The 5 April deadline is quickly approaching for UK share investors to max out this year’s ISA allowance. I’ve been on the lookout for some of the best stocks to buy before the cut-off date. And I’ve come across some top quality penny stocks I’ve since added to my watchlist.
Penny stocks are companies whose shares cost less than £1 apiece. The downside is that their cheapness can make them prone to extreme price volatility. But this means a lot of UK share investors tend to stay away from them and, as a result, some truly-brilliant businesses are being overlooked.
Here are four of those penny shares I’m thinking of adding to my Stocks and Shares ISA:
#1: Legal eagles
DWF Group is a provider of legal and business services in Europe, The Americas and Asia. And it’s expanding aggressively to give revenues a serious shot in the arm. Indeed, net revenues leapt 15% in the six months to October, thanks to the contribution of its recently-acquired RCD division in Spain. Bear in mind though, there’s always the risk that acquisitions can fail to live up to expectations and that integration with the wider group can throw up other problems. DWF trades at 84p per share.
#2: Home comforts
A bright outlook for the Irish homes market is encouraging me to invest in Cairn Homes today. Housebuilders like this usually suffer during periods of extreme economic uncertainty. But this penny stock is benefitting from a mixture of favourable lending conditions and significant government support which is driving demand for newbuild homes through the roof (so to speak). I think it’s a top buy despite the threat that interest rates might rise to curb inflation. This would impact affordability for many aspiring buyers that might hit demand for its homes. Cairn Homes trades at 90p per share.
#3: Cleaning up
I think McBride is a highly-attractive share for uncertain times like these. This UK penny stock manufactures household cleaning and laundry goods, the sort of products which remain in demand regardless of broader economic conditions. Revenues rose 2% in the six months to December, a result the company said reflected “continued strong demand for cleaning products due to the Covid-19 pandemic.” Meanwhile, pre-tax profit more than doubled year-on-year. I’d buy McBride despite the threat posed by increasing competition in the home products sector. It trades at 85p a share.
#4: Green giant
Getting in on the green revolution is also a great investment idea as lawmakers step up efforts to save the planet. And I believe buying shares in recycling specialist Renewi is an attractive way to do that. This penny stock — which trades at 47p per share — provides waste-to-product services across the UK and the Low Countries. Cash generation at Renewi has improved markedly recently, but be careful as debt levels remain high. The company will likely have a leverage ratio of around 2.5 times at the end of March.
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.