Here are two cheap penny stocks I’m thinking of buying in September. Give me a few minutes to talk you through them.
Riding the green machines
I expect demand for Vertu Motors (LSE: VTU) automobiles to rise in the immediate future as the economic recovery clicks through the gears. And over the longer term, sales should benefit from people trading in their petrol cars for electric vehicles (EVs) as concerns surrounding the environment rise.
Prices of EVs are tipped to fall significantly over the next decade as the cost of building expensive battery packs declines, making it more affordable to make the switch.
Many car manufacturers are also giving customers hefty financial incentives to make the leap to greener vehicles. What’s more, it’s possible that government scrappage schemes could be reintroduced to help the UK meet its carbon reduction targets. It was rumoured that a £6,000 scheme to boost EV and hybrid sales was close to being introduced last summer.
Delays in rolling out the necessary infrastructure to support large volumes of EVs could derail this predicted sales surge. Indeed, the RAC has said public charging network “will need to grow exponentially” to support likely demand.
Still, I think this potential roadblock to growth is more than baked into Vertu’s share price right now. City brokers think earnings at the penny stock will rise 121% this fiscal year (to February 2022). This leaves it trading on a rock-bottom forward price-to-earnings (P/E) ratio of below 5 times.
A penny stock for the retail revolution
I’m also interested in beefing up my exposure to e-commerce as the internet shopping phenomenon goes from strength to strength. One way I’d do this is by investing in DX Group (LSE: DX.). This penny stock provides delivery services to businesses and individuals across the UK.
DX Group is trading strongly as the economic recovery continues. And in late July, it upgraded its full-year expectations, thanks to strong trading at its DX Freight arm which specialises in shifting larger goods.
The firm is rapidly expanding to embrace these favourable conditions as well. Just this month, it’s opened new depots in Dewsbury, Grimsby and Luton, pushing the number of openings in the year to date to nine.
City analysts expect DX Group’s annual earnings to soar 30% in the current financial year (to July 2022). This leaves the logistics giant trading on a rock-bottom forward price-to-earnings growth (PEG) ratio of 0.5, making it a great cheap UK share to buy today.
Though I’m aware that the stock is at the mercy of soaring labour costs as driver numbers dry up. Recruitment firm Indeed says driver salaries have risen 5.7% between February and July. This is more than seven times faster than average wage growth on these shores.
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Vertu Motors. 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.