A dirt-cheap penny stock I’d buy for the electric vehicle boom!

I think this penny stock could help me make excellent returns as electric vehicle sales soar. Here’s why I’d buy it to hold for the next 10 years.

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I’m searching for great penny stocks to buy today. And in particular I’m seeking ones which could enable me to get rich from the electric vehicle (EV) revolution.

I think Vertu Motors (LSE: VTU) could be one of the best ways for me to execute this plan. And at current prices below £1 per share, I think it could be too cheap to miss.

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A growing market

Britain is the fifth largest European market for electric passenger vehicles. Yet according to researchers at Statista battery- and hybrid-powered vehicles command a market share of below 20%.

This gives car retailers like Vertu Motors plenty of upside to exploit as interest in EVs takes off. According to the Office for National Statistics, 44% of Britons say they are likely, or very likely, to switch to an all-EV from one that uses fossil fuels over the next decade.

Four out of 10 of these people said that they plan to make the switch over the next five years too.

BIG business

I think it’s particularly well-placed to capitalise on the EV boom. The internet is becoming an increasingly important channel for car retailers in the post-pandemic landscape. But customers who are looking to buy an EV are more likely to visit a showroom for face-to-face advice on these new technologies.

It has a huge network of almost 160 dealerships on its books. This broad geographic wingspan could give it the edge when it comes to winning EV customers.

I also like Vertu because of the huge range of EVs it stocks. The business has dealerships representing 32 of the world’s largest car manufacturers. This means it sells most of the country’s most popular EVs like the Kia e-Niro, Volkswagen ID.3 and Nissan’s Leaf.

Supply strains

The long-term outlook for Vertu is pretty bright, in my opinion. However, I am concerned that profits could suffer if problems with car production continue and stock levels are squeezed.

Latest Society of Motor Manufacturers and Traders (SMMT) data shows new car registrations fall 15.8% in April. Just 119,167 units rolled out of UK showrooms last month, it said on Thursday, with “global supply chain shortages” hampering new vehicle deliveries. Vertu has warned of the uncertainties that these supply issues pose to its business.

A cheap penny stock I’d buy

Still, I think the returns I can expect to make from owning this one over the next decade make the penny stock a great buy today. And at current prices of 51.2p per share, I think Vertu is particularly attractive. This means that it trades on a forward price-to-earnings (P/E) ratio of just 7 times.

What’s more, Vertu also offers great value in terms of dividends. Its forward yield sits at 4.1%, ahead of the 3.7% average for UK shares.

I think Vertu’s a great way for me to make money from the green revolution.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Vertu Motors. 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.

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