As a long-term investor, I’m not overly concerned by the extreme price volatility that penny stocks can experience. I buy UK shares with the aim of holding them for many years, perhaps more than a decade.
Over this kind of timeframe quality stocks have a great chance of overcoming temporary volatility to soar in value, whatever their initial price.
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So here are two top penny stocks I’m considering buying right now.
A penny stock for the Russian retail boom
I’ve previously mentioned how Raven Property Group could be a great way to play the Russian retail sector. As e-commerce grows rapidly in the country, I expect demand for the warehouses it lets out to take off.
Another rare way to get exposure to this emerging market, one where people’s income levels look set to boom in the years ahead, is X5 Retail Group (LSE: FIVE). This British stock trades at 33p per share.
This penny stock is one of Russia’s leading grocery retailers. Its brands include Perekrestok, the country’s largest chain of supermarkets, as well as the Pyaterochka chain, which operates more than 15,000 convenience stores. X5 also has skin in the online retail game though its perekrestok.ru website. And last year it entered the parcel delivery market with the launch of its 5Post division.
I like X5’s leading position in the defensive food retail sector. I also like its responsiveness to fast-changing consumer trends (the penny stock also recently launched its Perekrestok.Bystro express delivery service for smaller orders).
Though I’m aware that the steady rise of green energy poses significant risks to Russia’s oil-dependent economy. And this could put paid to my hopes of explosive profits growth at X5 in the years ahead.
Playing the green revolution
Speaking of renewable energy, I think US Solar Fund (LSE: USFP) could be a top way for me to latch onto this fast-growing industry. This particular penny stock — which trades at 75p per share — invests in solar plants, predominantly in North Carolina. It also has exposure to the country’s biggest solar-power-generating state of California.
The escalating climate crisis is prompting lawmakers across the globe to embrace solar energy with greater urgency. And, at the moment, the US offers operators in this industry some of the most supportive green energy policies at both state and federal level.
What’s more, the Biden administration is hoping to make the environment even more friendlier by introducing measures like clean energy tax credits to hasten growth in the solar market.
Like all renewable sources, energy created by the sun is weather dependent and thus intermittent. This can obviously have an impact on operator profits. There’s also the danger that US Solar Fund could overpay for an asset or that a plant could fail to deliver on forecasted earnings.
That said, I still think this penny stock has the potential to create brilliant shareholder profits over the coming decades.