I’m on a quest to find the best cheap shares to buy for my portfolio this year. Here are three penny stocks I’d buy to hold for years to come.
Penny stock Petropavolvsk (LSE: POG) is one UK share on my watchlist. I think that gold prices will rise as inflationary pressures increase and doubts over the economic recovery persist. Of course there’s no guarantee that yellow metal values will increase. A mix of central bank rate hikes to curb exaggerated price rises and a resurgent US dollar could even push bullion values much lower.
But I still think having exposure to gold could be a good idea as an insurance policy for when trouble comes along. Gold’s surge to record highs during 2020’s coronavirus crisis proves this point perfectly.
I’d do this by buying shares in gold producing companies like Petropavolvsk rather than investing in the metal itself. This gives me a chance to potentially grab dividends now and further down the line. And I think a P/E ratio of just 6 times for 2022 could make it too cheap for me to miss. I also like this mining company’s highly-efficient and low-cost POX Hub gold production process where output is steadily ramping up.
Coats Group (LSE: COA) is trading strongly as clothing sales bounce back following strict Covid-19 lockdowns. As a major supplier of threads, zips and trims, demand for its product is rising solidly. Revenues here rocketed 22% at constant currencies in the four months to October, its latest financials showed. Sales were also up 6% versus the same 2019 period.
Sales growth is poised to slow, naturally, though I like the steps Coats Group is making to drive long-term sales. An increased focus on sustainability for example could deliver big rewards (sales of its 100% recycled EvoVerde thread range are expected to have doubled year-on-year in 2021). I’d buy this penny stock even though the issue of sustainability is growing in importance for consumers. This has the potential to hit so-called fast fashion volumes hard.
N Brown Group
Buying retail stocks can be risky business. A case can be made that this sector is particularly dangerous today as supply chain issues persist and the British economy stalls. But I think the potential rewards at some retailers outweigh the risks and this is where N Brown (LSE: BWNG) comes in. This particular company owns popular clothing brands like SimplyBe and JD Williams.
I like this particular stock for a number of reasons. It sells its product at affordable price points. This could make it a winner when consumer confidence is slipping and inflation is rising as is the case today. I also like its focus on the fast-growing ‘plus size’ segment which looks set to continue growing strongly. Analysts at Allied Market Research think the market for larger garments will be worth $696.7m by 2026, up from $481m in 2019. I also like its successful entry into the homewares market, a segment that has boomed in the past few years.