Market volatility has ramped up several levels this week and could continue rising as the Ukraine conflict escalates. Penny stocks have fared particularly badly as investors have sold smaller shares that might be vulnerable to a fresh geopolitical and macroeconomic crisis.
The tragic war in Ukraine isn’t the only danger to stock markets either. Rising inflation threatens to hit consumer spending hard and push up business costs. It is also likely to prompt sustained interest rate hikes which will increase the cost of borrowing and damage demand for assets like stocks. Finally, a fresh flare-up of the pandemic would also likely drive UK share prices much lower.
2 penny stocks I’d buy today
In times of war the onset of market volatility takes second fiddle on the scale of importance. Still, I’m aware that people are worried about how choppiness on share markets could affect their wealth.
I plan to continue investing in UK shares. I don’t think I can’t afford not to if I want to build a decent financial nest egg for retirement. Here are two top penny stocks I’m thinking of buying today. I believe they could be too cheap to miss after recent price falls.
Britain’s rapidly-ageing population is putting increasing pressure on the State Pension. And this is, in turn, making it more and more important for me to secure my financial independence with UK shares. On the hand however, Assura (LSE: AGR) is penny stock that actually stands to benefit from this demographic change.
Assura — which has fallen 22% over the past 12 months — develops and then lets out primary healthcare facilities like GP surgeries. Demand for these sorts of properties are only going to grow as the country’s need for medical care increases.
Though it could suffer if government health policy changes, I’d use its recent fall to three-year lows as an opportunity to load up. Recent share price weakness means Assura now carries a mighty 4.9% dividend yield for this financial year.
A strong housing market also makes Topps Tiles (LSE: TPT) an attractive penny stock for me to buy. Strong homes demand is prompting housebuilders to supercharge construction rates and, by extension, their demand for building products is soaring. Sales of some materials are also rising for existing homeowners as they embark on some DIY before they put their property on the market.
I expect these phenomena to remain in tact too. Interest rates should remain lower than historical norms, in my opinion, which should continue supporting the housing market. I don’t think Topps Tiles’ recent share price performance reflects this likelihood. The retailer is down 6% in value over the past year and this week dropped to two-week lows.
Of course, Topps Tiles could come under pressure if rising inflation hits consumer confidence. But it’s my opinion that this threat is baked into the company’s share price. It trades on a forward P/E ratio of 10.5 times. It also carries a 4.7% dividend yield today.