2 top penny stocks I might buy in May!

Buying penny stocks can help supercharge an investor’s capital gains. I think these two particular small-caps could be great long-term wealth builders.

| 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.

Person holding magnifying glass over important document, reading the small print

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.

I’m searching for the best penny stocks to buy for my Stocks and Shares ISA. Here are two on my radar today.

Gensource Potash

The global population is increasing rapidly. Yet there is a finite amount of land to grow crops to feed it. So demand for fertilisers is tipped to surge in a bid to boost yields.

The outlook is especially strong for potash too, a key ingredient in the yield-boosting material. This is why I’m considering adding Gensource Potash (LSE:GSP) shares to my portfolio.

The business is developing the Tugaske mining project in Canada, from which the business hopes to begin extracting material in 2024. It has plans to produce 500,000 tonnes of potash a year, a target it hiked from 250,000 last year, owing to the market’s favourable outlook.

As well as boosting yields, potash has allows farmers to use water more efficiently. The latter is especially important as climate change creates drier landscapes.

Investing in Gensource presents higher risk than buying shares in larger miners. Development issues at Tugaske could create large, unexpected costs that add extra stress to its balance sheet. And this penny stock doesn’t have the financial might of say a Rio Tinto to help it overcome any problems.

Yet I still believe this stock is an attractive buy today. The quality of its Canadian asset, allied with bright forecasts for the potash market, could lead to explosive profits growth here. BHP has predicted that global potash demand could double between the late 2010s and late 2040s.

Aura Energy

A fast-growing world population — allied with strong economic growth in emerging regions — means that energy consumption is also set to rocket. Yet fossil fuels are unlikely to plug the supply and demand gap as governments accelerate green policy.

This provides a huge opportunity for UK shares that provide renewable energy or alternative fuels. It’s why Aura Energy (LSE:AURA) is also on my shopping list today.

The company’s flagship asset is the Tiris uranium project in Mauritania where it hopes to start production next year. The site has been subject to recent resource upgrades and is now said to contain 29.6m pounds of the radioactive material. This was up 52% from prior estimates.

Nuclear energy remains a controversial topic. And so the building of a new global fleet of reactors to meet growing power demand is by no means certain.

Yet as countries try to cut oil and gas use — in response to the climate crisis and to reduce their reliance on Russian imports — there appears to be little choice but to increase nuclear output. This is one reason why the International Atomic Energy Agency reckons nuclear energy will account for 14% of total electricity by 2050. That’s up from 10% today.

And Aura, with its uranium-producing assets in Africa and Scandinavia, could be well placed to meet this growing demand. If Sweden lifts a uranium mining ban there — a position that lawmakers are edging closer towards — this penny stock could soar in value.

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 positions in Rio Tinto Group. The Motley Fool UK has no position in any of the shares mentioned. 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

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »