Proton Motor Power Systems

The news flow coming out of Proton Motor Power Systems (LSE: PPS) has been highly encouraging in recent weeks. Yet this hasn’t prompted an improvement in the company’s share price so far (it remains 63% cheaper than at this time last year). I think the market has missed a trick here and would consider buying Proton today.

This penny stock manufactures stationary power units and fuel cells for cars, boats, and trains that utilise hydrogen technology. And earlier this month it announced it had made “a promising start to 2022” with €1.3m worth of orders booked so far. This adds to the €3.2m worth of orders Proton booked last year.

I think Proton Motor Power System’s profits could soar as the climate emergency drives demand for cleaner energy systems. Competition from alternative power sources remains a threat, of course, but I think the potential size of the hydrogen market still makes it a top stock for me to own. 

Creightons

Beauty and personal care product maker Creightons (LSE: CRL) remains 3% more expensive that it was 12 months ago. But the share price has plummeted around 50% from September’s record peaks as investors fear the impact of rising inflation on consumer spending.

This is a risk I need to consider, along with the possibility that demand for Creightons’ hand sanitiser could sink as the pandemic recedes. However, on balance I believe the penny stock is still an attractive investment target. I think demand for its skincare and healthcare products could rise strongly as people get out and about again following Covid-19 lockdowns.

I’m also encouraged by Creightons’ acquisition of the Emma Hardie and Brodie & Stone brands last year to strengthen its branded product ranges. The business has a cash-rich balance sheet which could help it hunt for more takeover targets as well.

Triple Point Social Housing REIT

The Triple Point Social Housing REIT (LSE: SOHO) share price has fallen 16% in value over the past year. This has consequently taken the company firmly into penny stock territory. As a long-term investor I think this weakness makes it an attractive dip buy.

Triple Point provides accommodation for individuals with special needs. This is a market which is tipped for strong growth — the London School of Economics has previously said that 200,000 new specialised supported housing units will be needed between 2015 and 2030. The business is highly active on the acquisition front to fully capitalise on this opportunity too.

Changing government policy regarding social housing funding could hit Triple Point’s profits hard. But as things stand today I believe the business remains a great stock to buy for solid long-term returns in my portfolio.

The post 3 top penny stocks to buy in March! appeared first on The Motley Fool UK.

Of course, takeover offers are unpredictable. I would never buy a stock purely because I thought it might attract a buyer. Even so, I think there are a number of other attractive penny shares on the London market at the moment. Today I want to look at one company I’m considering as a possible replacement for Air Partner in my portfolio.

A turning point?

Small-cap Creightons (LSE: CRL) makes toiletries and fragrances under its own brands and for customers such as supermarkets. It did well in the pandemic by securing a big government contract to supply hand sanitiser. This helped to boost after-tax profit by 34% to £4.3m last year.

However, this isn’t some fly-by-night company that’s appeared out of nowhere. Creightons has been listed on the London market since 1986. Over the last 10 years, the shares have risen by more than 3,600%, making it a true penny stock success story.

Creighton shares have risen by 28% over the last 12 months, but the stock is now well down from the 134p high seen in September last year. In my view, this retreat represents a reality check — it could take a little time for profits to resume growing after last year’s surge.

I think this could be a buying opportunity, as the stock’s valuation now looks quite affordable to me.

Setback or opportunity?

When a share price goes into reverse it’s always worth showing some caution. Some companies never recapture their lost form.

In this case, one potential cause for concern is that there were some director share sales in October and November last year, when Creightons’ share price was still over £1. I think this suggests that company insiders thought the share price might be at a short-term high.

However, executive chairman William McIlroy still has a 23% stake in Creightons, worth nearly £13m. Managing Director Bernard Johnson owns 8%. I’m confident both men will be motivated to continue the development of this business — and perhaps find a trade buyer before they decide to retire.

Why I’d buy this penny stock now

Creightons share price slide has left the stock trading on around 15 times earnings for the last 12 months. This business doesn’t have any broker coverage. This means there aren’t any broker earnings forecasts for the current year, which ends on 31 March.

However, my reading of the recent half-year results suggests that a fairly stable performance is likely during the remainder of the current financial year. If I’m right, then the stock looks reasonably valued to me for a business that’s historically been quite profitable.

I’d be quite comfortable adding a slice of Creightons to my portfolio today, as a long-term holding.

The post I was right about this penny stock in January. Here’s what I’d buy now appeared first on The Motley Fool UK.

Here are two penny stocks I’ve been considering this month.

A penny stock to buy

I’ve been looking at Creightons (LSE: CRL) as a potential buy for my portfolio. It’s a developer and manufacturer of toiletries and fragrances for its own brands and also private labels. It provides outsourced manufacturing for third-parties too.

The share price is 97.5p as I write, so only just in penny stock territory. In fact, as recently as September the share price was around 130p. I view the stock decline as general market weakness, and not about anything specific to the company’s performance.

Even though Creightons is a penny stock today, with a market value of only £68m, the company is showing signs of being a quality operator. For example, it’s able to generate double-digit returns on its capital. It has been able to increase its operating margin almost every year from 2012 when it was as low as 1.6%. In the company’s fiscal year 2021 (the 12 months to 31 March 2021) the operating margin had improved to 8.8%. These are key characteristics I look for before investing in a company.

The growth has also been impressive of late. Revenue grew 29% in Creighton’s most recent year, and profit increased further by 37%. Some of this growth was from sales of hand sanitiser due to the pandemic, so may be considered a one-off. This may mean that revenue growth slows, so it’s a risk to keep in mind.

One further risk to consider is the lack of analysts covering the stock as the company isn’t large enough to warrant professional research. Therefore, I have to be confident in my own forecasts before I invest. 

But on balance, I like the potential here. I’m considering this penny stock for my portfolio.

And one to avoid

I also came across AO World (LSE: AO) as a potential penny stock investment. It’s an electrical products retailer operating across Europe and offering a range of kitchen appliances and home electricals.

Revenue growth has been impressive in recent years, so there might be a good investment case here.

However, the company has only recently become a penny stock as the share price dipped to 95p at the end of November. The price was over 400p at the start of 2021, so something must have gone wrong.

Well, in the most recent half-year results to 30 September, the company said it made an operating loss of £11m. This was down from a profit of £16m in the same period one year ago. The company said it built up its cost base as it expected revenue growth to continue. Multiple issues now mean revenue will be flat or even potentially decline by 5% for the full year.

The company has really suffered due to supply chain constraints and cost inflation recently. I don’t expect these problems to ease for a little while longer. So, as it stands, I won’t be investing in AO World until I see some evidence that these issues are easing. If they do, I’ll revisit the investment case here.

The post Penny stocks: here’s 1 to buy, and 1 to avoid! appeared first on The Motley Fool UK.

A penny stock for the ages

Britain’s has been a top destination for overseas students for centuries. In fact, latest data shows that UK universities are perhaps more popular today than ever before. According to the Higher Education Statistics Agency the number of non-UK students enrolled in institutions jump 12% in the 2019/2020 academic year to a record 556,625.

It seems that the long-term outlook for accommodation provider Empiric Student Property remains quite robust then, at least in my opinion. And while bookings for the upcoming academic year are lower than they would be during this point in previous cycles, activity is picking up as pandemic restrictions are lifted. I think this penny stock is a great growth share to buy, even if its more conservative approach to acquisitions could see it lose business to rivals.

Looking good

The decision to begin making hygiene products has helped save Creightons’ bacon and keep revenues and profits rising during the Covid-19 crisis. Indeed, financials this week showed sales rose 29% in the 12 months to March, to £61.6m. This was thanks to a £14.6m contribution from newly-launched ranges of soaps and similar hygiene-based goods.

I think things are looking up for the company’s traditional beauty and haircare products too, as government restrictions ease and people get out and about again.

It’s also worth noting that Creightons has its eye on expansion. Management said cash generated by the group’s growth has put it in “an excellent position to take advantage of any new opportunities that may arise,” adding it was “open to the acquisition of new brands with a digital presence.”

Remember though, that a return to lockdown conditions could drive Creightons’ recovery off the tracks.

A top value stock

Coats Group manufactures zips, trims and threads which are essential components in the clothing industry. This puts the penny stock in the box seat to ride the rebound in fashion sales as people return to all forms of socialising.

Indeed, revenues at the business rocketed 37% year-on-year in the first six months of 2021 to $732m, due to lockdown restrictions easing. However, Coats has a lot of debt on its balance sheet ($168m worth as of June) and this could cause a problem if demand for its products sinks again. Still, at current prices, I think the business could be too cheap to miss. It trades on a forward price-to-earnings growth (PEG) ratio of just 0.2.

Medical marvel

I think Zoetic International could be one of the best penny stocks to buy if one is concerned about the ongoing public health emergency. This is because the company manufactures and then sells cannabidiol (or CBD) oil products in the US and Europe to people suffering from medical ailments. And so, like any drugs developer, it doesn’t have to wring its hands worrying about how economic, political or social crises will damage its top line.

People will still move heaven and earth to get their hands on its treatments. However, it’s important to remember Zoetic operates in a highly-regulated industry. Thus, the risk of revenue-smacking law changes to the sale and usage of cannabis products are high.

The post 4 penny stocks to buy in August appeared first on The Motley Fool UK.

This small-cap has a market-cap of just £57m and may be under the radar for many private investors. However, it’s been in business since 1954 and has delivered steady growth in recent years — sales have doubled since 2016. I think there could be more to come.

A mini-Unilever?

Creightons sells under a range of brands. The firm’s products are typically small, repeat purchases, such as shampoo and moisturisers. In some ways, this business reminds me a little of FTSE 100 giant Unilever, whose beauty and personal care business sells similar products.

By backing the smaller company over the last five years, Creightons’ shareholders have seen an 850% share price gain and received a few dividends. By contrast, Unilever (which I hold) has seen its share price rise only 35%, plus (bigger) dividends.

Unilever’s brands are much larger and better known. Its product range is more diverse, including food, drink and cleaning products as well. But the larger company is also more mature — I can’t see Unilever matching Creightons’ recent growth.

Pandemic boost?

The big question for me is whether Creightons can maintain its recent run of growth. The company’s annual sales have risen from £21m in 2016 to £56m over the 12 months to 30 September 2020. Pre-tax profit has risen from £0.6m to £4.7m over the same period.

That’s an impressive record, in my view. But one concern I have is that last year’s strong results were boosted by  pandemic demand for hygiene products, such as hand sanitisers.

In its half-year results, the company admitted that “the main driver” of sales growth during the period was increased sales of hygiene products, sanitising gels and handwashes. The biggest buyers of these products were the NHS and “major UK retailers”. I’d imagine demand for these products could ease over the coming year.

Sales of the group’s branded products were said to have “continued to grow” last year, but the company didn’t provide numbers.

Creightons share price: buy, sell, or hold?

In my view, there’s quite a lot to like about Creightons. My analysis suggests the company has a strong balance sheet, with minimal debt. Profit margins have improved in recent years and Creightons’ own brands appear to be gaining strength.

On the other hand, I can see some risk that sales growth might slow over the next 12-18 months, as demand linked to the pandemic eases.

Creightons shares are currently trading on about 15 times earnings from the last 12 months. The company doesn’t appear to have any broker coverage, so I can’t find any forecasts for this year. However, my research suggests the stock’s current valuation is higher than its historic average, suggesting it may not rise further in the short term. 

I think Creightons’ share price is probably up with events. I’d need to do more research before deciding whether to buy this stock at current levels. But I can see this business as a possible long-term investment for me with a rising share price further down the line. If I already owned the shares, I’d be happy to continue holding.

The post Will the Creightons share price continue to rise? appeared first on The Motley Fool UK.