1 near-penny stock that is unstoppable right now

This near-penny stock has doubled its share price in the past year. But Manika Premsingh believes that its numbers suggest that even better days are in store. 

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

British Pennies on a Pound Note

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The UK government’s stimulus measures did their job keeping the economy relatively buoyant during the pandemic. And this is evident from the real estate market. The housing market saw a massive boom as people rushed in to make the most of the stamp duty holiday. House builders, as a result, continued to see strong order books.  

Bricakability’s stock is on the rise

Because of this, property and related stocks did well, like Brickability (LSE: BRCK), the concrete blocks and bricks manufacturer. Its share price is 104p as I write, close to its highest ever levels. The stock, which was publicly listed on AIM in 2019, has been a penny stock all along, and it is only in August this year that it rose above that level. It has stayed above 100p ever since. Let me put it another way. The stock has moved way past its pre-pandemic levels, which I often use as a guiding point to understand a stock’s progress since the pandemic. 

Solid results

And I reckon that there could be more growth in store for Brickability. Consider its latest results. The company reported a huge 197% increase in revenue for the six months ended 30 September 2021 compared to the same six months in 2020. Its pre-tax profits have also seen an impressive rise of 120%. 

These results have received a huge bump-up from its acquisition of Taylor Maxwell earlier this year, which adds to its portfolio of services that now include timber cladding. However, the company’s like-for-like revenue growth, which is adjusted for the impact of acquisitions, has also been robust at around 54% as well. I also like that it has made the acquisition without taking on a whole lot of debt. Its debt levels have barely budged from last year, because it was funded through an equity raise.

Positive outlook for the near-penny stock 

Brickability’s outlook is positive too. It expects that its full-year performance will be “at least” in line with what the market expects. I read that to mean that there is a good chance that it could actually be higher. It is also on an acquisition drive, which could see it expanding fast in the coming years. 

What I’d do now

With this strong showing, the stock does look somewhat pricey right now. Its price-to-earnings (P/E) ratio is 25 times, but it could well be the premium that investors are willing to pay for a high growth stock. I reckon that if the economy goes into a tailspin because of coronavirus or inflation or any other threat we can think of, a stock like Brickability could be impacted. And then buying at the present price might not seem like such a good idea. 

But going by both its profit-making capacity in the past and with a view to its future, I think it does look like a good stock for me to buy. Penny stock or not, this is one I like.  

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 assessed. Consider taking independent financial advice.

Manika Premsingh 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.

More on Investing Articles

Newspaper and direction sign with investment options
Investing Articles

When cheap markets meet favourable conditions, sentiment flips very quickly

London’s stock market is cheap — some sectors, even cheaper. Given a change in sentiment, the uprating could be substantial.

Read more »

Investing Articles

Empty Stocks and Shares ISA? I’d snap up these 3 stocks to start with!

Sumayya Mansoor explains how she would start to build wealth from scratch with an empty Stocks and Shares ISA and…

Read more »

Concept of two young professional men looking at a screen in a technological data centre
Investing Articles

7.7% yield and going cheap! Why is this unknown FTSE 250 stock flying?

It's no household name, but there's one FTSE 250 stock with a high dividend yield and booming profits that looks…

Read more »

Photo of a man going through financial problems
Investing Articles

I’d stop staring at the Nvidia share price and buy this FTSE 100 stock instead

This writer reckons there is a smarter way to invest in Nvidia today without taking on stock-specific risk. Here is…

Read more »

Young lady working from home office during coronavirus pandemic.
Top Stocks

5 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Young Asian man drinking coffee at home and looking at his phone
Dividend Shares

These 3 FTSE 250 stocks offer me the highest dividend yields, but should I buy?

Jon Smith considers FTSE 250 shares with a very high yield, but questions whether the income is going to be…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Is FTSE 100 takeover target DS Smith a great buy?

A mega-merger between FTSE 100 giants DS Smith and Mondi has the City abuzz. But is there any value in…

Read more »

Young Black man sat in front of laptop while wearing headphones
Investing Articles

The WPP share price dips as profits fall. Here’s why it could be a top dividend buy

I'm starting to think the WPP share price undervalues the stock, especially if the long-term dividend outlook comes good.

Read more »