When I am looking for penny stocks to buy, I like to focus on companies benefiting from growth tailwinds. Indeed, as investing in these small businesses can be risky, I think this approach can reduce risk. And there are a handful of businesses that I believe currently exhibit these traits.
Penny stocks to buy
The first company on the list is the private jet broker Air Partner (LSE: AIR). Over the past two years, this organisation has benefited from two substantial tailwinds. Rising demand for cargo transportation, and higher demand for private jet services from the rich and famous, has helped the group outperform expectations.
According to its latest trading update, during the six months to the end of July, the company’s underlying pre-tax profit jumped to £3.8m, up 26.7% on pre-pandemic levels.
The additional cash flow from operations gives the group the financial resources to pursue bolt-on acquisitions to expand its operations. In the past, the group has diversified into different sectors in the aviation industry by reinvesting cash generated from its existing operations.
In August, Air Partner acquired Kenyon International Emergency Services, a leading emergency planning and incident response company.
As long as management continues to make sensible acquisitions, I think this is one of the best penny stocks to buy today. I would not hesitate to add it to my portfolio.
Some challenges it could face as we advance include economic uncertainty and competition. Compared to the multi-billion pound companies that dominate the aviation industry, it is a relatively small business.
International expansion
I would also acquire international currency and derivatives manager Record (LSE: REC) for my portfolio of penny stocks.
Like Air Partner, this company is also experiencing a bit of a growth spurt. During the six months to the end of September, revenues increased 38% year-on-year. The total value of assets managed by the group increased by 7% to £62.4bn.
And to capitalise on this growth, the company is also launching new products. By doing so, it has increased exposure to higher revenue and more scalable products. The group has also launched a sustainable finance fund in collaboration with UBS Global Wealth Management.
I think these initiatives will only help the company build on the growth achieved over the past year. That said, Record does need to keep innovating, especially in the highly competitive financial services space. With competitors like UBS, which is one of the largest investment banks in the world, Record cannot afford to take its market share for granted.
Nevertheless, despite this challenge, I think the group has tremendous growth potential over the next few years. With profits booming and a cash-rich balance sheet, Record has the potential to capitalise on opportunities as they present themselves.