Small-cap stock Raven Property Group (LSE:RAV) is currently on my radar. Could it be one of the best penny shares to buy now for my holdings? Let’s take a closer look.
Property boom
Raven Property was founded in 2005, with a focus on investing in a portfolio of what it calls “Class A” warehouse properties in Russia. At present, it has a portfolio of 1.9m square metres of warehouses throughout the major cities of Russia.
The recent rise in e-commerce has meant many businesses need quality warehousing and distribution spaces to operate from. This is where firms like Raven come in. They buy the space and negotiate lucrative rental agreements with businesses that need such facilities.
I am always on the lookout for the best penny shares to buy at cheap prices with upside potential in the long term. I do understand these types of stocks have increased risks, however. As I write, Raven shares are trading for 28p. At this time last year, the shares were also trading for 28p. The shares were trading for 36p a few months ago, in September. I believe the geopolitical tensions between Russia and Ukraine have contributed to the share price falling 22% since that time to current levels.
For and against investing
FOR: The rise in e-commerce is definitely notable. What I like about Raven in particular is its focus in Russia. According to data compiled by Statista, it is estimated that the e-commerce and shopping sectors in Russia are set to grow rapidly in the next few years. This tells me demand for warehouses should increase, in turn, benefitting firms like Raven.
AGAINST: Unfortunately, Raven’s location in Russia is also one of its biggest risks. Current geopolitical tensions between Russia and Ukraine could derail any progress for the e-commerce market, as well as warehousing demand. There is a chance that a war breaks out and the region suffers economically. This would hurt Raven’s business and could cause issues with performance and any returns I hope to make. I believe it has already impacted the share price in recent months.
FOR: Helping make my case that Raven could be one of the best penny shares to buy now is its juicy dividend yield of over 5%. Not many small caps offer such an enticing yield. These dividend payments could help me make a passive income. I do understand that dividends can be cancelled at any time, however.
AGAINST: The growing e-commerce and shopping market in Russia has attracted many property firms to try and capitalise. Raven itself notes a viable threat from a “serious competitor in Moscow,” in one of its recent updates. Moscow is said to be one of the most lucrative areas in Russia from a warehousing and e-commerce perspective. This competition could hurt Raven’s progress and performance.
One of the best penny shares to buy now
Overall, I would add Raven shares to my holdings, although I understand there are credible risks involved, especially the current geopolitical tensions in the region. Raven’s current dividend yield, as well as its rock-bottom price, with a price-to-earnings ratio of just 4, is extremely attractive. I’d add the shares to my holdings and hold on to them for a long time.
