Purchasing penny stocks can be a great way for me to find growth opportunities for my long-term portfolio. Defined as a company with a share price under £1, penny stocks are found across the whole London Stock Exchange. I think I’ve found three such firms that I’ll add to my portfolio in May. Why am I attracted to these businesses? Let’s take a closer look.
Penny stock #1: PetrolTal
An oil and gas production company focused on operations in Peru, PetroTal (LSE:PTAL) is listed on the AIM 100 index. It is currently trading at 40p and is in prime penny stock territory.
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From 2020 to 2021, crude oil revenues increased over two times, from $76m to $159m. Despite this, profit before tax has declined between 2019 and 2021, falling from $20m to a loss of $1.45m. This is a trend I would like to see reverse in the near future.
In better news, the company recently reported that its Well 10H in Peru set a new record of over 10,000 barrels per day. This well was also constructed for 17% less than expected.
In addition, for the three months to 31 March, production and sales were up 58% and 48%, respectively, year on year.
Penny stock #2: Breedon
The second penny stock I’m buying in May is UK construction materials producer Breedon (LSE:BREE). It currently trades at 81.8p and specialises in cement.
Between 2017 and 2021, revenue increased markedly from £650m to £1.2bn. Furthermore, profit before tax grew from £71m to £114m.
It should be noted, however, that past performance is not necessarily indicative of future performance.
For the three months to 31 March, revenue rose 16%, year on year. Additionally, the company announced that there was stable long-term demand for projects.
There is the added risk of further volatility in relevant commodities and the potential for rising costs of raw materials.
Penny stock #3: Jubilee Metals
Finally, Jubilee Metals (LSE:JLP) is a penny stock firm engaged in the metals recovery industry in South Africa and Zambia.
For the years ended June, between 2017 and 2021, the company swung from a £20.42m loss to a £43m profit.
What’s more, revenue has surged from £9.81m to £132m over the same period. This performance, together with the firm’s sustainable business model, prompted investment bank Berenberg to initiate a target price of 21p. This penny stock currently trades at 15.3p.
There is always the risk, however, of political and military instability in the areas where Jubilee Metals operates. If any of these risks come to fruition, this could be bad news for the share price.
Overall, each of these businesses is strong and in prime penny stock territory. They could provide me with growth over the long term and I will be buying shares in each firm in May.