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3 penny stocks to buy now

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I am constantly combing the market for penny stocks to buy now that might have growth potential.

While investing in these small-cap stocks can be incredibly risky, some have gone on to generate tremendous returns for investors.

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The strategy is not suitable for all investors, but I am comfortable with the level of risk involved. 

Here is a selection of penny stocks I would buy for my portfolio today based on their growth potential.

Stocks to buy now

With a market value of around £54m, Air Partner (LSE: AIR) is a market minnow. It is also one of the best penny stocks to buy now, in my opinion.

The aviation specialist’s primary line of business is private jet brokerage. However, it has been expanding into different markets in recent years. As part of this strategy, it recently acquired Kenyon, a world leader in emergency planning and incident response.

On top of this growth, the company has benefited from growing demand for private jets during the pandemic. As profits jumped last year, the group was able to nearly doubled its full-year dividend to 2.4p. The stock now offers a yield of 3.2%.

Unfortunately, as the global aviation business is incredibly cyclical, this yield is not guaranteed. Profits could slump next year, which may force management to reduce the dividend. 

Still, as Air Partner continues to invest for growth and return capital to shareholders, I would buy the equity for my portfolio of penny stocks. 

Pennys stocks on offer

As well as Air Partner, I would also buy Tullow Oil (LSE: TLW) and Enquest (LSE: ENQ). While both of these firms have market capitalisations of between £400m and £600m, they are still technically penny stocks. 

I would buy both stocks as recovery plays, although due to the risks of investing in oil equities, I would buy both to provide as much diversification as possible. 

Both Tullow and Enquest are independent oil explorers. That means they have far more exposure to oil prices than big oil firms. These tend to be more diversified with exposure to the oil transport, refining and chemicals markets. 

And as oil prices rise, these companies could be set to achieve windfall profits. According to Tullow’s latest trading update, the firm is on track to earn $0.4bn in pre-financing cash flow this year, assuming an oil price of $60 per barrel. The group also noted that this figure would rise by $50m if oil price averaged $70/bbl. At the time of writing, the price of oil is $72/bbl. 

Enquest has hedged its oil production with a $55/bbl floor and a ceiling of $64/bbl. This will cap the company’s profits, but with the price trading at the high-end of this range, the firm looks to be on track to outperform this year. 

I would acquire both of these penny stocks as it looks as if their profits will jump this year. Unfortunately, they are not without their risks. The oil price is back above $70, but it might not remain there for the rest of the year. Moreover, both companies have elevated debt levels. This could hold back their growth in the months and years ahead. 

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Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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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