The increasingly worrying state of inflation is causing many investors to move their capital out of the stock market and into low-risk instruments like savings accounts. After all, they’re a safe haven from volatility and many can be accessed instantly should a bill need paying.

Yet even with the interest rate hikes, the gains offered by even the best saving vehicles pale in comparison to 10.7% inflation. In other words, this decision is actually destroying investor wealth in terms of spending power.

With that said, for investors with a spare £1,000, what are the best shares to buy today to stay ahead of inflation?

Food stocks for thought

Even if the UK enters the recession economists fear, demand for food isn’t going anywhere. After all, it’s a staple item that humans can’t live without – literally.

This is how two promising enterprises recently came across my radar: Anpario (LSE:ANP) and Benchmark Holdings (LSE:BMK). These small firms specialise in helping livestock farmers take better care of their herds, reducing medical expenses, as well as improving protein quality and yield.

Anpario is a global producer of medical feed additives for poultry, ruminant, swine, and fish livestock. The group uses all-natural ingredients across its product portfolio and this commitment has proved advantageous as the regulatory landscape shifts. For example, in 2020, China banned all antibiotic growth promoters. This move disrupted many of Anpario’s competitors while creating a new market opportunity for the business.

Benchmark Holdings is a bit more unique. The company uses genomics to breed disease-resistant fish. Not only does this improve the end product for consumers, but it also reduces the impact of overfishing on natural ocean habitats.

Both stocks are achieving impressive double-digit growth. And while Benchmark has yet to cross the threshold into profitability, underlying EBITDA margins are trending upwards, with analyst earnings forecasts expecting a positive net income by 2024.

High growth comes with risk

With food supply becoming an ever more present concern courtesy of global warming, both of these penny stocks have long-term potential. At least, that’s what I think. Yet, like all small businesses, there remains a long trail ahead.

With interest rates on the rise, access to vital external capital is getting more expensive. Both companies are flooded with cash and other liquid instruments to meet their short-term liabilities. However, funding new growth endeavours will undoubtedly prove more challenging as the current economic storm continues.

This uncertainty is arguably why both stocks have dropped by more than 25% in the last 12 months. And this volatility isn’t likely to disappear any time soon.

Nevertheless, these businesses appear to be on track to hit their milestones, even with all the latest round of disruptions. The risk level is undoubtedly high. But in the long term, investors could be immensely rewarded for their patience.

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Since climate change and other issues aren’t going to be solved overnight, ESG investing looks like it’s here to stay. But apart from the moral side of this strategy, can it generate substantial returns for my portfolio? I certainly think so.

And there’s one business that has come back onto my radar that could be one of the best ESG investments of 2022 and beyond.

Saving the world… one fish at a time

Global warming is often foremost in people’s thoughts regarding the environment. Yet there are plenty of other areas where rapid change is needed. One, in particular, is the fishing industry. With humanity’s insatiable appetite to consume marine wildlife, conservationists are increasingly concerned about dwindling fish populations, water pollution, and habitat degradation.

To put in perspective how serious the problem has become, an estimated 70% of the global fish population has been depleted. That poses a serious threat to the global food supply over the long term. But Benchmark Holdings (LSE:BMK) claims to have found a solution.

This biotechnology company operates in a rising industry called aquaculture. This sector specialises in breeding fish specifically for human consumption. And, in turn, reduces the reliance on capturing wild fish from the oceans.

Benchmark has been using its scientific expertise in genomics to breed fish that are resistant to most diseases. At the same time, the group has developed its own specialised feed that improves mortality, as well as researching new medicines for treating infected fish.

The end result is a higher quality food source for humans without depleting and damaging the ocean environment. To me, that sounds like an excellent candidate for an ESG investment. But while the cause is noble, is this a high-quality business?

An ESG stock worthy of investment in 2022?

Benchmark recently released its full-year results. And, in my opinion, there is reason to be excited. Revenue over the last 12 months grew 18%, reaching £125.1m. Meanwhile, ignoring the effects of exceptional items, adjusted operating profits shot up 37% to £10.8m.

Needless to say, that’s quite an impressive level of growth. And with the demand for the group’s solutions bound to increase exponentially in 2022 and beyond, I don’t think this upward trend will be slowing down anytime soon.

However, like all investments, this ESG stock is far from risk-free. While underlying earnings may be in the black, the bottom line isn’t. And it hasn’t been for several years. An unprofitable young enterprise is hardly an uncommon sight.

And to stay afloat, management has racked up a considerable amount of debt. A good chunk of the firm’s outstanding obligations is maturing within the next two years. And while the company has outlined a plan to renew or replace these credit facilities, additional capital might need to be raised through equity, causing dilution.

But even with this caveat, Benchmark looks like it’s perfectly positioned to benefit from some solid future tailwinds in the aquaculture industry. That’s why I think it could be one of the best ESG investments for my portfolio in 2022.

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However, this comes with a downside. Smaller companies can grow faster than larger corporations, but they are also riskier investments.

As such, I cannot take their growth for granted. So I will be keeping a close lookout for the challenges these businesses may face when I buy them. 

Penny stocks for growth

Seeing Machines (LSE: SSE) designs and produces driving safety technology. The £450m market capitalisation company is still in its early stages of growth. Revenues are expected to total A$47m this year.

However, sales have grown at a compound annual rate of 26% over the past six years. I think it is likely this trend will continue as organisations try and improve efficiency and digitisation.

Analysts appear to agree. Sales are projected to jump to nearly A$60m in 2022. 

Unfortunately, the group is still losing money. This is the most considerable risk involved with this stock. Losses have been funded over the past six years by issuing new shares diluting existing investors. With no sign of profits on the horizon, it seems likely the company will continue to ask investors for more cash. 

Despite this risk, I am attracted to the enterprise for its growth potential. 

Another penny stock I would buy for growth is aquaculture biotechnology company Benchmark Holdings (LSE: BMK). The group develops treatments for the aquaculture industry to help improve output and reduce wastage. 

As the world’s population continues to expand, food security is becoming a pressing issue. Therefore, it seems likely technology to help improve food production yield will continue to be a hot market. 

Benchmark’s established reputation in the sector, coupled with the group’s existing portfolio of products, puts it in a great position to capitalise on this trend, in my view. 

Challenges the enterprise could face include competition and regulation. These may weigh on growth if the firm has to hike spending to deal with additional regulatory requirements. 

Economic recovery

I think one of the best penny stocks in the oil and gas sector is Jadestone Energy (LSE: JSE). 

Over the past couple of years, the group has built a portfolio of oil and gas assets throughout the Asia-pacific region. It concentrates on cash generative, low-cost prospects. This strategy is now paying off thanks to higher oil prices. 

During the first half of 2021, the group generated $54m of cash from operations. It ended the period with net cash on the balance sheet of $48m. 

This cash provides further scope for expansion. It will also help support Jadestone’s dividend. The shares currently support a dividend yield of 1.6%, a rare quality among penny stocks. 

Unfortunately, as an oil producer, the price of this commodity dictates its fortunes. A fall in oil prices could have a significant impact on its bottom line. This is the leading risk I will be keeping an eye on going forward. 

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Global Ports Holding said that revenues came in at $79.4m during the 15 months to March 2021. This compares with sales of $70.4m in the 12 months to December 2019. However, on an adjusted basis, turnover clattered to just $26.8m. This removes the impact of accounting issues that saw capital expenditure for the construction of the Nassau Cruise Port treated as operating expenses and revenues.

Last year’s sales collapse caused pre-tax losses to balloon to $122.7m for the 15 months to March 2021. Global Ports Holding recorded a loss of $24.5m in 2019.

Calmer seas

It said that it was effectively forced to close its ports from the second quarter of last year when the Covid-19 crisis caused “unprecedented disruption to the global travel sector”. Consequently, just 1.3m passengers passed through its ports in the five quarters to last March. That compares with the 5.3m it welcomed during 2019.

Pleasingly though, the UK share said that it has witnessed “a significant increase” in cruise ship activity since the end of March. There are expected to be 190 ships on the high seas this month, up from 48 in May. What’s more, Global Ports Holding added that “we continue to see new reservations coming across most of our network and we are encouraged by the current cruise line reservation trends for 2022.”

On the rise

Benchmark Holdings (LSE: BMK) hasn’t moved the dial either after it released fresh trading details of its own. At 66p per share, this penny stock remains 55% more expensive that it was this time last year.

Benchmark provides three main services to the so-called aquaculture industry. The UK share provides medicines that allow intensively-bred fish stocks to remain healthy. It sells special feed to grow the creatures and keep them in good shape. And its genetics division produces fish eggs (particularly in the field of salmon).

Sales scale new heights

The company said that revenues jumped 17% in the three months to June 2021, to £28.3m, with growth particularly strong in Genetics, where turnover rose 21%. Advanced Nutrition and Health sales, meanwhile, increased 15% and 20% respectively year-on-year.

Benchmark’s soaring top line didn’t stop the business recording further pre-tax losses in the quarter. However, these narrowed to £5.9m from £23.2m a year earlier.

Chief executive Trond Williksen said: “Our three business areas performed strongly, and we achieved a major strategic milestone with the successful commercial launch of Ectosan Vet and CleanTreat.” The firm claims that Ectosan is the first sea lice treatment to be launched for more than 10 years.

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Two unique biotech companies have caught my attention, both of which seem to have incredible potential for growth. Would I buy them now?

A biotech stock breeding success

Fishermen have been struggling to keep up with the rapidly rising demand for fish through traditional fishing methods. To keep up, many businesses are turning towards aquaculture. That’s an industry where the fish are bred, raised and eventually harvested for consumption, rather than catching them wild.

Between 1990 and 2018, aquaculture’s total fish production increased over 520%. And this created a very favourable environment for Benchmark Holdings (LSE:BMK).

The biotech stock has three operations. Its genetics department uses genomics to breed fish and improve their resistances towards most diseases. The second manufactures specialised food that improves health and reduces mortality. The final segment focuses on developing specialised medicine to treat infected salmon.

For example, sea lice are a plague that costs salmon breeders nearly $1bn worldwide each year. However, Benchmark successfully created an award-winning solution that eliminates sea lice without harming the fish.

Combined, the company enables farmers to maximise their efficiency and yield. The stock has a strong balance sheet and clearly operates in a market growing at exceptional rates.

However, there are some considerable risks. The business is still young and has yet to generate any profits. What’s more, its portfolio of products, while impressive, remains quite limited. As such, it looks overly dependent on certain key products in my eyes.

Providing a path through clinical trials

The pharmaceutical industry is one of the most highly regulated sectors in the market today. And while the regulations protect patients’ health, they also introduce complications for pharmaceutical companies.

Fortunately, Ergomed (LSE:ERGO) has a solution. The biotech stock is a global provider of specialised clinical trial services for the drug development industry.

Its pharmacovigilance (PV) segment performs drug safety monitoring throughout all stages of development, as well as after a product enters the market. The firm also provides research management services through its clinical research outsourcing (CRO) department. These services include planning, monitoring, and reporting of clinical trial data.

The PV and CRO industries are expected to grow by 11.6%, and 7.5%, respectively, over the next five years. Needless to say, I think this presents a considerable investment opportunity.

But there is one significant problem I’ve spotted for this biotech stock — Brexit. As the UK is no longer part of the EU, the regulatory environment for drug development has already begun to change. And this continues to create complications and delays throughout the drug development process.

Consequently, any delays in clinical trials will impact Ergomed’s revenue, at least temporarily. However, the degree of impact should be limited as the firm generates most of its revenue outside the UK. 

The bottom line

Both of these biotech stocks have performed exceptionally well over the last 12 months. Combined, their share prices have increased by over 100%!

And while I see enormous potential in both businesses, there remain several unknown factors that make me slightly cautious. Therefore, I’m not adding either stock to my portfolio just yet. But I’m definitely going to keep an eye on them.

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One play on this trend is the AIM-traded producer of nutrition, breeding and health products for the global aquaculture industry Benchmark (LSE: BMK).

Building for the future 

For the past two decades, Benchmark has been in investment mode, spending heavily to increase its global footprint and re-investing all of the cash generated from its fledgeling operations back into the business. It now looks as if all this hard work is starting to pay off.

For the six months ended 31 March, adjusted earnings before interest, tax, depreciation and amortisation jumped 91% to £6.3m while adjusted profit before tax hit £4.4m. Revenue for the period grew 9% to £75.7m.

That being said, Benchmark is still ploughing funds back into growth. The firm recently completed a £17m commercial-scale fish vaccine manufacturing site in Braintree and its disease-free fish egg production facility in Norway expects to reach full capacity by 2019. Meanwhile, the group recently tapped shareholders for £12.2m to fund a 49% interest in a “strategically important Chilean JV” giving it a large presence in Chile, the world’s second-largest salmon market.

In my opinion, management is heading in the right direction by prioritising growth over profit at this stage. The global aquaculture market is expected to grow by 5% per annum to reach a market size of $219bn by the year 2022, and it would be silly for Benchmark not to make the most of the market expansion. 

Unfortunately, as the company continues to invest, City analysts are expecting losses to continue for the next few years, but over time, Benchmark’s efforts should really pay off, and I wouldn’t be surprised if a larger competitor buys out the enterprise and its technology before it has a chance to break even.

Follow the money 

Unlike Benchmark, Hikma Pharmaceuticals (LSE: HIK) is already profitable, but growth has hit the rocks in recent years thanks to rising competition and the firm’s own mistakes.

Still, now Hikma is in recovery mode, and it looks as if the business has the unreserved backing of its management. CEO Sigurdur Olafsson recently splashed out £262k to snap up 20,000 shares in the company and was shortly followed by Chief Scientific Officer Surendera Tyagi who spent £20k.

Analysts have soured on Hikma recently because the launch of what was supposed to be a blockbuster generic version of Advair, GlaxoSmithKline’s money-spinning respiratory medicine, has been held back by the US drugs regulator the FDA.

This was supposed to be one of the company pillars of growth in 2018 and 2019, but it now looks as if there will be no approval until at least 2020. In the meantime, the City believes Hikma’s growth will be sluggish with earnings growth of just 5% is pencilled in for this year.

Nonetheless, as with Benchmark, I believe that over the long term, Hikma’s growth will return as the world’s ever-expanding population demands access to more affordable healthcare. The stock might not look cheap today, trading at 20 times forward earnings, but the potential opportunity available to the business over the long term is clear.

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With that in mind, here are two stocks which offer surprisingly strong growth prospects for the next couple of years.

Improving performance

Reporting on Tuesday was aquaculture health, nutrition and genetics business Benchmark (LSE: BMK). The company’s results for the year to 30 September showed that it continues to make progress with the delivery of its strategy. For example, revenue increased by 28%, rising by 13% on a like-for-like (LFL) basis. It continues to invest in a state-of-the-art production capacity in genetics and animal health, with £21.5m spent on it during the year. Additionally, £15.2m was invested in R&D over the year.

While the company’s bottom line remained in the red during the period, losses were reduced by 61%. Looking ahead to the current financial year, Benchmark is expected to return to profitability. It is then forecast to record a rise in earnings of 90% in the next financial year. This could improve investor sentiment over the medium term. With the company trading on a price-to-earnings growth (PEG) ratio of just 0.5, it seems as though sentiment has scope to improve significantly in future.

Certainly, the stock remains relatively high-risk and is still not yet a profitable entity. Therefore, in the near term it would be unsurprising for its share price to be volatile. But with a bright set of forecasts, its price could deliver high capital growth over the medium term.

Consistent growth prospects

Also offering high growth prospects is online fashion retailer ASOS (LSE: ASC). The company experienced a challenging period between 2013 and 2015, when its strategy of investing in new international markets was called into question after disappointing financial performance. However, under its current management team it seems to have developed a successful strategy which has seen it generate growth in earnings of 43% and 25% in the last two years.

Looking ahead, ASOS is forecast to post a rise in its bottom line of 26% in each of the next two financial years. Beyond that, more growth could be ahead as it seems to have a successful strategy as well as improving levels of customer loyalty.

As such, while a price-to-earnings growth (PEG) ratio of around 2 suggests that its shares are expensive at the present time, there could be further upside ahead. That’s especially the case if the current bull run continues and investors become increasingly optimistic about the valuations placed on stocks that are able to offer above-average earnings growth.

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The manufacture and sale of animal feed and drugs is probably more profitable than the human sides of these businesses because there’s less competition and the market is much more substantial. 

Eco Animal Health Group (LSE: EAH) is a great example. Over the past five years, as the company’s revenue has expanded by just over 100%, pre-tax profit has exploded 310% and earnings per share have risen 210%. On the back of this growth, shares in the company have gained 285% over the past three years. 

Expanding into new markets

Eco sells animal health products around the world, and as the company figures show clearly, this is a lucrative and rapidly expanding business. 

The firm’s latest product release is Aivlosin, a drug to control of both acute and chronic respiratory and enteric diseases. In the past year, Eco has received approval to sell this treatment in Egypt, Turkey, the US, Malaysia, Mexico, and Brazil. 

These new approvals should allow the group to continue on its growth trajectory. City analysts are predicting earnings per share growth of 42% for the year ending 31 March 2018, following earnings growth of 68% for the last fiscal year. 

So, even though the shares look expensive at 25.7 times forward earnings, when you factor in Eco’s growth, the stock is actually cheap. Specifically, the shares trade at a PEG ratio of 0.6. A yield of 1.3% is also on offer and the payout is growing steadily. 

Investing for the future 

Benchmark Holdings (LSE: BMK) could be a future giant. Even though the company is expected to report revenues of £135m (up 24% year-on-year) for the year ending 30 September 2017, profit remains elusive and a loss of £12.5m is expected. Still, this performance is a reversal of fortunes for the group after warning on sales in the first half. 

However, the company has a medicines and vaccines pipeline of 46 products, of which five are in regulatory phase, and 10 are in pre-regulatory development trials. Benchmark is essentially two businesses, a nutrition business (animal feed) and a pharma one. The latter is growing rapidly with sales up 49% to the end of September according to a trading update from the company published today. The feed business is growing at only half this rate. 

A course for growth 

As Benchmark’s new products hit the market, the group’s growth should explode and this will be good news for investors. So, while the business might not look to be a great buy today (as it is currently lossmaking) over the next decade or so, as new treatments hit the market, earnings should surge. 

I’m more positive on its outlook than most other early-stage pharma companies in the same position as the business is already producing a steady stream of revenue, which will support it through the development stage. 

If the firm can bring all of the products currently in its pipeline to market, this certainly looks to be one stock you might regret not buying.

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The company’s shares have now fallen by 47% this year. Should shareholders simply ditch this disappointing stock before things get worse?

What’s gone wrong?

One of the firm’s big hopes is a new treatment for sea lice, which have become a serious problem for producers of farmed salmon. Back in June, the company said commercial trials were due to start “in the coming weeks”. The product was expected to contribute “significant revenues” in the second half of the year.

Unfortunately, this hasn’t happened. In Friday’s update, we learned that the trials have still not started and are unlikely to do so before the end of September when the company’s financial year ends. This means the new product won’t make any contribution to revenue in the 2017 financial year.

This is disappointing as revenue from the new product was expected to offset falling sales of Benchmark’s older sea lice treatment Salmosan. This decline is serious. Sales in the group’s Animal Health division fell from £12.2m to £7.1m during the first half of this year. The division’s operating loss doubled from £3.2m to £6.7m during the same period.

Full-year outlook

Profit forecasts for 2017 were slashed in November last year, after the group warned of delayed investment and lower growth rates in certain sectors. Friday’s news is another disappointment.

Benchmark reported a pre-tax loss of £22.4m last year. Analysts expected the group to report adjusted earnings of 0.68p per share this year. But even if these forecasts are left unchanged, the stock still trades on a forecast P/E of 66. There are big hopes for 2018, but I don’t think the shares are cheap enough to be worth the risk.

I’d buy this instead

Benchmark’s management has promised more than they can deliver. By contrast, Royal Dutch Shell (LSE: RDSB) chief executive Ben van Beurden has delivered exactly what he promised.

Mr van Beurden has reduced the group’s net debt, improved cash flow and made good progress with planned asset sales. At about £22, Shell’s share price has risen off the lows of £14 seen at the start of 2016. But I think the stock still offers a useful amount of upside

The acquisition of BG Group is starting to look like a smart move, and the stock still offers a dividend yield of around 6.4%. This payout should be covered by earnings this year. In my opinion, this pretty much eliminates any risk of a dividend cut.

What about upside?

All of that is fair enough, but with Shell trading on a forecast P/E of 14.8, surely potential gains are limited? I’m not so sure. I believe the final stage of the oil and gas group’s recovery will come when the price of oil rises to a more sustainable level.

The extensive cost-cutting that’s taken place across the industry means that a fairly small increase in the price of oil could drive a big increase in profits. I believe this is inevitable at some point in the next year or two. In the meantime, this 6%+ dividend yield continues to reward patient shareholders.

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Benchmark Holdings (LSE: BMK) describes itself as an “aquaculture biotechnology and food chain sustainability business” — fish breeding, genetic technology, and stuff like that.

After a few year of losses, Benchmark is forecast to deliver a modest profit this year which should start ramping up in 2018. Right now we’re looking at a forward 2018 P/E of around 38, but in early profit days it’s not a very useful measure — and it would actually still give us an attractive PEG of 0.5. So how is Benchmark really doing?

First-half results released Tuesday showed an increase in revenue of 69% to £69.2m, with an operating loss reduced from £15.2m in the first half last year to £6.7m.

Net debt at the interim stage stood at £12.8m, down from £14.6m, but there was a big share placing again during the period, as there was last year.

Long-term prospects

The firm is clearly gaining interest in its products and services, with a new long-term collaboration project agreed with salmon producer Salmar. And Benchmark’s newly acquired shrimp breeding operation, INVE Aquaculture, has helped it to a contract with Manit Farms of Thailand for its water quality management technology.

For the rest of the year, the company says it  should broadly meet current expectations, and reckons that a number of products coming to market between 2017 and 2019 should support its long-term growth.

Further share placings could cause issues with dilution, but if we’re really close to the turnaround phase, I reckon the 73p shares look like good value — and relatively low risk as far as lossmaking “jam tomorrow” companies go.

Wooden grow

I’m more fearful when I look at Accsys Technologies (LSE: AXS), a company specialising in the chemical preservation of wood. The firm floated on AIM as far back as 2005, and apart from a couple of years of small profits in 2008 and 2009, it’s been losses all the way.

The year ended 31 March 2017 brought in a pre-tax loss of €4.4m (from a loss of €0.5m a year previously), even though revenues rose by 7% to €56.5m. Annual losses have been relatively small and the firm’s cash pile has been depleting slowly, but a share placement in April, which raised approximately €14m, was necessary — and that has to disappoint those investors who really were expecting to see profits by now.

Time running out?

In fact, almost exactly two years ago, my colleague Peter Stephens pointed out that Accsys was “forecast to post a pre-tax profit of around £0.7m in the current year, followed by a pre-tax profit of £1.2m next year“, which put it on an attractive growth valuation at the time. Back then I’d have been bullish about it myself. But it didn’t happen, and analysts are still predicting losses to continue until at least 2019. 

Meanwhile, the share price has collapsed by 96% from an early peak of around 2,260p back in 2007, to just 78p today. I’m seeing something of a niche company, disappointing false starts, and no sign of light yet. I do wish Accsys well, but right now the shares are in bargepole territory for me.

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