2 ‘nearly’ UK penny stocks to buy

I think the following cheap UK shares could provide excellent investor returns over the next decade. Here’s why I’d buy these ‘nearly’ penny stocks today.

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You may not have heard of former penny stock Fonix Mobile (LSE: FNX). But there’s a good chance you’ve used its services. The business provides the tech that allows companies and charities to charge customers via their mobile phone bills or through SMS messaging.

So, if you’ve entered a competition, paid for car parking, or donated to a good cause using your mobile phone (to name just a few examples), it’s possible that Fonix allowed you to.

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In an increasingly-cashless and mobile-dependent society, this ‘nearly’ penny stock looks in good shape to thrive. The number of customers on its books grew 13% year-on-year during the 12 months to June 2021.

Fonix is also looking to take its expertise onto mainland Europe too to help give profits growth an extra boost. Its first foray onto foreign shores will see it launch in Austria in the near future.

I’d buy Fonix even though its dependence on a handful of key customers creates a risk to future profits.

In its 2020 financial year, the UK share generated 83% of gross profits from its top 10 clients. The loss of one or more of these businesses to a competitor could clearly have significant ramifications for profits. Fonix shares go for 167p a pop right now.

Another ‘nearly’ penny stock I’d buy

Everyman Media Group (LSE: EMAN) is another cheap UK share that’s attracting my attention right now. Unlike Cineworld, which is buried in debt and faces colossal competition from the likes of Netflix (more on this later), I think this cinema operator has a chance to thrive as Covid-19 restrictions are rolled back.

Box office takings are soaring in Britain right now. Vue was the latest large chain to release promising ticket sales data in late July. Then it said that UK admissions recently stood at 70% of the average recorded in the three years prior to Covid-19. This was despite capacity restrictions and social distancing when theatres reopened.

There are, of course, significant threats to cinema operators like Everyman. The Covid-19 crisis is far from over and any significant surge in infection rates could close the industry down again.

And, as I mentioned earlier, the US streaming giants like Netflix, Amazon and Disney provide significant competition for the cinema industry. Black Widow star Scarlett Johansson’s move to sue Disney as simultaneous streaming of the film decimated box office takings provides perfect evidence of this.

However, I think Everyman is in good shape to fight off the streamers. Its cinemas don’t just offer the chance to grab the latest mainstream movie. Its boutique venues offer a unique experience where visitors can also watch an independent or classic movie with a glass of red and some gourmet food.

Priced at 141p per share, this ‘almost’ penny stock is another great low-cost UK share I’d buy right now.

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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, Netflix, and Walt Disney. 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.

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 considered, so you should consider taking independent financial advice.

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