X5 is a heavyweight in Russia’s supermarket industry. It owns the Perekrestok brand, the country’s biggest grocery chain, and operates thousands of convenience stores under the Pyaterochka banner. While I expect spending at these outlets to rise as personal income levels steadily improve, this wouldn’t be my main motivation for buying the penny stock.

Indeed, I think the colossal amounts X5 is investing in e-commerce will pay off particularly handsomely. Like almost everywhere else, online spending in Russia soared during Covid-19 lockdowns. And the low penetration of e-commerce among Russian shoppers compared with other regions means that the growth potential here is especially colossal. Analysts at Statista predict Russia’s online retail market will treble in size between 2020 and 2024.

An ultra-cheap penny stock

Under its Vprok.ru brand, X5 opened a new ‘dark store’ in Moscow last month to capitalise on this growth potential. It’s the largest such store in the whole of Russia and will eventually be able to execute 8,000 orders every day. This followed the expansion of its delivery network to new regions earlier this year, giving it access to around two-thirds of Russia’s population.

Latest financials showed X5’s revenues rocketed 11.7% year-on-year between July and September. It’s perhaps no surprise then that City analysts reckon the retailer’s earnings will jump 57% in 2021. This leaves the company trading on a forward price-to-earnings growth (PEG) ratio of just 0.2.

It’s true that current broker forecasts could be blown off course if Russia’s economy suddenly hits trouble. Soaring Covid-19 infection rates in the country could certainly cause conditions to worsen.

Flying high

Still, it’s my opinion that this danger is currently baked into X5’s ultra-low share price. It’s a view I also believe extends to Raven Property Group’s (LSE: RAV) current valuation. City analysts think this particular penny stock will swing back into the black in 2021 following last year’s losses. Consequently, this Russia-focussed company trades on a forward price-to-earnings (P/E) ratio of below 4 times.

Raven Property invests in warehouse spaces across several major Russian cities, including Moscow and St Petersburg. It’s a part of the property market which I think will also enjoy explosive growth as e-commerce in the country booms. These sort of spaces are essential in allowing retailers, manufacturers and delivery companies to reach their customers.

I think the market is ripe with opportunity for Raven Property, although a failure to secure quality properties could see it fail to make the most of the online shopping boom. Like X5, I’d happily buy this penny stock for my shares portfolio today.

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One emerging market hero I’m considering buying in October is Russian retailer and penny stock X5 Retail Group (LSE: FIVE). A giant in Russia’s grocery sector, its brands include Perekrestok, the country’s biggest supermarket chain, and it has considerable exposure to the fast-growing convenience and online channels.

Revenues at the company jumped 10.7% between April and June. Particularly pleasing was news that e-commerce sales continued to soar. X5 is investing heavily in its digital operations, a drive that could pay off big time as Russia’s online retail industry is tipped for explosive growth.

I also like X5 because it operates in a more defensive area of the broader retail sector. This should leave it better protected than non-essential retailers if economic conditions deteriorate.

Though competition is intense and threatens future revenues, I think this penny stock’s a great share to buy as personal income levels in Russia rise. And particularly as we move into October.

At current share prices, X5 trades on a rock-bottom forward price-to-earnings growth (PEG) ratio of 0.3.

A penny stock for the green revolution

The Tharisa (LSE: THS) share price has declined sharply in recent weeks. And yesterday, it closed inside penny stock territory (97p) for the first time in 2021. I think this provides an attractive buying opportunity for long-term investors like me.

Mining giant Tharisa has slumped in value along with the prices of the platinum group metals (PGMs) it produces. Why? Well these elements are used in vast quantities to produce catalytic converters in cars and trucks.

Investors have sold out as the likely impact of semiconductor shortages on auto production — and consequently on demand for PGMs — could hit Tharisa’s profits hard.

It’s unclear at this stage how long these chip supply problems will persist for. But I still believe the earnings outlook for Tharisa remains very exciting.

The climate crisis means lawmakers are demanding higher quantities of PGMs be used in exhaust systems to better reduce emissions. Pollution regulations are set to tighten significantly in China in 2023, the world’s number-one car market. Fresh action by legislators in other parts of the world could be coming too as environmental concerns steadily grow.

Following that recent price decline, Tharisa’s share price offers great value, on paper. Today, the PGM producer trades on a forward price-to-earnings (P/E) ratio of just 4 times.

It’s a reading that more than reflects the threat of prolonged weakness in car production rates, as well as the complex nature of mining for metals which can damage earnings growth. So this is another penny stock I’d happily buy this October.

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Over this kind of timeframe quality stocks have a great chance of overcoming temporary volatility to soar in value, whatever their initial price.

So here are two top penny stocks I’m considering buying right now.

A penny stock for the Russian retail boom

I’ve previously mentioned how Raven Property Group could be a great way to play the Russian retail sector. As e-commerce grows rapidly in the country, I expect demand for the warehouses it lets out to take off.

Another rare way to get exposure to this emerging market, one where people’s income levels look set to boom in the years ahead, is X5 Retail Group (LSE: FIVE). This British stock trades at 33p per share.

This penny stock is one of Russia’s leading grocery retailers. Its brands include Perekrestok, the country’s largest chain of supermarkets, as well as the Pyaterochka chain, which operates more than 15,000 convenience stores. X5 also has skin in the online retail game though its perekrestok.ru website. And last year it entered the parcel delivery market with the launch of its 5Post division.

I like X5’s leading position in the defensive food retail sector. I also like its responsiveness to fast-changing consumer trends (the penny stock also recently launched its Perekrestok.Bystro express delivery service for smaller orders).

Though I’m aware that the steady rise of green energy poses significant risks to Russia’s oil-dependent economy. And this could put paid to my hopes of explosive profits growth at X5 in the years ahead.

Playing the green revolution

Speaking of renewable energy, I think US Solar Fund (LSE: USFP) could be a top way for me to latch onto this fast-growing industry. This particular penny stock — which trades at 75p per share — invests in solar plants, predominantly in North Carolina. It also has exposure to the country’s biggest solar-power-generating state of California.

The escalating climate crisis is prompting lawmakers across the globe to embrace solar energy with greater urgency. And, at the moment, the US offers operators in this industry some of the most supportive green energy policies at both state and federal level.

What’s more, the Biden administration is hoping to make the environment even more friendlier by introducing measures like clean energy tax credits to hasten growth in the solar market.

Like all renewable sources, energy created by the sun is weather dependent and thus intermittent. This can obviously have an impact on operator profits. There’s also the danger that US Solar Fund could overpay for an asset or that a plant could fail to deliver on forecasted earnings.

That said, I still think this penny stock has the potential to create brilliant shareholder profits over the coming decades.

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