Market volatility remains high as the conflict between severe risk aversion and opportunistic dip buying rages on. The biggest FTSE 100 stocks to the smallest penny stocks are all shaking wildly amid fragile investor confidence.
The choppiness across global stock markets looks set to continue too as the tragic events in Ukraine roll on. Fears for global trade have leapt following the placement of sanctions on Russia. And soaring energy prices have amplified existing concerns over runaway inflation.
Right now, the performance of my shares portfolio isn’t my chief concern. But my desire to continue investing remains resolute. These three penny stocks have enjoyed solid share price gains in recent sessions. Here’s why I’d buy them today.
Coats Group
The Coats Group share price has soared around 20% from its levels at the turn of March. Yet on paper, the threads, zips and trims manufacturer still looks pretty attractive. Today, it trades on a forward price-to-earnings (P/E) ratio of 11.9 times.
Coats is a major clothing parts supplier, and I expect demand for its wares to rise steadily as increasing emerging market wealth and a growing global population keep clothes demand rising.
My main concern for Coats is that growing consumer awareness around sustainability could impact its operations. This has the potential to derail the rapidly-growing ‘fast fashion’ segment and, by extension, demand for Coats’ products. Still, at current share prices this is a risk I’d be happy to take.
Marston’s
Concerns over mounting inflation — and the impact this could have on consumer spending — have weighed on the Marston’s share price in recent months. And while the pub operator has sprung higher lately, it still trades on an ultra-low forward P/E ratio of just 10.1 times.
I like Marston’s because it has a huge estate of pubs, restaurants and hotels that span the country. Britons are spending more and more of their disposable income on leisure pursuits, such as eating and drinking out. So the 1,500-odd locations Marston’s has will allow it to exploit this opportunity to its fullest.
I also like Marston’s because, through its joint venture with Carlsberg, it brews some of the country’s most popular beers. Its brands also include San Miguel, Tetley’s and Hobgoblin.
Civitas Social Housing
Property business Civitas Social Housing isn’t as cheap as Marston’s or Coats, on paper. In fact, it trades on a forward P/E ratio of 15.2 times. But what it does pack is a mighty 6.4% dividend yield. This is thanks to its classification as a real estate investment trust (REIT). Under these rules the business has to pay 90% of annual profits out by way of dividends.
I think Civitas Social Housing in particular is a great penny stock to own as it invests in social homes for people who require specialist support. This is one of the fastest-growing parts of the UK property sector. It also gives me a chance to bump up the number of ethical shares I own in my investment portfolio.
I’d buy Civitas even though adverse changes to social care policy could hit profits later down the line.