I’m on the hunt for top UK penny stocks to add to my Stocks and Shares ISA this July. Here are three sub-£1 British shares that have caught my attention.
A good buy despite rising online competition
Profits at Card Factory (LSE: CARD) took an almighty whack in 2020 as Covid-19 forced its stores to close. But soaring vaccination rates in Britain mean that things are starting to look up for this UK retail share. Card Factory is in great shape to ride the growth of value retail as it sells its greeting cards, balloons and other celebration-related paraphernalia at rock-bottom prices. I also like its robust position in a defensive retail market. The giving and receiving of greetings messages remains stable during economic upturns and downturns, right?
Card Factory has also been investing in its online channel to ride the e-commerce explosion. Though it’s important to remember that internet-only operators like Moonpig are grabbing an increasingly-large slice of the cards market in Britain.
An expensive but excellent penny stock?
I’d also happily buy 1Spatial (LSE: SPA) shares as the digital revolution clicks through the gears. This UK IT services share provides Location Master Data Management (or LMDM) software, products which allow users to connect or combine data from multiple sources in different places. And it is doing a roaring trade at the moment. 1Spatial advised this week that it has “entered the new year with increased levels of committed revenue and a strengthened financial position.”
Orders are up year-on-year in the financial year to January 2022, and 1Spatial’s sales pipeline is growing across all regions. Bear in mind that investor expectations of explosive profits growth leave the company trading on a forward price-to-earnings (P/E) ratio of around 60 times. This sort of elevated reading could prompt a share price collapse if news flow out the company begins to worsen.
A UK property share
I think that Empiric Student Property (LSE: ESP) is another top penny stock to buy this July. As the name suggests, it provides accommodation for students. And it’s in great shape to ride the boom in university admissions in Britain. Bella Malins, director of admissions at University College London, recently told The Guardian that undergraduate admissions to the university were up 16% this year. This is one of many such spikes being recorded across the country.
I wouldn’t just buy Empiric Student Property for short-term gains though. British universities have been an attraction for foreign students for centuries. And recent data suggests that their appeal among overseas students is still strong, a particularly good omen for accommodation providers like this.
It’s important to remember that Empiric is nowhere near as busy on the acquisition front than rivals such as Unite Group. This could compromise the company’s ability to deliver long-term earnings growth.