be worth $158.2bn by 2028. This compares with the $74.2bn it’s been estimated at this year.

Encouragingly, Gaming Realms is making sound progress in the gigantic US marketplace too. It’s been granted supplier licences this year in both Pennsylvania and Michigan. And last month, it launched its Slingo Originals games in Michigan with industry giant BetMGM.

It’s true that Gaming Realms operates in a highly-regulated environment, representing a clear danger to future earnings. But the popularity of its brands and its games, allied with its ambitious expansion in this fast-growing marketplace, should still make its investors handsome returns, in my opinion.

A person holding onto a fan of twenty pound notes

Catch a top penny stock

Fishing has long been a popular British pastime, and the number of people taking up the hobby has boomed since the Covid-19 outbreak last year. The Environment Agency sold a staggering 1.02m individual freshwater rod licences to adults living in England last year. This was up 16% on an annual basis and bodes extremely well for penny stock Angling Direct (LSE: ANG). Sales at the retailer rocketed 27% higher in the 12 months to January.

Angling Direct isn’t just making a splash in its home markets however (turnover here rose 31% last year). Revenues in its core European territories of Germany, France and The Netherlands soared between 29% and 44% in fiscal 2021.

The penny stock’s strong online proposition has also helped to turbocharge revenues growth over the past 12 months. As has its position as a one-stop shop for everything the fisherman needs to cast off.

But competition is fierce and the likes of Amazon pose a severe threat to future profits. However, I still think Angling Direct has the mettle to also generate great shareholder profits in the years ahead.

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.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Amazon. The Motley Fool UK has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. 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

Investor looking at stock graph on a tablet with their finger hovering over the Buy button
Investing Articles

2 reasons why I’m loading up on FTSE 100 shares

This Fool thinks FTSE 100 shares look cheap. With that, he plans to continue snapping them up today. Here's one…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Why wait? I’d buy FTSE 100 shares now before the next stock market rally!

Our writer explains why he'd snap up what he sees as bargain FTSE 100 shares now rather than waiting in…

Read more »

Investing Articles

Is it time for me to change my tune about Rolls-Royce shares?

This Fool has steered clear of buying Rolls-Royce shares. But after its recent performance, he's reconsidering his stance. Here's why.

Read more »

Investing Articles

Aviva share price: 3 reasons to consider buying for 2024

The Aviva share price is still lower then when I bought some nearly a decade ago. Here's why I'm thinking…

Read more »

Front view photo of a woman using digital tablet in London
Investing Articles

These 2 shares could bank me £328 a month in second income

Jon Smith runs through two FTSE stocks that have above-average dividend yields that could pay out a generous second income…

Read more »

Stack of one pound coins falling over
Investing Articles

This passive income plan is simple – but could earn me thousands!

Christopher Ruane explains how putting a fiver a day to work in the stock market might help him earn thousands…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Charticle

After record profits, are Lloyds shares a buy, sell, or hold?

As Lloyds pulls in pre-tax profits of £7.5bn, boosts its dividend, and continues to repurchase shares, are the company’s shares…

Read more »

Investing Articles

NatWest shares: is a once-in-a-lifetime opportunity on the way?

Should investors get ready for a unique opportunity as the UK government plans to sell off its NatWest shares later…

Read more »