2 cheap penny stocks to buy for my Stocks and Shares ISA!

Time is running out for me to max out my Stocks and Shares ISA allowance! Here are two penny stocks I’d buy within the tax wrapper right now.

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I haven’t got long to use the remainder of my annual £20k Stocks and Shares ISA allowance. I don’t need to use the money I invest before the 5 April deadline to buy shares straight away. But I don’t see any reason to wait when there are so many great bargains out there right now.

Here are two dirt-cheap penny stocks I’m thinking of snapping up.

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Marston’s

I think pub operator Marston’s (LSE: MARS) is a top buy as conditions in the leisure sector steadily improve. At 84p per share, the business trades on a forward price-to-earnings (P/E) ratio of just 11.3 times, an attractive valuation given the strength of recent industry news.

This penny stock’s most recent update in January revealed how sales were bouncing back following lockdowns earlier in 2021. Latest financials from industry rival JD Wetherspoon confirm that drinkers are returning to the bar in large numbers too. On Friday, Wetherspoons said that sales in the previous three weeks were just 2.6% below 2019 levels in what it said was part of an “improving trend”.

The Marston’s share price has rebounded solidly in recent weeks. I think it could keep marching higher too as people continue emerging from Covid-19 hibernation. I am concerned by the impact that rising beer, labour and energy costs could do to profit margins at pub operators like this. But as a long-term investor I think the rewards of owning the leisure business outweigh the risks.

The amount people spend on going out is on a continuous uptrend (barring those coronavirus-related interruptions). And Marston’s, with its large estate of pubs, eateries and hotels, is well-placed to capitalise on this.

Breedon Group

I believe that building materials supplier Breedon Group (LSE: BREE) also offers unmissable value right now. At 86p per share this penny stock trades on a forward price-to-earnings growth (PEG) ratio of 0.6. A reminder that any reading below 1 suggests that a stock could be undervalued.

Breedon is a highly-cyclical business. And, as a consequence, I need to consider the impact that Britain’s darkening economic outlook could have on its revenues. Uptake of its aggregates, concrete and other products would likely suffer a sharp slowdown if construction activity begins to cool.

This is a risk I think is baked into Breedon’s rock-bottom valuation however. In fact, I remain quite upbeat about the company’s earnings outlook today. Historically-low interest rates and government support for first-time buyers mean that homes demand should continue to outstrip supply. So sales of its bricks, tiles et al from developers are likely to remain rock-solid as building rates pick up.

Government commitments to increase infrastructure spending also bodes well for Breedon in the short term and beyond. And demand for its goods should remain supported by a healthy repair, maintenance and improvement (or RMI) market. Breedon reported record volumes, turnover and profits in 2021. And it looks in great shape to build on this momentum.

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