2 of the best cheap penny stocks to buy today!

I think these could be two of the greatest cheap penny stocks for me to buy right now. Here’s why I think they could both be winners.

Pendragon

Car retailer Pendragon (LSE: PDG) has slumped in value recently as concerns over the cost of living crisis have mounted. In fact, recent action by online motor seller Cazoo illustrates the growing pressure facing these sorts of stocks.

On Tuesday, the business announced it was cutting 750 jobs, warning of a possible recession “in the coming months”. Investors in Pendragon need to be prepared for extreme sales pressure in the near term then.

That said, it’s my opinion that the penny stock’s rock-bottom valuation reflects this danger. At 57.8p per share, Pendragon trades on a forward P/E ratio of just 7.5 times.

As a long-term investor I think recent share price weakness represents an attractive dip-buying opportunity for me. This is because I believe Pendragon’s profits could soar over the longer term as demand for electric vehicles (EVs) takes off. Around 44% of Britons plan to buy an EV in the next 10 years, according to official data.

Shanta Gold

I believe too that investing in Shanta Gold (LSE: SHG) could be a good idea right now. I’m tipping precious metals prices to have a fresh run higher as inflation soars and global growth slows.

Many economists are becoming increasingly gloomy over conditions, a scenario that could supercharge demand for safe-haven gold again. The World Bank this week, for instance, slashed its 2022 global growth forecasts to 2.9% from 4.1% on account of “the war in Ukraine, lockdowns in China, supply chain disruptions and the risk of stagflation”.

There’s no guarantee that gold prices will rise in this climate. And this could cause profit forecasts at metal producers like Shanta Gold to slide. The World Gold Council says that gold-backed exchange-traded funds (ETFs) saw outflows of 53 tonnes in May. A possible resurgence in the US dollar is one threat to precious metals’ prices going forward.

However, on balance, I think gold demand could rise strongly. Inflationary looks set to remain higher for longer as the war in Ukraine drags on and broader supply chain issues endure. The World Bank also noted this week that “global inflation is expected to moderate next year but it will likely remain above inflation targets in many economies”.

I’d buy Shanta Gold, given the shaky economic backdrop. And I’d also add it to my portfolio because of the work it’s undertaking to supercharge production at its African assets. I think this could deliver excellent long-term returns. The penny stock remains on course to become a 100,000-ounce-a-year gold producer next year.

At 9.3p per share, Shanta Gold trades on an ultra-low forward P/E ratio of 8.2 times. Like Pendragon. I think it’s a brilliant bargain for me to load up on today.