Could this be 1 of the best penny shares to buy now?

Jabran Khan details this small cap and wonders if it could be one of the best penny shares to buy for his holdings for lucrative returns.

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.

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.

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.

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.

Jabran Khan 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

Investing Articles

Up 75% in 5 years, I reckon this FTSE 250 still has lots to give!

Our writer explains why this FTSE 250 stock could still continue to provide growth and returns despite already being on…

Read more »

Investor looking at stock graph on a tablet with their finger hovering over the Buy button
Investing Articles

2 high-quality FTSE 250 stocks to consider buying

The FTSE 250 is home to some of the best investment opportunities out there. This Fool highlights two stocks for…

Read more »

Investing Articles

The Marks and Spencer share price dips! Is this my chance to buy?

Marks and Spencer was one of the hottest stocks on the market last year. With its share price falling in…

Read more »

Growth Shares

How low could the boohoo share price go?

Jon Smith explains why the enterprise value and the low risk of bankruptcy should help to prevent the boohoo share…

Read more »

Young Asian woman with head in hands at her desk
Investing Articles

Down 23% in a year! Can the Diageo share price regain £30 in 2024?

This Fool UK writer is checking the charts to see if the Diageo share price can recover from the recent…

Read more »

Asian man looking concerned while studying paperwork at his desk in an office
Investing Articles

I wouldn’t touch this FTSE 100 stalwart with a bargepole

Despite looking like a bargain on paper, this Fool is avoiding FTSE 100 constituent Vodafone at all costs. Here he…

Read more »

Investing Articles

I’m waiting for the Rolls-Royce share price to pull back before I buy

The Rolls-Royce share price has been the Footsie's best performer in the last year. But this Fool has no intention…

Read more »

Front view photo of a woman using digital tablet in London
Dividend Shares

2 dividend stocks to take me from £0 to £9.5k in second income

Jon Smith talks through some ideas with second income potential, including one stock that has a dividend yield above 10%…

Read more »