I’m searching for top UK penny stocks to buy in my Stocks and Shares ISA this August. Many investors don’t like to invest in low-cost stocks such as these. This is because sub-£1 shares can be prone to bouts of extreme share price choppiness.
But, as a long-term investor, I’m not put off by the threat of volatility like this. The cream always rises to the top, as they say. And I’m confident that by doing some decent research I can find top-quality UK shares that’ll rise strongly over a period of years.
In fact, I think the reluctance of many other share pickers to dive in gives me the chance to pick up an underpriced bargain or two. Here’s a selection of great penny stocks I’m considering adding to my ISA next month.
Safe as houses
Fresh waves of Covid-19 infections in Britain is casting a cloud over the economic recovery here. But this isn’t a development which investors in Residential Property Income need not wring their hands over. This particular penny stock invests in shared ownership and rental homes, parts of the property market where demand is beating supply by quite a margin.
Theoretically, an economic downturn could damage activity in the shared ownership part of the business. But for the time being at least, things remain pretty rosy on this front. Indeed, the company has made £40m worth of acquisitions recently to its bolster profits from this fertile market.
Set to thrive like this FTSE 100 stock?
I’ve regularly explained why B&M could be one of the best FTSE 100 stocks to buy right now. Even though its lack of e-commerce operations could hamper profits growth, I believe the firm’s focus on the value end of the retail market has the capacity to deliver monster earnings growth. Like discount grocers Aldi and Lidl have produced over the past decade.
I reckon too, that penny stock TheWorks.co.uk is another top UK share to buy to play this rising consumer trend. This company sells an array of goods like books, games, stationery and craft products. It’s true that demand for The Works’ non-essential products could tank if broader economic conditions worsen. But, as a long-term investor, I still think it could be a top stock to buy, my enthusiasm bolstered by its decision to accelerate its e-commerce strategy.
A top emerging market penny stock
I’m also tempted to invest in life insurance giant Old Mutual in August. This is despite the fact that emerging markets are expected to recover more slowly and bumpily from the Covid-19 crisis. I’m more interested in what shareholder profits this penny stock could make me through to 2030, and possibly beyond.
The insurance market in sub-Saharan economies is significantly underpenetrated, giving market leaders like this plenty of business to win as economic conditions steadily bounce back. Although competitive pressures are rising for Old Mutual, I think soaring population growth and personal wealth levels still make this a top UK share to buy.