Here are three top penny stocks I’m considering buying next month.
A dirt-cheap penny stock
I’d buy building materials supplier SIG (LSE: SHI), as I think demand for its insulation products could rocket for years to come. A backcloth of soaring energy bills is likely to bolster sales of its heat-preserving products. Growing concerns over the climate crisis also looks set to improve demand for SIG’s energy-saving foam-based hardware.
Housebuilders are being tipped to turbocharge production over the next decade at least to solve the country’s housing crisis. This bodes well for SIG, and particularly as these construction firms put greater focus on the energy efficiency of their products. I do note that a downturn in the housing market, and the subsequent damage this could cause to build rates, could significantly impact SIG’s profits.
I think SIG’s shares could be too cheap for me to fail to act. The business currently trades on a forward price-to-earnings growth (PEG) ratio of 0.2. Investing theory says that any reading below 1 suggests a stock could be undervalued by the market.
Use your noodle
The Restaurant Group (LSE: RTN) is another penny stock I’m paying close attention to today. Even though the pandemic rolls on and we can’t rule out further lockdowns, I think the potential long-term returns here could outweigh the risks. Brits are spending increasingly large portions of their income on eating out and firms like this stand to be big winners.
I like The Restaurant Group in particular because it owns the highly-popular Wagamama noodle chain. Sales here rose a healthy 11% and 8% in October and November compared to the same months in 2019. I’m also encouraged by the improved performance of the penny stock’s other brands like Frankie & Benny’s and Garfunkel’s. Strong trading at The Restaurant Group — allied with the success of disciplined cost-cutting — actually encouraged the business to hike its full-year growth forecasts late last week.
The Restaurant Group is a very different beast to what it was a few years back. Its turnaround plan is bringing hungry customers back in their droves, and I think now could be the time to grab a slice of the stock. But I have to remember that the dining out sector is highly competitive.
Battery-powered profits
I’m also thinking about building my exposure to the green economy. And I believe adding Atlantic Lithium to my portfolio could be an effective way to do this. The company is developing Ghana’s Ewoyya lithium project, which continues to illustrate its exceptional mining potential.
Demand for lithium is predicted to soar over the next decade as electric vehicle production rates increase. Analysts at Statista think global consumption of the battery-making material will rocket to 1.8m tonnes by 2030, up from a projected 497,000 in 2022. As a consequence, I’m thinking profits at Atlantic Lithium could soar. I have to keep in mind that there’s a range of operational problems that could affect a mining company like this, potentially damaging profits. But I’m confident enough to buy the shares for my portfolio.