2 penny stocks (including a 7% dividend yield) I’d buy right now!

I think these penny stocks could be red-hot buys following recent share price weakness. Here’s why I’d buy them for my own investment portfolio today.

| 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.

Bearded man writing on notepad in front of computer

Image source: Getty Images

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 following fresh volatility on the London Stock Exchange. I believe many small-cap shares are too cheap to ignore after recent panic selling.

Here are two such companies I’m aiming to buy when I have spare cash to invest.

Anglo Asian Mining

Base and precious metals miner Anglo Asian Mining (LSE:AAZ) has slumped back into penny stock territory. It’s fallen as worries over interest rate hikes have depressed gold, silver and copper values.

Volatile commodity prices are always a threat to businesses like these. Yet I believe the rewards of owning this share over the long term outweigh the risks. At current prices of 88p per share, I think opening a position is an attractive idea.

Anglo Asian owns a string of exploration, development and production assets in Azerbaijan. And it is hoping to double metal production over the next five years by sequentially opening a string of new mines.

The business hopes, for instance, to produce 36,000 tonnes of copper by 2028. That’s up from the 10,300-11,200 tonnes it hopes to dig up this year.

Getting new production online is difficult. But work to achieve first output at its Gilar and Zafar high-grade projects in 2023 and 2024 is progressing well. Anglo Asian has a strong balance sheet to help it realise its growth strategy too. It had cash of $10.7m on hand as of March.

Charts showing how the green revolution will supercharge metals demand

The miner’s pivot towards copper could prove hugely profitable as investment in green technologies heats up. As the chart above shows, red metal demand is tipped to soar over the coming years.

Today, its shares trade on a forward price-to-earnings growth (PEG) ratio of 0.3. This is below the widely regarded value watermark of 1.

What’s more, City analysts expect Anglo Asian to pay another full-year dividend of 8 US cents per share in 2023. As a result, the miner also offers a mighty 7% dividend yield.

All things considered, I think the miner is one of the best-valued penny shares on the market.

Kodal Minerals

Lithium business Kodal Minerals (LSE:KOD) is another top mining share I have my eye on today. Though, unlike Anglo Asian, it isn’t at the producing stage just yet.

Buying early-stage miners is riskier than those already selling raw material. They don’t have the cash flows coming in to help fund project development. But I believe the profits Kodal could deliver over the next decade make it an exceptional buy.

It owns the Bougouni mine in Mali, an asset which may produce 220,000 tonnes of lithium-packed spodumene per annum. Demand for the silvery-white metal is tipped to balloon as electric vehicle production speeds up.

The business has agreed a $100m funding package with China’s Hainan Mining that will help it get Bougouni off the ground too. But be aware that Kodal hasn’t yet met the conditions to receive the cash.

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 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

Will it be too late to buy Nvidia stock in March?

NVIDIA stock is up more than 60% since the start of 2024. Our writer considers whether it might still be…

Read more »

Typical street lined with terraced houses and parked cars
Investing Articles

Why did Direct Line shares just soar 27%?

Direct Line shares have jumped more than a quarter in the course of today's trading session. Our writer explains why…

Read more »

Close-up of British bank notes
Investing Articles

These 2 shares are Dividend Aristocrats. Which should I buy this March?

Our writer likes the business model of this pair of FTSE 100 Dividend Aristocrats. So why would he only consider…

Read more »

Frustrated young white male looking disconsolate while sat on his sofa holding a beer
Investing Articles

I bought 49 Unilever shares in June. Here’s what they’re worth today

Harvey Jones bought a modest amount of Unilever shares last summer hoping the stock would soon recover. He's having to…

Read more »

BUY AND HOLD spelled in letters on top of a pile of books. Alongside is a piggy bank in glasses. Buy and hold is a popular long term stock and shares strategy.
Investing Articles

I reckon these shares, potentially 20% undervalued, are Warren Buffett’s type of investment

Oliver Rodzianko thinks Games Workshop is an absolutely stellar investment. As it's potentially undervalued, he reckons Warren Buffett would agree.

Read more »

Calendar showing the date of 5th April on desk in a house
Investing Articles

Great investing habits that can boost my Stocks and Shares ISA

Forget complicated calculations and financial jargon! Our writer uses a few simple habits to build wealth inside his Stocks and…

Read more »

Young Asian woman with head in hands at her desk
Investing Articles

Why has the St. James’s Place share price crashed 30%, after FY results?

The St. James's Place share price has just fallen off a cliff. What could have gone wrong in 2023 that's…

Read more »

Family in protective face masks in airport
Investing Articles

Here’s how much I’d have if I’d bought 1,000 Rolls-Royce shares 10 years ago

Rolls-Royce shares may be flying high this year but that wasn't always the case. I'm calculating how much I'd have…

Read more »