I think buying UK penny stocks is a great idea for Stocks and Shares ISA investors like me. Because they can be prone to extreme price volatility, a lot of share pickers prefer to stay away from them. This leaves the rest of us with the chance to snap up some overlooked bargains.
Here are three quality penny stocks I’d add to my own ISA today. I think they could deliver brilliant long-term shareholder returns.
A green great
I believe the next decade could be a big one in the history of Renewi (LSE: RWI). Why? Well this penny stock provides waste management services in Europe and North America, where nine-tenths of the material it receives is recycled or used for energy recovery. Renewi’s therefore well placed to exploit the battle against climate change as lawmakers put recycling towards the front of their green agendas. Indeed, the boffins at Grand View Research think that the global waste recycling services market will swell at a compound annual growth rate of 5.2% between 2020 and 2027. Be aware though, that government policies can change, driven by changing consumer habits around recycling and broader green issues. Such developments might derail the company’s profits outlook over the medium-to-long term.
From Russia with love
I’d also be happy to stash Petropavlovsk (LSE: POG) in my shares portfolio. Even if the global economy rebounds strongly from 2021 the spectre of rocketing inflation is likely to keep gold prices rising, in my opinion. This naturally bodes well for companies that haul the shiny stuff out of the ground like Petropavlovsk. Unfortunately, output at the firm has suffered recently. That’s due to it processing lower volumes and grades of third-party concentrates, and total production dropped by almost half between January and March. Investors like me need to bear in mind that mining is a risky business. And there’s a range of operational problems that can cause profits to disappoint. But overall, I think the company’s long-term outlook is exciting as output at its cutting-edge Pressure Oxidation processing plant (or ‘POX Hub’) in Russia looks poised to soar.
A refreshing penny stock
The success of Britain’s Covid-19 vaccine drive means that buying Marston’s (LSE: MARS) shares might also be a good idea for me. The pub operator is looking forward to getting back to full trading on 21 June under the government’s roadmap back to normality. That explains why City analysts think its losses will narrow in 2021 before the business bounces back to profit in 2022. Of course, a fresh surge in infections could put these forecasts in the danger zone. But notwithstanding another downturn in the fight against the pandemic, I think the outlook for Marston’s remains bright. Britons have in recent years been spending a greater proportion of their cash on leisure and less on physical goods. This is a trend that looks set to continue after more than a year of social restrictions in the UK.
Markets around the world are reeling from the coronavirus pandemic…
And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.
But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Marstons. 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.