Many speculate on which penny stocks might rapidly soar in price. But here at The Motley Fool, it’s worth reiterating that we follow Buffett’s famous investing maxim: “Our favourite holding period is forever.”
In other words, we’re not simply looking to cash out when a former penny stock hits the big time. Instead, as Fools, we’re looking for long-term investments in quality — but perhaps underappreciated — companies. Here are four of our contributors’ favourites for investors to consider buying right now!
Agronomics
What it does: This investment company focuses on cellular agriculture, precision fermentation, and biomanufacturing.
By Charlie Carman. From deforestation to greenhouse gas emissions to antibiotic use on livestock, there are many problems with conventional farming methods. Agronomics (LSE:ANIC) invests in companies offering innovative solutions to these issues.
The UN predicts that global food output needs to rise 60% by 2050. Novel agricultural developments will be required to meet exploding demand, and Agronomics is well-placed to benefit.
The group has exposure to over 20 companies that produce animal products from cell cultures, such as meat, leather, and dairy. This process removes the need for animal slaughter.
Granted, these nascent biotechnologies carry significant risks. Encouraging mainstream consumer adoption is a major challenge, since many people are reluctant to consume lab-grown meat. There are also regulatory hurdles and trade barriers to contend with.
Despite the risks, trading at 7p today, this penny stock offers a promising long-term investment opportunity to consider in an industry with massive growth potential.
Charlie Carman does not own shares in Agronomics.
DP Poland
What it does: DP Poland operates the Domino’s Pizza franchise in Poland and Croatia.
By Ben McPoland. I reckon DP Poland (LSE: DPP) has a lot of promise. As I write, it’s priced at 9p, giving the small enterprise a market cap of £89m.
Admittedly, this penny stock has been drifting in recent years. This is partly because small-cap stocks are out of favour with higher interest rates, but also because the firm is still loss-making. This lack of profitability is a key risk here.
Having said that, losses are narrowing and the market anticipates a first profit next year. The move towards a capital-light, franchise-led model should help things advance from there.
Meanwhile, growth remains decent, with like-for-like sales rising 2.9% and system sales up 6.5% in the first quarter. Revenue is expected to reach nearly £66m this year, which would be 47% higher than 2023.
The company recently acquired rival Pizzeria 105, expanding its footprint into 31 new Polish cities while bringing in 76 experienced franchisees. By 2027, the firm is aiming to operate 200 Domino’s stores across Poland, up from 113 last year, then eventually 500+.
Ben McPoland owns shares of DP Poland.
Premier Miton
What it does: Premier Miton is a UK-based investment firm offering a range of funds and trusts, as well as a portfolio management service.
By Paul Summers. The last few years have been tough for holders of shares in Premier Miton (LSE: PMI). Revenue and profit have tumbled due to volatile markets and low investor confidence, with more people throwing their money into cash accounts as interest rates have climbed. The threat of US tariffs impacting the global economy has only made things worse.
Still, there’s an argument that investors may now look to active managers for ways to outperform the market. Should this be the case, the current valuation of less than 11 times forecast earnings may already offer a good margin of safety.
For those seeking income, there’s also a monster dividend yield of 10%. To be clear, this is at risk of being cut if trading doesn’t improve. So, half-year numbers, due in late May, will be worth checking out.
But risk-tolerant contrarian investors may find a lot to like here.
Paul Summers has no position in Premier Miton.
Ultimate Products
What it does: Ultimate Products owns a number of brands it uses to sell household goods primarily in its home UK market.
By Christopher Ruane. Ultimate Products (LSE: ULTP) does not strike me as a share for widows or orphans given its risk profile. This year’s interim results showed a year-on-year revenue decline, sharply higher net debt and a reduced interim dividend.
A business model based on manufacturing in the Far East and shipping to Europe has taken hits from higher shipping rates and longer journey times. That means more money needs to be tied up in inventory.
But as the owner of brands such as Salter, the company has a strong offering for retailers and their customers. Demand in such product areas is likely to be resilient over the long term. The British love of a cuppa means that, when most consumers’ kettle breaks, they immediately replace it.
Despite challenges, the company was free cash flow positive in its first half and trades on a price-to-earnings ratio of just 9.
Christopher Ruane does not own shares in Ultimate Products
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