2 penny stocks to buy for a winning portfolio

Recent market volatility gives me an opportunity to buy top stocks at rock-bottom prices. Here are two top penny stocks with excellent earnings potential.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Young woman preparing home budget, using laptop and calculator

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

sdf

I think these top penny stocks could help me make huge long-term returns. Here’s why I think they could be a key part of a winning shares portfolio.

Aura Energy

Price: 10.3p per share
Market cap: £54.2m

Mining business Aura Energy (LSE: AURA) is evolving from a uranium explorer to a producer of the radioactive material. I think it could therefore be a great way for me to make money from rising nuclear energy demand.

This particular energy stock is focussed on developing the 800,000-pound-a-year Tiris uranium project in Mauritania. Fresh drilling work began in May to upgrade resources at the site which Aura hopes will produce first material in 2024. It believes the programme could lead to annual production of 3m and 5m pounds of uranium before 2029.

I think Aura has terrific earnings potential as the world moves towards low-carbon energy sources. Nuclear energy use is tipped to rise steadily as the burning of fossil fuels declines. Nuclear power will also be essential for helping the lights stay on when adverse weather conditions impact renewable energy generation.

This is why the International Atomic Energy Agency thinks nuclear energy capacity could reach 792 gigawatts (GW) by 2050. That’s more than double the 393 GW recorded in 2020.

Remember that Aura still has some way to go before Tiris starts producing. Any setbacks with mine development could derail profits forecasts and prompt Aura to embark on fresh fundraising. Shareholders could be tapped for cash or more debt added to the balance sheet.

Such risks are part-and-parcel of investing in small-cap mining stocks. And it’s my opinion that buying this penny stock today could be a good idea for me before its share price potentially explodes.

Inland Homes

Price: 41.5p per share
Market cap: £97.7m

Rising interest rates pose a threat to Britain’s housebuilders by putting homeowner affordability under even more pressure. But I’m still tempted to invest in penny stock Inland Homes (LSE: INL) right now.

Recent trading updates from across the industry show how resilient demand remains despite recent Bank of England action. On Tuesday, for instance, Bellway said that sales reservations per week were up 5.9% between 1 February and 5 June. Critically the firm said that “ongoing positive price momentum continues to offset build cost inflation” too.

Inland Homes is set to release its own set of financials in the coming days. I’m expecting another set of impressive numbers that could help its share price to rise strongly.

The company’s low valuation certainly gives plenty of room for a share price re-rating. The penny stock trades on a forward price-to-earnings (P/E) ratio of just 6.7 times. I think Inland Homes could prove an lucrative long-term investment as historically-low interest rates would appear here to stay. In my opinion, homes demand looks set to outpace supply for years to come.

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 assessed. Consider taking independent financial advice.

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

More on Investing Articles

UK financial background: share prices and stock graph overlaid on an image of the Union Jack
Investing Articles

Could the Vodafone share price reach £1 in 2025?

The Vodafone share price is slowly rising as recovery signs begin to emerge. But could the stock soon reach £1…

Read more »

Investing Articles

Here’s what needs to happen for the BT share price to reach £5

The BT share price is up 40% in the last 12 months, but could this be just the beginning of…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

What needs to happen for the Tesco share price to reach £5?

The Tesco share price is up 27% in 12 months, but could this double-digit growth continue to £5? Zaven Boyrazian…

Read more »

A pastel colored growing graph with rising rocket.
Investing Articles

3 US growth shares that could surge in August

As we head towards August, there are a number of exciting growth shares that might be close to taking off…

Read more »

Middle aged businesswoman using laptop while working from home
Investing Articles

This US stock could change the face of artificial intelligence

This US stock is a leader in agentic artificial intelligence and could dramatically change the way companies work in the…

Read more »

Finger clicking a button marked 'Buy' on a keyboard
Investing Articles

Analysts have upgraded this FTSE 100 stock to Buy. What should investors do?

Associated British Foods shares have been uninspiring for some time. But is it finally time to consider buying the FTSE…

Read more »

Man changing battery on electric bicycle
Investing Articles

Prediction: in 12 months the sizzling National Grid share price could turn £10,000 into…

It's been another solid year for the National Grid share price and the dividend yield is decent too. So why…

Read more »

Businessman using pen drawing line for increasing arrow from 2024 to 2025
Investing Articles

Up 185% in 3 years, why does the market love this FTSE 250 stock

Over the past three years, this stock has vastly outperformed the FTSE 250. Dr James Fox takes a closer look…

Read more »