A specific share price doesn’t really mean a lot. UK shares priced at £5 might be better value than shares at £2, for example. But when shares are selling for significantly less than £1, it often means we’re looking at a fall. And that can mean a recovery candidate.
Here are three priced at under 100p, which I’m strongly tempted to buy for 2023.
Lithium
Lithium stocks were hot in early 2022, but they’ve faded in the second half. It still means Atlantic Lithium (LSE: ALL) shares are 33% up over 12 months, at 33p. But that’s a lot cheaper than their 52-week peak of 68p.
The market cap is a little over £200m, so it’s a small company, and there’s risk with that.
The attraction is that lithium is in great demand for batteries, including for the electric vehicle (EV) market. Shares in EV manufacturers Tesla and NIO slumped in 2022, so that’s possibly behind the weak sentiment in the lithium market.
But the EV business surely has a very big future ahead of it, doesn’t it?
It’s hard to put a valuation on Atlantic, as it’s not yet profitable, and I’d say that’s the biggest risk. But forecasters have a first profit marked down for 2025, even if only a small one.
Cybersecurity
I also like the look of cybersecurity specialist Corero Network Security (LSE: CNS).
Corero has a market cap of only a little over £50m, so it could be be more vulnerable to short-term ups and downs than most. But if I bought, it would be for the long term.
The company provides protection from web attacks, and we’ve seen a big rise in those in 2022. I think we could see significantly bigger demand in the coming decades.
We are looking at a business only just turning profitable, which I think is the main risk. In the first half of 2022, it recorded adjusted EBITDA of only $0.3m. But there was $5.8m net cash on the books.
And Corero expects to see 15%-25% contract growth for the full year.
Lloyds
Lloyds Banking Group (LSE: LLOY) is a FTSE 100 stock I just can’t overlook. It has a market cap of over £30bn. But its share price fall all the way to 45p over the past few years makes it the lowest in the top index today.
The shares have gone nowhere this year, though. And there’s a risk I could be saying the same at the end of next year too. We do, after all, face rising mortgage costs and a weakening property market. Those are not ideal conditions for the UK’s biggest mortgage lender.
Against that though, we’re looking at price-to-earnings (P/E) multiples of under seven. And dividend yields of above 5% and rising. If forecasts are correct, which is admittedly far from certain, dividends could reach 6% by 2024.
Verdict?
Though I’m tempted by all of these, they do all carry different degrees of risk. I rate Lloyds as my safest pick, and I intend to buy more. I’ll examine the other two more closely first.
