3 penny stocks to buy in February!

I’m hunting for the best penny stocks to buy for my shares portfolio. These three hot UK shares are high on my shopping list for February.

| 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.

Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

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.

sdf

Here are three top penny stocks I’m considering buying next month.

A dirt-cheap penny stock

I’d buy building materials supplier SIG (LSE: SHI), as I think demand for its insulation products could rocket for years to come. A backcloth of soaring energy bills is likely to bolster sales of its heat-preserving products. Growing concerns over the climate crisis also looks set to improve demand for SIG’s energy-saving foam-based hardware.

Housebuilders are being tipped to turbocharge production over the next decade at least to solve the country’s housing crisis. This bodes well for SIG, and particularly as these construction firms put greater focus on the energy efficiency of their products. I do note that a downturn in the housing market, and the subsequent damage this could cause to build rates, could significantly impact SIG’s profits.

I think SIG’s shares could be too cheap for me to fail to act. The business currently trades on a forward price-to-earnings growth (PEG) ratio of 0.2. Investing theory says that any reading below 1 suggests a stock could be undervalued by the market.

Use your noodle

The Restaurant Group (LSE: RTN) is another penny stock I’m paying close attention to today. Even though the pandemic rolls on and we can’t rule out further lockdowns, I think the potential long-term returns here could outweigh the risks. Brits are spending increasingly large portions of their income on eating out and firms like this stand to be big winners.

I like The Restaurant Group in particular because it owns the highly-popular Wagamama noodle chain. Sales here rose a healthy 11% and 8% in October and November compared to the same months in 2019. I’m also encouraged by the improved performance of the penny stock’s other brands like Frankie & Benny’s and Garfunkel’s. Strong trading at The Restaurant Group — allied with the success of disciplined cost-cutting — actually encouraged the business to hike its full-year growth forecasts late last week.

The Restaurant Group is a very different beast to what it was a few years back. Its turnaround plan is bringing hungry customers back in their droves, and I think now could be the time to grab a slice of the stock. But I have to remember that the dining out sector is highly competitive.

Battery-powered profits

I’m also thinking about building my exposure to the green economy. And I believe adding Atlantic Lithium to my portfolio could be an effective way to do this. The company is developing Ghana’s Ewoyya lithium project, which continues to illustrate its exceptional mining potential.

Demand for lithium is predicted to soar over the next decade as electric vehicle production rates increase. Analysts at Statista think global consumption of the battery-making material will rocket to 1.8m tonnes by 2030, up from a projected 497,000 in 2022. As a consequence, I’m thinking profits at Atlantic Lithium could soar. I have to keep in mind that there’s a range of operational problems that could affect a mining company like this, potentially damaging profits. But I’m confident enough to buy the shares for my portfolio.

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.

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.

More on Investing Articles

photo of Union Jack flags bunting in local street party
Investing Articles

Down 97% and 69%! Should I buy either of these 2 iconic FTSE 250 shares?

This pair of FTSE 250 stocks are household names yet have declined significantly over the past few years. Is there…

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

3 huge lessons I’ve learned from buying FTSE 100 income stocks!

Harvey Jones has been loading up his portfolio with UK dividend income stocks, and has been pleased with the results.…

Read more »

Pakistani multi generation family sitting around a table in a garden in Middlesbourgh, North East of England.
Investing Articles

Taylor Wimpey shares are down 20% and yield 8%! Is this the perfect recovery stock?

Harvey Jones is the first to admit that his Taylor Wimpey shares have been disappointing. But while he waits for…

Read more »

piggy bank, searching with binoculars
Investing Articles

Up 82% in 12 months, this dividend stock still has a 5.5% yield!

This dividend stock has given investors growth and a strong yield in recent years. Dr James Fox explores whether there’s…

Read more »

British flag, Big Ben, Houses of Parliament and British flag composition
Investing Articles

Over the last 3 years, this British investment fund has delivered nearly double the return of the FTSE 100

Thanks to his specific investment approach, this British fund manager has beaten the FTSE by a wide margin over the…

Read more »

Emma Raducanu for Vodafone billboard animation at Piccadilly Circus, London
Investing Articles

Analysts reckon the Vodafone share price is still undervalued!

Our writer’s been looking at the latest Vodafone share price forecasts and assesses how the group’s performed against the targets…

Read more »

Investing Articles

Considering a Stocks & Shares ISA in 2025? Make sure to avoid these pitfalls

Mark Hartley outlines a few basic tips for investors to ensure opening a first-time Stock and Shares ISA goes as…

Read more »

Thoughtful man using his phone while riding on a train and looking through the window
Investing Articles

What will take the Lloyds share price beyond 80p?

The Lloyds share price has leapt by 40% in the last six months. It's also soared by 135% in five…

Read more »