2 FTSE 100 penny stocks I’d buy as the market falls

Jon Smith takes a look at the recent fall in the FTSE 100, and notes two penny stocks that appeal to him to buy right now.

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The FTSE 100 is currently on track for the fifth consecutive week of losses. However, falling markets give me an opportunity to scout out potentially oversold stocks to buy. Some might have fallen below 100p, making them penny stocks. Here are two FTSE 100 penny stocks that I think I’m going to buy.

Not changing channel

The first one is ITV (LSE:ITV). The share price dropped below 100p back in February, and currently trades at 67p. Over a one-year period, this marks it down by 46%. It’s quite a fall for the British media company.

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The main driver behind this move was the release of full-year results earlier this year. Even though total revenue was up 28% year-on-year to £1.76bn, the share price fell sharply due to concerns around investment. Part of this spending is on ITVX, the streaming platform that the business says will double the amount of streaming viewing.

However, with such tough competition in this area already, investors were clearly concerned that this could be an expensive mistake, hence the share price fall. I think this is the main risk for the penny stock over the next year.

Despite this slump, I think ITV is a buy right now. Streaming viewing hours were up 22%, with the family share of viewing also increasing slightly. This highlights that the business is growing market share. It also has a wide range of media, ranging from shows like Love Island, to sporting events and dramas like Line of Duty. This means a wide range of appeal to all kinds of advertisers, helping to boost revenue.

A penny stock with pedigree

The second penny stock I like now is Lloyds Banking Group (LSE:LLOY). The share price is down 9% over the past year, and has taken a 19% hit in the past three months alone.

I recently wrote a more in-depth piece on the bank, saying why I think the next move could be higher for the stock. Its £4bn investment over the next few years in the strategy refresh could be just what it needs to start outperforming again. A push towards digital and simplifying the customer experience should boost retention of existing clients but also attract new ones.

Higher interest rates are also helping the group. With rates now at 1%, the margin it can make in the process of lending out money versus paying interest on deposits is much larger.

There’s a risk that the firm could suffer if the UK returns to a recession, as hinted at by the Bank of England late last week. The cost of living crisis could dry up spending by many retail account customers, potentially leading to loan defaults.

I’m going to take advantage of the fall in both penny stocks by adding them to my portfolio.

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Jon Smith has no position in any share mentioned. The Motley Fool UK has recommended ITV and Lloyds Banking Group. 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.

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 considered, so you should consider taking independent financial advice.

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