Yesterday, the Cineworld Group (LSE: CINE) share price closed at its cheapest since November 2020. Fears over spiking Covid-19 infections have all but obliterated all gains the UK leisure share has enjoyed over the past 12 months. Will it continue to sink?
Well, sales data from industry rival Odeon has given investors something to cheer. And this has caused Cineworld’s share price to rise 4% on Tuesday.
Odeon said that more than one million Britons had bought a ticket to watch a movie in the week to Friday, 16 July. This was the highest number of sales since the coronavirus outbreak in 2020.
Time to buy Cineworld?
Fans of Cineworld will say this illustrates the strong and evergreen hold that cinema has on the public. People will still turn up to watch a film in their droves, even during the worsening public health emergency.
Odeon’s statement will also assuage concerns that streamers like Netflix and Amazon will hammer a nail into the coffin of the cinema operators.
That said, Odeon’s news isn’t enough to tempt me to buy Cineworld’s shares. Okay, cinemagoers are returning in huge numbers at the moment. But are they returning in sufficient-enough numbers (due in part to social distancing requirements) to help the penny stock pay down its gigantic debt pile? I’m not so sure.
The company has had to take on huge amounts more debt to keep the lights on since last autumn’s warning that it could struggle to continue as a going concern. It’s also had to issue shares to get to grips with its $8.3bn net debt mountain.
As a former Cineworld shareholder, I wouldn’t be shocked to see the battered UK leisure share forced into similar drastic action in the not-too-distant future in a further possible blow to shareholder interests.
I’d rather buy this penny stock
For this reason I’m not tempted to go dip-buying following Cineworld’s recent share price fall below 60p. Indeed, there are a string of much better penny stocks I’d much rather buy today.
Take Bushveld Minerals (LSE: BMN), which trades around 11.5p. Okay, its operations might be a million miles away from those of the cinema operator. This UK share digs for vanadium in South Africa and makes components for energy storage systems.
But unlike Cineworld, whose industry is coming under increased pressure from the likes of Netflix, demand for Bushveld’s services could rocket. This is because vanadium redox flow batteries are essential in preventing energy created from renewable sources being lost.
The number of ‘green’ energy projects being built is rising at a tremendous pace, giving the company plenty of business to go out and win.
Finally, unlike Cineworld, Bushveld Minerals has a rock-solid balance sheet that it can use to develop its operations. Okay, the mining industry can be highly problematic which can damage revenues and jack up costs. But, all things considered, I think this UK share could still prove one of the best penny stocks to buy today.
Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.
Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.
The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Amazon and Netflix. The Motley Fool UK has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. 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.