I’m searching for the best penny stocks to buy today. Here are two cheap UK shares near the top of my shopping list.
A great way to invest in gold
Petropavolvsk (LSE: POG) is one penny stock I’d be happy to buy for the long haul. Social, economic and political crises that prompt stock market crashes can happen at any time, as 2020’s financial market following the coronavirus outbreak showed. Having exposure to gold — whether that be by owning the metal itself, a financial instrument that tracks the bullion price, or a gold-producing UK share — is a good idea to protect oneself from this threat.
I’d prefer to own shares in a gold-mining company. They offer the investors a chance to bank dividends as well as to ride a rising bullion price. Petropavlovsk investors will have to wait a little longer to receive income from the business. It hasn’t paid dividends since for almost a decade. And City analysts think its first dividend won’t come until next year following chief executive Denis Alexandrov’s ongoing pledge to restart shareholder payouts.
Still, as a long-term investor I’d be happy to wait around a little longer. Besides, next year’s projected payout means the stock boasts a splendid 4.4% dividend yield. This makes the business a great value buy today, in my opinion. And its rock-bottom P/E ratio of 7 times for 2022 seals the deal.
The business of pulling metal is fraught with danger though, and production problems that can hit output levels and by extension revenues can be common. Petropalovsk has reported a strong uplift in production costs of late, caused by lower grades and recoveries as well as cost inflation and rising taxes. That said, I think these troubles are more than baked into Petropavlovsk’s cheap share price of 23p. I’d happily buy this commodities stock right now.
A penny stock for the building revolution
Urban regeneration company U and I Group (LSE: UAI) is another stock that attracts me as a long-term investor. Britain’s chronic shortage of available housing is well publicised and continues to propel property prices through the roof. Accordingly, the government is taking steps to supercharge homebuilding in the UK. It’s aiming for 300,000 new homes to be created a year by 2025.
U and I, which specialises in converting old buildings into habitable residential spaces, is well placed to benefit from this building revolution. Sure, the business has been an underperformer in recent years. But under new chief executive Richard Upton, the builder has put slashing costs and disposing of non-core assets front and centre of its new strategy.
This should boost profits and give U and I the financial clout to pursue its growth objectives. That said, the stock could plummet from current levels of 88p if that reset programme disappoints, I still think the developer is a highly-attractive cheap UK share to buy right now.