Market volatility is returning with gusto as fears mount over soaring inflation and central bank rate hikes. This leaves some great dip buying opportunities and I’m currently looking for some top penny stocks to buy.
Here are two I think will recover strongly from current weakness and deliver excellent long-term returns for my portfolio.
Science in Sport
Price: 54p per share
Market cap: £77m
Broader demand for goods and services drops when times are tough for consumers. But I believe Science in Sport (LSE: SIS) might prove more resilient than many UK shares. This penny stock manufactures protein powders, energy gels, and other nutritional supplements that help keep sporty people going.
People don’t drop their sports and fitness goals when times get tough. Even if they can’t afford to go to an expensive gym they can switch to a low-cost operator. Or they can work out in other ways like road running using home fitness equipment. So I’m expecting demand for Science in Sport’s products to remain solid.
From a growth perspective, I like the firm’s strategy of developing the brand through partnerships with elite sports teams and organisations. It has teamed up with 330 such bodies, and progress with NBA basketball and NFL football teams in 2021 helped drive US revenues 50% higher last year.
Intense competition is likely to remain a threat to Science in Sport. But I’m convinced the company could still deliver terrific shareholder returns from its rapidly growing market. Grand View Research analysts think the sports nutrition sector will almost double in size between now and 2030 (to $82.3bn).
AfriTin Mining
Price: 6.8p per share
Market cap: £75.7m
Commodities producers like AfriTin Mining (LSE: ATM) aren’t usually popular shares when economic conditions worsen. The prices of the stuff they produce can fall off a cliff when fears over demand increase. AfriTin’s recent rapid price declines illustrates this point and poses a big threat to this particular mining stock.
I’m still thinking of buying AfriTin shares today though. This is because I’m focussed on the company’s long-term profits outlook and I expect sales of its tin to rocket in the years ahead. I’m tipping consumption of the soldering metal to increase as demand for consumer electronics surges.
I think this tin miner could be an especially lucrative way to exploit the coming ‘commodities supercycle’ too. For one, expansion of its flagship Uis project in Namibia should lift tin production significantly in the years ahead. Expansion of the current operation should lift output from 850 tonnes per year to 2,800 tonnes in the medium term.
I also like the business because work at Uis will also give it significant exposure to lithium and tantalum. AfriTin hopes drilling work at the site will lift the resource estimate from 71.54m tonnes of tin to 200m tonnes of tin, lithium, and tantalum. Lithium demand should rise strongly along with sales of battery-powered electric vehicles.