I think Tharisa (LSE: THS) could be a top (nearly) penny stock to buy as vehicle emissions standards get stricter. Tharisa (which trades at 115p per share) pulls platinum group metals (PGMs) out of the South African ground. And demand for its product is likely to soar as the amount of PGM content that is required in catalytic converters increases. In addition, this UK mining share can look forward to rising global car demand as populations grow and wealth levels in emerging markets soar.
What’s more, the PGM price outlook seems strong for some time yet as the economic recovery gets under way. The World Platinum Investment Council thinks that the platinum market will remain in deficit in 2021 to the tune of 158,000 ounces (which is a good thing as prices are stronger if there is less of a given commodity to go around). The deficit will be created by solid jewellery, investment and industrial demand (driven by the auto sector rebound), the body reckons.
Why I’d buy this ‘nearly’ penny stock
Drawing raw materials out of the earth is always risky business for companies. Exploration, development and production work can often disappoint. And this can cause share prices to fall off a cliff. However, on this front I’m encouraged by the progress Tharisa has made in recent times. Indeed, mining and processing rates hit all-time highs in the three months to June, with production rising 9% to 39m tonnes.
Besides this, I think the near-penny stock is hard for me to ignore at recent prices. City analysts think annual earnings will rise 3% in the financial year to September 2021. So Tharisa trades on an ultra-low forward price-to-earnings (P/E) ratio of 3.3 times. The digger packs a good 4.8% corresponding dividend yield too.
A FTSE 100 dividend stock
Telecoms titan Vodafone Group (LSE: VOD) also falls just outside penny stock territory today. At 119p per share the telecoms titan trades just above the £1 ceiling. And just like Tharisa its shares seem to offer spectacular value for money too.
The number crunchers expect Vodafone’s earnings will soar 25% year-on-year during the 12 months to March 2022. Consequently the FTSE 100 firm trades on a forward price-to-earnings growth (PEG) ratio of 0.5. Any reading below 1 suggests that a UK share could be undervalued by the investment community.
Meanwhile Vodafone is predicted to keep its reputation as a generous dividend payer rolling on. The yield for fiscal 2022 thus clocks in at a mighty 6.5%.
There’s a lot I like about Vodafone today. It is well placed to benefit from the 5G rollout and the rising popularity of flexible working. It has great exposure to fast-growing regions of Africa (revenues at its Vodacom unit soared 27% in the three months to June, to €1.46bn). And the FTSE 100 firm has terrific cash flows and a strong balance sheet (following the flotation of its towers business) which it can use to keep paying monster dividends. I think it’s a great UK share for me to buy, despite the threat posed by intense competition in its global markets.
