A dirt cheap penny stock for investors to consider in June!

This top penny stock’s grossly undervalued, according to our writer Royston Wild. Here’s why he thinks it’s one of the best value stocks out there.

| 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.

Close up of a group of friends enjoying a movie in the cinema

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.

Investing in penny stocks is a high-risk, high-reward strategy.

On the downside, prices of these small-cap companies can be highly volatile. Heavy selling of their shares can ramp up when industry or economic conditions worsen and fears over their survival increase.

But when investors get it right, buying young companies when they trade below £1 can deliver stunning — and in some cases, life-changing — returns. This is because these shares can have much better growth (and therefore share price) potential than the broader stock market.

Should you invest £1,000 in Airbnb right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Airbnb made the list?

See the 6 stocks

Everyman Cinema Group (LSE:EMAN) is a company I think has significant long-term investment appeal. And following recent share price weakness, I believe it’s worth serious consideration from clever investors.

Everyman's share price performance since 2019.
Created with TradingView

Industry pressure

Investing in cinema stocks has been a risky strategy since the end of Covid-19. Changes to viewing habits and the movie studio model means box office takings remain some way off their pre-pandemic highs.

Weak bookings over the US Memorial Day weekend underlined the scale of the problem. Despite high-profile releases Furiosa: A Mad Max Saga and Garfield, the American box office endured its worst performance since 1995.

So why on earth would I consider buying Everyman shares?

Put briefly, it offers more than the bog standard film theatre, which means it’s more resilient to the state of the broader cinema industry.

Flying high

The AIM-listed firm operates 44 venues across the UK, from which it runs the latest blockbusters, silver screen classics, independent movies and specal film events. Patrons can also grab some food in its restaurants and have a drink delivered to their seat.

This has proved to be a winning formula. As Everyman explains: “With a focus on hospitality, Everyman is re-defining how film is being consumed and is therefore outperforming the wider cinema market”.

Latest financials in April reveal how its business model’s thriving. Admissions jumped 9.5% over the course of 2023, to 3.75m, while the average ticket price rose 3.2% to £11.65.

With food and beverage spend per head soaring — up 10.2% year on year to £10.29 — sales jumped 15.3% from 2022 levels, to £90.9m.

Growth potential

Everyman’s formidable results fly in the face of the broader cinema industry’s problems. And the business — which grew its market share 30 basis points last year, to 4.8% — believes it can continue making strong progress.

Last year it completed four organic cinema openings during the year. It also acquired two Tivoli cinemas in December after previous owner Empire Cinemas went into administration.

Consumers in the UK are feeling the pinch, and Everyman’s sales might cool if economic conditions remain tough. But I believe the eventual rewards this penny stock could deliver still make it a top buy.

And especially at current prices too.

A bargain penny stock

Losses are narrowing sharply following the end of the pandemic. But the company isn’t expected to punch a profit until 2025. This means a price-to-earnings (P/E) ratio isn’t available.

Everyman's price-to-book (P/B) value.
Created with TradingView

However, Everyman’s price-to-sales (P/S) ratio can be used to gauge its value. And today, this sits at just 0.5, comfortably below the value benchmark of 1.

All things considered, I think value investors should give this overperforming penny stock a close look.

But there are other promising opportunities in the stock market right now. In fact, here are:

5 stocks for trying to build wealth after 50

The cost of living crisis shows no signs of slowing… the conflict in the Middle East and Ukraine shows no sign of resolution, while the global economy could be teetering on the brink of recession.

Whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times. Yet despite the stock market’s recent gains, we think many shares still trade at a discount to their true value.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. We believe these stocks could be a great fit for any well-diversified portfolio with the goal of building wealth in your 50’s.

Claim your free copy now

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

artificial intelligence investing algorithms
Investing Articles

Up 272% in just a year, is Palantir stock just getting started?

This writer recognises that Palantir has grown its business very well -- but does the stock price offer him an…

Read more »

Runner standing at the starting point with 2025 year for starting in new year 2025 to achieve business planing and success concept.
Investing Articles

Up 50%? The Aston Martin share price forecast is mind-blowing! 

If analysts are right, the Aston Aston Martin share price could absolutely rocket in the year ahead. Harvey Jones says…

Read more »

Investing Articles

As the S&P 500 drops, here are 2 Stocks and Shares ISA holdings I’m watching

Our writer has different views on how President Trump's tariffs might affect these two US holdings in his Stocks and…

Read more »

Surprised Black girl holding teddy bear toy on Christmas
Investing Articles

£10,000 invested in Tesla stock at Christmas is now worth…

Tesla stock has been one of best-performing investments of the past decade. But things haven't gone to plan for investors…

Read more »

Investing Articles

Up 279% in 5 years, could Meta stock keep soaring?

Meta stock has more than tripled in five years. This writer sees lots to like about the business but also…

Read more »

Pink 3D image of the numbers '2025' growing in size
Investing Articles

25% total return in a year? Is now the perfect time to buy BP shares?

BP shares are on the front line of today's global economic and political uncertainty but analysts think they can still…

Read more »

Affectionate Asian senior mother and daughter using smartphone together at home, smiling joyfully
Investing Articles

With Cash ISA changes coming, could now be the time to consider buying shares?

Changes to the Cash ISA could lead to greater investment in the stock market. This could be a good thing…

Read more »

Investing Articles

These FTSE 100 dividend shares just got cheaper, thanks to President Trump!

Investors buying dividend shares can lock in bigger long-term yields when share prices take a tumble. These two just did…

Read more »