I love shopping for dirt-cheap UK shares. Here are a couple of top-quality penny stocks I’ve been thinking of buying in November.
A penny stock for the cannabis boom
A flourishing medicinal cannabis market could make Kanabo Group (LSE: KNB) one of the hottest growth shares for this decade. The penny stock manufactures cannabidiol (CBD) oil products as well as the medical-grade VapePod vaporiser. It hopes its cutting-edge vaporiser technology in particular will help it put a dent in the hugely-competitive CBD market and deliver splendid long-term earnings growth.
The news coming out of Kanabo in recent months has been highly encouraging on two fronts. It has signed an accord with Medocann Group to develop new medical products. Meanwhile, Materia Malta (with whom Kanabo agreed to merge with over the summer) received a licence to begin producing cannabis for medicinal and research purposes.
Investors need to remain aware that Kanabo lacks the financial clout of the US heavy-hitters in this fledgling industry. It could therefore be squeezed out of the market as they have more to invest in their products and marketing. Kanabo is also at the pre-revenues stage (excluding a recent small pilot programme), and further share placings could be needed to help it get off the ground.
I’m extremely tempted to buy Kanabo shares right now. But my concerns over the intense competition it will face when it finally gets to market are holding me back. I might ultimately miss the boat. But I think I’ll wait until a clear picture on its early sales performance and the reception of its products emerges before investing my hard-earned cash.
I’d be much happier to spend out on US Solar Fund (LSE: USFP) this November. As the name suggests, this penny stock invests in solar farms on the other side of the Atlantic. I think it’s therefore on course to capitalise on soaring demand for renewable energy as the climate emergency worsens.
There’s no guarantee that US Solar Fund will generate better shareholder returns that Kanabo, of course. For one, the amount of energy generated by solar panels is obviously highly sensitive to weather patterns. Overcast conditions can have a significant impact on this and, by extension, revenues at solar farm operators. There’s also the fact that operating vast swathes of solar panels is pretty expensive business.
These drawbacks wouldn’t discourage me from investing however. The global solar market is tipped for huge growth over the next decade as fossil fuels fall out of favour. Trends Market Research recently suggested that the global market will be worth $223.3bn by 2026. That compares with a value of $52.5bn in 2018. And the US is one of the friendliest on the planet when it comes to solar policy, putting US Solar Fund in great shape to exploit this opportunity to the fullest.
Royston Wild 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.