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3 penny stocks I’d buy right now

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Growth in the UK construction sector has taken a whack in recent weeks, due to a shortage of new materials. But, largely speaking, the industry is in rude health (the sector’s PMI gauge hit two-year highs in June).

And this bodes well for penny stock Speedy Hire (LSE: SDY) which rents out tools, plant and specialist equipment.

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These supply shortfalls could well dent low-cost Speedy Hire’s ability to exploit the economic recovery. But I’m encouraged by the rate at which the penny stock is pulling market share away from its customers, something which could offset this problem.

Besides, I think a forward price-to-earnings growth (or PEG) ratio of 0.4 leaves a decent margin of error for UK share investors. A reading below 1 suggests a stock could be undervalued by the market.

Flying ace

I won’t pretend that the travel industry isn’t laden with risk. The rampant Delta variant means Covid-19 cases are rising strongly across much of the globe. Still, at 15 euro cents per share, I think the Ryanair (LSE: RYA) share price is cheap enough to merit serious attention.

The UK airline is expected to endure another year of losses in this fiscal year (to March 2022). But analysts think it will swing strongly back into profit in fiscal 2023. So the business trades on an undemanding forward price-to-earnings (P/E) ratio of around 12 times.

I think a mix of strong pent-up demand and sturdy consumer spending power (it’s been estimated that Britons have amassed £200bn worth of savings during the Covid-19 crisis) will light a fire under plane ticket demand from next year.

Ryanair recently reported that it shifted 9.3m passengers in July. This was up from 4.4m in the same month last year and illustrates the scale of plane ticket demand and the impact of Covid-19 vaccine certificates. This was much better than the 7m-9m travellers the penny stock had previously forecasted in the summer months.

A dirt-cheap penny stock

I think Pendragon (LSE: PDG) could be another top stock to ride for the economic recovery. This is because, as with travel and leisure, the amount people spend on automobiles tends to rocket when broader consumer confidence improves.

I also think the car retailer should benefit strongly from rising environmental concerns fuelling electric vehicle (EV) demand. And this is a driver that could support this UK retail share for years to come.

Think tank the Climate Change Committee believes there will be 23.2m EVs on the road by 2032. That compares with 430,000 at the end of last year.

These numbers could disappoint though, if steps to improve charging infrastructure in Britain fail to take off.

Highly-cyclical stocks like Pendragon would also suffer if the twin threats of Covid-19 and Brexit damage consumer spending power.

However, I think an ultra-low P/E ratio of 6 times for 2021 makes this a penny stock worthy of my attention.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Pendragon. 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.

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