The Motley Fool

3 of the best dirt-cheap penny stocks to buy in August!

A pile of British one penny coins on a white background.
Image source: Getty Images

Today, I’m looking at three of the best ultra-cheap penny stocks to buy next month.

Gold star

2020’s Covid-19 outbreak proved that having exposure to gold as insurance against unforeseen catastrophes is a good idea. While stock markets crashed as investor confidence sank, demand for safe-haven assets like precious metals rocketed. Consequently, gold prices soared to record highs and investors in UK gold mining shares watched the value of their stock balloon.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Gold prices have slipped back from those peaks, but I think another charge higher could be around the corner. I expect prolonged US dollar weakness and inflationary fears to keep bullion prices bubbling nicely. Signs of renewed trade hostilities and setbacks in the pandemic battle could also spook people into buying gold.

I’d buy penny stock Serabi Gold (LSE: SRB) to play this theme. Despite the risky nature of metals excavation that can hit profits, I think at 62.5p the company could be too cheap to miss. It trades on a forward price-to-earnings growth (PEG) reading of 0.6.

The plus-size penny stock

I also think N Brown Group (LSE: BWNG) could be one of the best stocks to buy for the next 10 years. This isn’t just because value retail continues to go from strength to strength, as I mentioned again recently. It’s because its brands such as Jacamo and Simply Be give the penny stock a leading position in the fast-growing plus-size clothing market. According to Allied Market Research, this market will be worth $696.7bn by 2027. That compares with $481bn in 2019.

Models wearing N Brown's plus size ranges

It’s certainly true that retailers like N Brown face a colossal challenge as stock shortages worsen. According to the CBI, stock levels in relation to predicted sales are at their lowest since 1983. The body’s latest survey suggests stock levels will remain low in August as well. Still, at current prices, I think the UK retail share still looks mighty attractive. It trades on a forward price-to-earnings (P/E) ratio of just 7 times at current prices of 50.1p.

Growth + dividends

Cairn Homes (LSE: CRN) is another top penny stock that offers plenty of bang for a investor’s buck. City analysts think annual earnings at the Irish housebuilder will double in 2021. This means the company trades on a PEG 0.2. What’s more, at current prices of 92p, Cairn Homes carries a meaty 3.7% dividend yield, one that beats the 3% FTSE 100 average by a decent margin.

Just like in the UK, Ireland is suffering from an extreme shortage of new properties as homebuyer demand soars. Official data just showed average home prices on the Emerald Isles rise at their fastest pace for two-and-a-half years. And I expect sales to remain strong as interest rates in the country will likely remain at rock-bottom levels for some time. I’d buy Cairn Homes despite the damage an economic downturn could cause to the penny stock’s profits.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.