Buy the dip! 2 penny stocks to buy following market volatility

I plan to continue investing despite current share market volatility. Here is why, and here are two penny stocks I’m considering buying right now.

| 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.

British Pennies on a Pound Note

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.

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.

Assura

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.

Topps Tiles

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.

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

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »