I think these penny stocks are top buys following recent share price weakness. Here’s why I think they could boost my wealth.
Mega cheap on paper
Investors have been turned off by Venture Life Group (LSE: VLG) in recent months and its share price has slumped. The business manufactures a range of non-prescription healthcare products and demand for its hand sanitisers has slumped in line with global Covid-19 infection rates. This penny stock is now 53% cheaper than it was a year ago.
I think this weakness provides a great dip-buying opportunity though. After all, Venture Life now trades on a forward price-to-earnings growth (PEG) ratio of 0.3. This is inside the accepted benchmark of 1 that suggests a stock could be undervalued.
Acquisitions to fuel growth?
I like Venture Life because of its commitment to expansion and the success of its acquisition strategy. City analysts believe the stock’s earnings will rebound 35% in 2022 and latest financials in January underlined its solid outlook.
Back then, Venture Life said that second-half sales were up 35% from the first six months of 2021. It added that the order book was “significantly ahead” of levels reported a year earlier. I’m also encouraged by its deal with Samarkand Global to sell its oral products like Dentyl mouthwash in China. Disappointing sales from its previous partner there compounded the firm’s woes last year.
Venture Life is a highly cash-generative business and has plenty of liquidity to pursue acquisitions following a revolving credit facility it sealed in mid-2021. An acquisition-led growth strategy can throw up problems like poor sales and unexpected costs later down the line. But as a long-term investor I find its commitment to supercharge profits through M&A very attractive.
Another great dip buy
Assura Group (LSE: AGR) is another penny stock that’s fallen heavily over the past year. Despite a recent recovery, the healthcare property specialist trades at a 6% discount to levels recorded this time last March. I’m also considering snapping it up today.
Assura doesn’t exactly look cheap based on current earnings forecasts. The business trades on a price-to-earnings (P/E) ratio of 21.6 times for the financial year beginning in April. However, its jumbo 4.6% dividend yield is what makes it an attractive buy for me at current prices.
A rock-solid penny stock
I have to say I believe that Assura deserves that premium P/E ratio, anyway. It’s never going to deliver explosive earnings growth — City analysts are forecasting a 6% profits rise in the year to March 2023 — but the ultra-defensive nature of its operations make it a fantastic investment in my book.
Assura develops and then lets out primary healthcare facilities. This is a part of the property market that delivers stable rents at all point of the economic cycle. In fact, demand for such buildings should keep rising steadily as Britain’s population ages and the need for healthcare infrastructure subsequently increases.
Future changes to government health policy could hit earnings one day. But as things stand now, I think Assura is a great buy, and especially for those seeking passive income with dividend shares.
