Two penny stocks on my radar are Springfield Properties (LSE: SPR) and Netcall (LSE: NET).
I reckon both could be worth taking a closer look at for potential growth in the future.
Here’s why I’m seriously considering buying some shares for my holdings.
Affordable housing
In case you’re not familiar with the UK housing market, let me break it down. Demand is outstripping supply. This is something that needs to be addressed as the population grows. Next, as the economic turbulence continues, many are struggling to find affordable housing.
Enter Springfield Properties, a Scottish housebuilder that specialises and focuses on affordable housing.
Inflationary pressures have hurt the business, and wider industry. For example, it had to put many projects on hold as they were just deemed too costly and not feasible. Continued turbulence is something that I’ll keep an eye on that could hurt the firm. Plus, looking at Springfield’s balance sheet, debt levels could be something to be worried about, but this is a lesser worry if it can win new contracts and perform well.
It seems as inflation has fallen, the business is now moving forward once more. Over £40m worth of new business has been signed in total over the past eight months. Things are looking up, if you ask me.
Plus, at present, Springfield shares may be seriously undervalued, providing a great opportunity to buy cheaper shares. The book value of its assets and land values came in at around 125p per share. As I write, the shares are trading for 88p.
Springfield is a prime example of a stock that could soar once volatility subsides, if you ask me.
Netcall
By now, you may have read that artificial intelligence (AI) is the next big thing. Apart from the major names in the industry jostling for dominance, there are smaller firms like Netcall making waves in the industry too.
Netcall specialises in AI-powered customer engagement software and process automation. It can count impressive businesses like Legal & General, the NHS, and Nationwide, as customers.
Looking at Netcall’s story, I can understand why it’s doing well. For example, performance has been growing nicely in recent years. Over the past five years, revenue has grown by over 60%. Plus, analysts reckon this trend of growing revenue is set to continue for the next two fiscal years. However, I’m conscious that past performance is not an indicator of the future. Plus, forecasts don’t always come to fruition.
The biggest issue I have with Netcall shares right now is the valuation. The shares trade on a price-to-earnings ratio of 34. I can understand this, as the potential for the software and AI implications could offer tremendous growth in the future. However, if growth were to slow, or a product issue were to occur, the shares could drop dramatically.
Overall, I reckon there’s lots to like about Netcall. It may not be going toe to toe with the AI big boys out there, but it’s quietly chipping away and making its own position in this burgeoning industry.
