It’s easy to convince ourselves we always invest for the long term.

But anything that made it impossible for us to sell for at least a decade… well, that would focus the mind, wouldn’t it?

I’d be tempted to look for investment trusts. But I think that might be cheating a bit.

Bricks and mortar

So, for 10 years, I’d go for Michelmersh Brick Holdings (LSE: MBH). With the construction squeeze, the shares have lost half their value since their 2021 peak.

Topps Tiles and Steppe Cement were other candidates, all suffering the same way. And I don’t think there’s much to choose between them.

I reckon the property sector will pick up again. And when it does, I expect the UK’s makers of bricks and tiles to do well, whoever leads at the sharp end of building and selling homes.

With an 88.5p share price at the time of writing, and a market cap of £86m, Michelmersh only just squeaks under the penny stock limit of 100p and £100m. But that’s good enough.

We’re looking at a forecast price-to-earnings (P/E) ratio of only 9.5, and there’s a 4.8% dividend yield on the cards. Looks like good value.

Diversified choice

Most of my favourite penny stocks are related to building or construction in some way. But with a 10-year tie-in, I’d want diversification.

So my second pick is healthcare provider Totally (LSE: TLY), whose shares have had a tough year.

Totally runs the 111 emergency help line, urgent care services, and out-of-hours GP surgeries, among its variety of services.

Healthcare is politically charged. And using the private sector for NHS services could be a bit of a hot potato in the coming years.

But with ever-growing demand, I can’t see any going back now. Will the NHS improve massively in the next decade and be able to take all its services back in-house?

That could throw a spanner in the works. But I put the chances of its happening at close to zero.

Oh, Totally pays nice dividends too, with a forecast yield of 5.1%.

Other candidates

There are other penny stocks that I feel optimsitic about. They include Nanoco Group, which develops nanotechnology, and Zinnwald Lithium.

But I expect those to be volatile, and I’d need the ability to bail out if I saw something go wrong. I could not commit to 10 years.

I like the look of Superdry now too. But 10 years can seem like a lifetime in the fashion business. So that’s out for the same reason.

Penny stock risk

These also-rans hint at the main risk of the two I’ve chosen, and it’s down to the volatility of small companies.

Another economic squeeze in the next decade? A new stock market crash? Tiddlers like these could be at the biggest risk of going bust.

That’s why I’d only ever buy penny stocks as part of a wider, diversified, portfolio.

The post 2 top penny stocks I’d buy to hold until 2033! appeared first on The Motley Fool UK.

Totally

An ongoing government push to divert patients away from hospitals bodes well for Totally (LSE:TLY). The business operates the NHS 111 telephone consultation service. It also runs urgent care centres and out-of-hours GP surgeries, services that are easing the strain on packed casualty wards.

Record hospital waiting lists are also driving revenues at the small-cap. This is because hospitals are subcontracting out medical work to slash patient treatment waiting times.

CIty analysts think Totally’s earnings will soar 430%-plus in the financial year to March. A 36% increase is expected in the following year too.

Potential changes to NHS policy could disrupt earnings growth at the firm. But any amendments could still be offset by booming demand for healthcare services as Britain’s population rapidly ages.

H&T Group

I think H&T Group could be a perfect stock to own as the UK faces a prolonged recession. City analysts think earnings at the pawnbroker will rise 60% in 2023 and 20% next year.

I believe the AIM share might be a great buy for the longer term too. This is not just because Britain faces low economic growth for much of the decade, due to Brexit and a Covid-19 hangover. The company plans to rapidly expand its store estate following a £17m share placing last September.

Changes to financial regulations could hamper profits growth. But as things stand, I’d still buy H&T shares with spare cash to invest.

Animalcare Group

Medicines developer Animalcare Group (LSE:ANCR) creates products for pets and livestock. And it is expected to grow annual earnings by double-digit percentages through to 2024 at least.

People are spending increasing sums of money on their companion animals. At the same time, rising meat consumption is driving drug sales for livestock. This is why analysts at Grand View Research think the global veterinary medicine market will grow to be worth a whopping $83.39bn by 2030, up from $47.91bn today.

Animalcare sells its products in Europe and is growing its distribution partners in other global markets too. It could therefore be a great way to capitalise on this growing market. I’d buy the business even though drugs development problems can take a big bite from profits.

Midwich Group

Tough economic conditions pose a near-term threat to audiovisual equipment supplier Midwich Group. However, City analysts still expect the business to grow earnings strongly through to next year.

Bottom line rises of 11% and 5% are forecast for 2023 and 2024 respectively. The company sells to trade customers across Europe, North America and Asia. And these bright growth forecasts reflect the predicted impact of the firm’s ambitious global expansion programme.

Midwich raised its revolving credit facility in December too, in order to fund future acquisitions. This rose to £175m from £80m and could help lay the foundations for excellent long-term growth.

The post AIM shares: 4 growth stocks I’d buy to hold for 10 years appeared first on The Motley Fool UK.

Structural steel

First up is structural steel maker Severfield (LSE:SFR). Severfield’s share price is now down 25% over the past 12 months, at 53p as I write. But in recent weeks, we’ve seen a slight uptick from a recent low of 46.7p.

Any recession is not going to help the construction industry. But I see Severfield as having a defensive advantage for when things pick up. Structural steel is at the core of just about all major construction projects, and that has to be an investing attraction.

The biggest risk I see is that an economic turnaround might be some way ahead, and we might see more share price weakness.

But in the meantime, we’re looking at a forecast dividend yield of 6%. Cover by earnings should be reasonably strong.

Lithium

Shares in Atlantic Lithium (LSE: ALL) climbed in the early months of the year. But from a 68p peak in April, the price has been on a slide. At the moment it’s looking relatively stable at 34p.

Atlantic Lithium shares are still up 70% over the past 12 months, and it’s on the back of electric vehicle (EV) technology. Lithium is the stuff that batteries are made of, and the industry can’t get enough of it.

In the current worldwide economic turmoil, EV maker shares have tumbled. Tesla is down 23% over the past 12 months, and NIO has crashed by 70%. No wonder the appetite for lithium stocks has soured.

The biggest risk, I think, is the lack of profit. It’ll be a few years yet before shareholders see any, and there has to be a risk of dilution from any new cash raises. But Atlantic has some very promising assets. And the EV sector will surely pick up again.

Health

Shares in healthcare services firm Totally (LSE:TLY) are down 15% in the past 12 months, at 29p. But it’s another that started the year well and has fallen quite heavily in recent months. Since July, Totally shares have lost 40%.

Some of the fall is probably justified, as Totally had been on a lofty price-to-earnings (P/E) multiple. It’s admittedly hard to value a company when it turns from loss to profit, as it did in 2020-21. But today, a forecast P/E of 13 does not look stretching.

In fact, it looks very attractive when we see forecasts bringing it down to under eight next year. Analysts predict a dividend yield of 3.6% this year, and rising.

How referrals from the NHS might hold up if hospital admissions are dominated by Covid and influenza this winter is very uncertain, and that has to be a risk.

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Healthcare hero

Buying certain UK-focused healthcare stocks like Totally (LSE: TLY) could be considered risky on one hand. The fast-changing political landscape creates uncertainty over what future levels of NHS funding will look like.

This particular penny stock provides a range of medical services. These include urgent care services alongside the NHS such as the 111 emergency phoneline and operating out-of-hours doctor surgeries.

However, I think Totally has a very bright future. Britain’s population is rapidly ageing and so demand for its services should steadily rise over the long term.

I also think the company’s essential operations make it a highly attractive share to buy today. Healthcare is one sector in which spending remains stable at all points of the economic cycle.

Totally awesome

The business also stands to gain from growing NHS hospital waiting lists (which hit new record highs of 6.5m last month). In this climate it can expect the nation’s free healthcare service to continue contracting out lots of work.

What’s more, Totally’s March acquisition of Pioneer Health Services will boost its chances of winning more of this business. The penny stock bought the specialist NHS secondary care services provider for £13m earlier this year.

City analysts think Totally’s earnings will rise 62% in this financial year ending March 2023. This leaves the company trading on a forward price-to-earnings growth (PEG) ratio of just 0.2. A reading below 1 suggests a share could be undervalued.

Making money with uranium

Berkeley Energia (LSE: BKY), by comparison, is a penny stock that’s not expected to make profits any time soon.

This creates extra risk for investors. Firms in this position can be forced to tap shareholders for cash if they get into difficulties. They can also take on more debt to fund their activities.

Still, Berkeley is a mining share that’s packed with investment potential. The business owns and operates Spain’s giant Salamanca uranium project. This is a project which could produce 4.4m pounds of the radioactive element a year when production begins.

A top power play

Companies like Berkeley Energia will play a crucial role in helping countries reduce their carbon emissions.

Lawmakers across the continent are stepping up plans to extend the life of existing reactors, and/or to build new facilities to reduce their use of oil and gas. Their appetite has been intensified by Russia’s invasion of Ukraine and the uncertainty this creates for energy supplies too.

News from the European Parliament last week has boosted the outlook for Berkeley even further. This is because lawmakers have agreed that nuclear investments can be labelled as sustainable energy sources. This is significant as it could unlock billions of extra pounds to bolster the growth of the nuclear industry.

The post 2 top penny stocks I’d buy to hold until 2032! appeared first on The Motley Fool UK.

One of the best to buy now?

Last month, I said: “I think the Boohoo (LSE: BOO) share price is potentially too cheap to ignore”.  That’s still my opinion. This week’s profit warning doesn’t change the investment case for me. In fact, it seems even more compelling now given the shares over the last month or so have fallen by a quarter.

Christmas could be a boon for the company, especially if Omicron leads to more restrictions and encourages more consumers to buy online.

But with Boohoo already saying that returns are up due to shoppers sending their dress purchases back, Omicron could also dampen Boohoo sales. But I see that as a short-term issue.

Another problem is, investors seem to be turning away from fast fashion shares in general as ASOS shares have also been falling. Supply chain issues are key problems both are facing.

Boohoo shares strike me as cheap now, so combining that with its still-high (relatively speaking) level of growth, makes me think it’s a potentially profitable investment long term. It’s one of my best stocks to buy for 2022 and it won’t be long before I add it to my portfolio.

A smaller-cap income and growth option

finnCap (LSE: FCAP) could be a great small-cap growth stock, combining capital growth with income, which I think is a very powerful combination.

The group focuses on providing financial services to quite a number of listed companies, but also privately-held growth companies.

The financial services group has solid fundamentals. For example, it has a strong operating margin, which has jumped to 18.7% from 4.6%. That’s lower than earlier in the pandemic but the margin now is also higher than in 2019. Return on equity has also improved a lot in the last three years, to 29%. It was 16.4% in 2019.

The problem is, if 2022 sees a slowdown in IPOs and other fundraising activity, demand for finnCap’s services could melt away, which would hit its revenue and profits. This makes me a bit nervous.

On the plus side though, it’s a higher-yielding share. The dividend yield is around 4.8%. This income, along with it being a smaller-cap stock with growth potential and solid fundamentals, means I’m interested in buying the shares for my portfolio.

A riskier investment

Totally (LSE: TLY) is a smaller-cap penny stock that I think is also potentially one of the best stocks to buy now ahead of 2022.

The healthcare services provider should benefit from the NHS backlog as it provides insourcing. This is a system whereby hospitals subcontract medical services and procedures to it, and it uses hospital premises and equipment for delivering treatments.

In the short term, if Omicron leads to more hospital admissions this may put its general ops on hold. That could impact revenues. But longer term, I think there’s a big opportunity for the group.

An ageing population, ongoing pressures on hospitals (especially over waiting times) and increased spending on the NHS, all mean Totally has a number of factors in its favour to help boost growth.

I’m thinking it could be one of the best stocks to buy for my own portfolio, as I don’t hold any similar companies. 

The post These are my best stocks to buy for 2022 appeared first on The Motley Fool UK.

A top penny stock

Totally (LSE: TLY) is a share I’m considering adding to my portfolio. The healthcare group should benefit from the NHS backlog as it provides insourcing, which is a system whereby hospitals subcontract medical services and procedures to Totally Healthcare, which uses hospital premises and equipment for delivering treatments. 

It’s also involved in the delivery of urgent care, so it’s well established with the NHS and is an important partner. All the more so in the context of the backlog has built up even more under Covid. A total of 5.7 million people were waiting to start routine hospital treatment at the end of August — the highest figure since records began in August 2007.

An ageing population, ongoing pressures on hospitals (especially over waiting times) and increased spending on the NHS, all mean Totally has a number of factors in its favour in the short and long term to help boost growth.

Potential downsides

It’s not a no-brainer investment, though. It’s very reliant on the NHS for its income and therefore the share price will likely be very sensitive to political debates around any creeping privatisation of the NHS. However, the chief executive worked for the NHS for over 20 years, including being Chief Executive of three large Primary Care Trusts. The company therefore should be able to navigate these challenges.

Another option

Argentex (LSE: AGFX) is a provider of foreign exchange services. It seems well positioned for future growth. Just recently it announced revenue was up 33% six-month period ended 30 September 2021. Profit after tax was up 22% to £3.3m.

The CEO said: “We remain confident in our future and long-term strategy to deliver on our ambitious
growth plans, and we are well placed to capitalise on the significant opportunities that lie ahead.”

When looking at its valuation, there’s a lot I like. The forward P/E is 10. The price to earnings growth ratio (PEG) is 0.4. To my mind that could mean it fits the mould of a Jim Slater-style ‘Zulu’ growth stock. These are shares that have a low PEG and therefore could be undervalued, higher-growth shares. The group also pays a dividend, often seen as a sign that management is confident in the prospects of the business and that it’s making cash.

Argentex has a market cap of only £100m, so it has plenty of potential to grow much bigger. Historically revenue growth has been strong. 

It’s keen to emphasise its business model is not built on currency speculation. It helps customers with foreign exchange. This should make it more stable than, for example, a spread-betting company. The risks it faces, I think, are primarily around maintaining client relationships, the competition it faces and, because large amounts of money are involved, cybersecurity threats.

Ultimately though Argentex is one of a select group of penny stocks I’m considering buying right now.

The post £1,000 to invest? 2 penny stocks to buy right now appeared first on The Motley Fool UK.

However, such volatility doesn’t hamper my appetite for cheap British stocks. I invest according to the returns I expect to make over a long time horizon, say a decade or more. Over this sort of timescale the very best stocks tend to sail through such choppiness and deliver mighty shareholder profits.

Here are three great-value stocks I think could help me do just that.

A cheap UK healthcare share

I’m thinking of investing in some choice healthcare shares to give my portfolio a bit more robustness. And Totally (LSE: TLY) is one low-cost medical stock I’m running the rule over right now. This business provides urgent care services in partnership with the NHS. These include the NHS 111 emergency phone line and a raft of urgent care centres across Britain.

Like many other healthcare shares, demand for Totally’s services remain strong at all points of the economic cycle. As an investor, this provides me with exceptional peace of mind. My only concern with buying this business is the constant threat that changes to health spending by the government might hit the level of new contracts and contract extensions it receives.

A counter-cyclical champion

Worsening economic conditions in Britain suggests to me that Begbies Traynor Group (LSE: BEG) could be an attractive buy today. This dirt-cheap UK share provides financial rescue and recovery services and is a specialist in the insolvency field. Naturally, trading is likely to suffer when the economy picks up again. But, for the time being, industry conditions look very favourable.

According to the Insolvency Service, the number of UK insolvencies leapt 17% quarter-on-quarter between July and September. This was driven by the number of company voluntary liquidations hitting their highest quarterly total since 2009.

I wouldn’t just buy Begbies Traynor for the short term however. I think its appetite for acquisitions could deliver excellent profits growth over the longer term too.

Raise a glass

Breakneck sales growth over at Virgin Wines (LSE: VIP) have caught my attention too. Revenues at the online wine business have rocketed 30% year-on-year during the past two fiscal years. Not only is the business reaping rewards from the broader e-commerce explosion. It’s also benefitting from soaring demand for wine in the UK.

The experts at Statista think wine sales will continue growing strongly too. They forecast annualised growth of 13.2% through to 2025. I like Virgin Wines’ excellent customer proposition, its broad selection of wines, and the exclusive agreements it’s signed with many a winemaker. This guarantees repeat business from a customer than loves a particular bottle.

Though do remember that the retailer still faces considerable threat from supermarkets and other specialised players like Majestic Wine.

The post 3 of the best cheap UK shares under £2 to buy appeared first on The Motley Fool UK.

Hotel Chocolat

High street and online retailer Hotel Chocolat (LSE: HOTC) should be releasing its delayed set of full-year results on 5 October. Normally, a postponement would be taken negatively by shareholders but HOTC’s share price has held up well. In fact, it’s up almost 9% over the last month.

This isn’t completely irrational. Back in July, HOTC said revenue in its last financial year hit £165m. That’s 24% higher than in FY19 — the year before Covid-19 struck. So trading’s clearly far from terrible. 

On the flip side, I’m conscious that only a relatively small percentage of stock is actively traded (CEO Angus Thirlwell still owns over 25% of the company). Such a small free float does mean it’s share price is theoretically more susceptible to violent moves, both up and down.

This matters considering the valuation. A P/E of 42 looks very expensive and HOTC simply can’t afford to rest on its laurels if recent momentum is to continue. Should it disappoint in any way (perhaps in relation to rising costs), I might actually get the entry price I’ve been looking for. 

Tristel

Another steeply-valued small-cap UK growth stock reporting next month is contamination control product manufacturer Tristel (LSE: TSTL). It reveals full-year figures on 18 October. 

Like Hotel Chocolat, Tristel is a stock I’ve long admired but never pulled the trigger on. It’s a high-quality, financially-sound company operating in a niche area. Let’s not forget that Covid-19 has cemented the need to do everything possible to reduce infection in healthcare settings. This should provide the company with a springboard for further sales growth. 

However, I just can’t get away from that valuation. A P/E of 60’s eye-watering, even if Tristel has hinted that a rise in (non-pandemic-related) hospital admissions towards the end of its financial year has increased demand for its disinfectant products.

Regardless of it doing everything right from here, a more general stock market wobble could really hammer the price as investors dash to cash. That makes for an unattractive risk/reward trade-off, in my view. As a result, Tristel remains stuck on my watchlist, for now.

Totally

Penny stock Totally (LSE: TLY) is a final small-cap UK growth stock I’ll be following next month. A Q3 trading update from the healthcare solutions provider is scheduled for 28 October.

Of the three discussed today, TLY shares have performed the best over the last year, almost doubling in value. Based purely on valuation, Totally also looks a lot more palatable than both HOTC and TSTL. Its shares currently command a forward P/E of 22. The balance sheet looks fairly solid and there’s an experienced management team at the helm.

Naturally, there are things to be wary of. The fact that Totally is only trading around the breakeven level right now is the key drawback for me. This is also a low-margin business. And while recent demand from the NHS has clearly been good, it’s worth questioning what happens when the Covid-19 storm finally passes. 

Another interesting UK growth stock then, but not one I’d feel comfortable buying before next month’s update.

The post 3 UK growth stocks I’m watching in October appeared first on The Motley Fool UK.

But Caledonia Mining’s share price has jumped 7% to 965p on Tuesday, following the release of terrific production numbers. Gold output at the UK mining share announced record quarterly production of 16,710 ounces between April and June, it said. This was up around 24% from the same 2020 quarter.

Second-quarter production received a huge bump after Caledonia’s Central Shaft mine in Zimbabwe became fully operational in early April. It’s the country’s deepest gold mine and cost $67m over six years to come to fruition.

First half output up at Caledonia Mining

Those blowout quarterly numbers meant first-half production at Caledonia Mining rose a shade under 8% year-on-year to 29,907 ounces. The business affirmed its full-year target of between 61,000 and 67,000 gold ounces too. And it said it remains on track to produce 80,000 ounces a year from 2022.

In other news, Caledonia hiked its latest quarterly dividend to 13 cents from 12 cents, previously. Chief executive Steve Curtis said: “With the Central Shaft now in operation, the anticipated combination of rising production and declining capital investment gives us confidence to further increase the dividend payment in addition to providing funding for investment in new projects.”

Totally sinks following FY announcement

The Totally (LSE: TLY) share price hasn’t fared nearly as well as Caledonia Mining’s on Tuesday. The UK healthcare share is up 125% over the past 12 months. But it’s down 6% today at 40p following the release of full-year financials. I’d suggest this reflects the impact of healthy profit-taking following the company’s stratospheric rise during the Covid-19 crisis.

Totally — which provides a range of healthcare services across the UK and Ireland — said revenues rose 7.4% in the 12 months to March, to £113.7m. At its core Urgent Care division, sales improved 9.2% year-on-year to £105.4m, while turnover at Insourcing rose more than 200% to £3.1m. These increases offset a 37.6% decline at the company’s Planned Care unit. Sales here dropped to £5.2m.

Meanwhile, gross margins at group level improved to 18.3% from 18.1% in financial 2020. This all meant the AIM-listed business was able to swing back into profit. It recorded pre-tax earnings of £100,000 in fiscal 2021, versus the £3.4m loss it recorded a year earlier.

On top of this, Totally saw the amount of cash on its balance sheet improve to £14.8m last year from £8.9m, previously. It therefore kept the full-year dividend stable at 0.5p per share.

“The year was impacted throughout by the Covid-19 pandemic and as a trusted partner of the NHS the teams at Totally were part of the frontline resource providing care,” chairman Bob Holt commented.

He added that demand for the company’s services — which includes providing healthcare assistance on the NHS 111 service – increased “on an almost daily basis.”

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Penny stocks: What’s on my radar

Perhaps the most important is the company’s financial position. A penny stock that’s already swimming in debt is one to avoid, unless it has significant assets to offset this. A struggling firm will usually need to tap its owners for more cash by offering shares on the cheap. By contrast, a company with net cash on its balance sheet should have the firepower to weather a few inevitable storms.

A second thing I look for is a reason (or reasons) why the shares might be ready to rise in value. As much as I invest for the long term, I don’t want to be in a stock that has little chance of growing revenue and profits. The opportunity cost of not investing elsewhere is simply too great. I therefore take a look at recent announcements to gauge whether it could be about to sprint ahead of the competition. 

Third, I look for evidence of volume. In other words, I need to see that the shares are changing hands (aka liquidity). Should this be the case, I can be more confident of being able to sell my holding when I want/need to. A lack of interest in certain penny stocks could make it difficult to shift them for the price I want.  

Another thing I look for is the number of shares owned by directors. If someone helping to manage the firm isn’t confident enough to invest their own money, why should I? Having a healthy slab of shares sends a message to would-be buyers that their interests are aligned with shareholders.

A final, more general point I consider when selecting penny stocks is to look across the entire market. Focusing on one sector, such as mining or biotech, is just too dangerous.  

An alternative strategy

An alternative to buying individual high-risk, high-reward penny stocks is to buy a fund specialising in this part of the market. Sure, not every holding will actually have shares trading for pennies rather than pounds, but this isn’t the point. The objective here is to diversify risk through buying a basket of stocks. The eventual return might not be as great but investing this way does allow me to sleep at night. 

Positively, there’s no shortage of active funds to select from. Like penny stocks however, the performance varies wildly. This is why it’s important to scrutinise the track records of those managing investors’ money. We’re talking evidence of consistent returns over five years or more here, not one or two months.

I currently have a number of such funds in my portfolio. These include the Liontrust UK Micro-Cap Fund and the Marlborough UK Micro-Cap Growth. Penny stocks in the former include Totally and Eckoh. The latter includes companies like Jubilee Metals.

Although there’s no guarantee that returns to date will continue, I’m content to keep my money invested here for the long term.

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