Student accommodation

As a quick reminder, a REIT is a business set up and designed to invest in real estate and provide returns to its shareholders. In fact, one of the rules of being a registered REIT is that 90% of profits must be passed to shareholders. REITs can be good for boosting my passive income stream and I already own a few as part of my holdings.

Empiric is a REIT that specialises in investing in and managing purpose-built student accommodation. It targets prime university cities and towns throughout the UK.

So what’s happening with Empiric shares currently? It is worth remembering that a penny stock is one that trades for less than £1. As I write, the stock is trading for 87p. At this time last year, it was trading for 92p, which is a 5% drop over a 12-month period.

The bull and bear case

When researching student admission, I saw that student numbers are increasing, along with demand for student accommodation. Empiric could benefit and continue to boost performance and returns in a burgeoning market. Speaking of returns, the shares currently offer a dividend yield of 4%. This is in line with the FTSE 100 average of 3%-4%.

Covid-19 had a material impact on many universities. Students stayed at home, did not apply for places, and lectures moved online. This new way of learning could have an impact on Empiric. Could there be less of a demand for accommodation if lectures remain online? Furthermore, the threat of new Covid strains still looms large.

Shareholder returns are underpinned by performance. I do understand that past performance is not a guarantee of the future, however. Looking back, I can see that Empiric has recorded consistent revenue and profit for the past four years. This was even the case during the pandemic-affected year of 2020. I’m keen to see whether 2022 results are close to pre-pandemic levels.

With potentially lucrative growth opportunities ahead, I wanted to learn more about Empiric’s price-to-earnings growth ratio (PEG). The general rule here is that a ratio of below one is favourable. Empiric’s current PEG ratio stands at an enticing 0.7.

A penny stock I would buy

Property stocks have traditionally been seen as a good way to combat soaring inflation. I have purchased a number of REITs in the past six months for my holdings. I would also add Empiric shares to my holdings.

The student accommodation market is a burgeoning one, especially with the influx of overseas students. This increased demand has led to a shortage of beds, which in turn, presents an opportunity for firms like Empiric to grow and boost performance and returns.

Robust markets

Staffline Group (LSE: STAF) is admittedly in some danger as the UK economy cools. If breakneck inflation persists and companies struggle then demand for its recruitment services could tank.

That said, I’m encouraged by the resilience of Britain’s labour market so far. And this could still encourage me to buy the penny stock today.

Indeed the Recruitment and Employment Confederation announced this week that, “Demand for permanent staff remains buoyant despite increased economic concerns”. Consumer price inflation hit fresh 30-year highs in April yet companies’ hiring intentions for the short-to-medium term has continued to rise.

“Strong start”

Staffline itself celebrated the ongoing robustness of the UK jobs market a month ago as it described the “strong start” it had made to 2022.

The company added then that while economic uncertainty had increased, its “strong market share in resilient sectors” like food distribution, e-commerce, and logistics helps give it decent earnings visibility.

City analysts believe conditions will remain favourable for Staffline as well. They think the penny stock’s profits will soar 246% year-on-year in 2022. And this leaves it trading on a forward price-to-earnings growth (PEG) ratio of 0.1.

Any reading below one suggests that a stock could be undervalued. At these prices I think Staffline is a steal.

Rewards vs risks

Pub operator Marston’s (LSE: MARS) is another penny stock that could suffer as the cost of living crisis intensifies.

It’s a danger that brewing giant Heineken highlighted this week. On Wednesday it said that it the impact of increasing inflationary strain on household disposable income poses “a consequent risk to beer consumption later in the year”.

In the UK, where all Marston’s pubs are located, inflation is tipped to peak at 8.7% in 2022 by the Office for Budget Responsibility. That could really weigh on drinkers’ budgets.

Another cheap penny stock

Naturally the danger of ballooning living costs to pub operators is particularly high. The cost of a pint or a glass of wine at one of Marston’s inns is far more expensive than what you or I would pay for a bottle at the supermarket to drink at home.

Still, as a long-term investor I’m tempted to buy Marston’s for my portfolio. I think a forward price-to-earnings (P/E) ratio of 9.8 makes it too cheap to miss.

Data shows that Brits continue spending larger proportions of their discretionary income on leisure activities like drinking and eating out. This is an established trend that I think Marston’s will profit handsomely from when those current dangers pass.

City analysts believe the penny stock will continue recovering from the damage wrought by Covid-19 lockdowns, too. They think Marston’s will bounce back into profit this year (to September 2022) following two years of losses and grow earnings 38% in financial 2023 as well.

Protection from rising inflation

I think buying property stocks is a good way to protect myself against rampaging inflation. This is because rents by and large rise in line with broader prices. It’s a quality that not all UK stocks share.

I think Empiric Student Property (LSE: ESP) in particular could be a top buy right now. As well as helping me guard against inflation today, it could make me a lot of cash in the years ahead as student numbers jump and the need for dedicated accommodation increases.

Latest figures from the Higher Education Statistics Agency showed the number of UK students leap 8% in the 2020/2021 academic year. The number of full-time first-year students also grew at the fastest pace on record. These numbers illustrate the massive opportunity for Empiric Student Property.

Chunky dividends!

City analysts are expecting the penny stock’s earnings to double year-on-year in 2022. Consequently the company trades on a forward PEG ratio of just 0.3.

I like Empiric Student Property too because of its healthy dividend yields. These sit at 3% and 4.1% for 2022 and 2023 respectively. I’d buy it despite the threat that Covid-19 poses to student enrolment levels in the near term.

Another dividend-paying penny stock to buy

Speaking of high dividend stocks, Centamin (LSE: CEY) is a gold stock whose big yields make it an attractive investment target. The forward yield here sits at a huge 5%.

There’s a couple of good reasons I think Centamin is a great buy today. The first is that I believe gold prices could be on the verge of soaring again as inflationary pressures grow. Demand for gold rises when the value of paper currenices come under scrutiny.

This week Bank of America said that it expects gold to hit $2,175 per ounce in the current climate. That’s around 100 bucks higher than summer 2020’s record peaks.

Production boost

I also like gold stock Centamin because of the steps it’s taking to boost production over the medium-to-long term. The company plans to deliver 500,000 ounces of the shiny stuff each year from its Sukari flagship mine over the next decade. Centamin is on track to dig between 430,000 and 460,000 ounces of gold from its Egyptian asset in 2022.

Centamin’s a great way to make money from a strong gold price in my book. But of course there’s no certainty that precious metal prices will rise. Rapid central bank rate hiking and a robust rise in the US dollar could send gold prices lower.

However, on balance I think — as a long-term investor — that the benefits of owning Centamin shares offset the risks. I also think its undemanding forward P/E ratio of 12.2 times makes the penny stock a great buy (it’s expected to enjoy a 10% rise in annual profits this year).

Sellers of big-ticket items like Pendragon might also suffer as rocketing inflation smacks consumer confidence.

That said, I think Pendragon’s cheap price might still make it a great long-term buy today. At 21.6p per share, it trades on an ultra-low forward price-to-earnings (P/E) ratio of 6.5 times.

I’m minded to buy the penny stock as I think sales of its electric vehicles could soar as concerns over the climate emergency grow. The Society of Motor Manufacturers and Traders has previously guided that 300,000 new battery-powered vehicles could roll out of UK showrooms in 2022.

Protection from surging inflation

I think investing in some choice property good stocks could be a good idea too as inflation hits 30-year highs. Many UK companies face pressure from rising prices in some way, shape or form, whether that be through rising costs or falling consumer spending power. Property shares are a good hedge against this as rents tend to rise in line with inflation.

This is one of the reasons I’m considering buying Empiric Student Property (LSE: ESP). But it’s not the only one. Sure, the student accommodation specialist would take a hit if the Covid-19 crisis worsens and university attendances dive again. However, I think the long-term benefits of owning this share outweigh this more immediate danger.

Soaring numbers of overseas students is only increasing the shortage of student beds in Britain. This is steadily nudging rents up and property supply is tipped to continue lagging demand for years to come.

At 89p per share, Empiric Student Property trades on a forward price-to-earnings growth (PEG) ratio of just 0.2. This is well inside the widely-accepted bargain benchmark of 1 and below.

Another dirt-cheap penny stock!

Pub operator Marston’s (LSE: MARS) is another penny stock that could suffer if Covid-19 rates increase and lockdowns return. Investors already have to tolerate a big dollop of risk here as labour costs rise.

But it’s my opinion that recent share price weakness here represents a terrific buying opportunity for long-term investors. Today, the firm trades on a forward P/E ratio of 10.2 times.

I’m encouraged by news that sales here were bouncing back before Omicron emerged and fresh restrictions followed. Revenues were up 1.3% in the eight weeks to 27 November, Marston’s said last week.

Britons were spending more and more money on leisure activities like drinking and easting out before the Covid-19 emergency. Those fresh numbers suggest this positive trend remains in tact and could power profits at pub operators like Marston’s in the years ahead.

Today, the UK leisure share trades at 81p per share. I’m thinking it could be too cheap for me to miss.

A report by the National Union of Students illustrates why the likes of Empiric might be a brilliant purchase for me. A shortage of new beds means that the average rent for purpose-build student accommodation has rocketed 61% over the past decade. An average cost of £7,374 per year in 2021/22 is also up 16% from pre-pandemic levels.

Latest data on student enrolments suggests that accommodation will remain scarce, too, thus keeping rents moving northwards. University clearing service UCAS has earlier said total applications in this academic period are up more than 8% year-on-year.

Profits at Empiric and its peers could suffer if applicants from the EU continue to fall post-Brexit. But all things considered I think the accommodation provider is an excellent penny stock for me to buy.

A golden era?

I think Greatland Gold (LSE: GGP) is another top penny stock for me to buy. Precious metals prices remain in a broad holding pattern but I believe an environment of high inflation could send them spiralling higher. Forecasters at Société Générale think gold will trade at around $1,900 per ounce by the second quarter of 2022. That’s up around 130 bucks from current levels.

With key inflation readings recently surpassing analysts’ expectations, though, I think there’s a good chance gold could perform better than some think. The rate of price rises are already pretty hair raising: consumer price inflation in the US hit 6.8% in November. That’s the highest reading for 40 years.

Another top penny stock I’d buy

I wouldn’t just buy Greatland Gold because of the bright near-term outlook for gold values, though. I’m also encouraged by recent news from the miner concerning exploration work at its Haveiron gold-copper project. Fresh drilling work at the mine in Western Australia revealed “significant” mineralisation in 19 of the 24 drilled holes. A $16m share placing last month gives the penny stock plenty of financial clout to develop the mine as well.

I’m aware that any setbacks with bringing Haveiron online would have a significant impact on Greatland Gold’s revenues. It could also have massive implications on overall costs. Considering that the business isn’t expected to turn a profit this financial year (to June 2022) this could prove particularly spooky for investors and prompt a sharp share price reversal.

Still, it’s my opinion that the potential rewards at Greatland Gold outweigh these risks. The bright outlook for gold prices and the quality of its Australian assets makes the miner a worthy buy in my opinion. Just like Empiric Student Property, I’d happily buy the company today for 2022.

A report by estate agency Savills illustrates how popular the purpose-built student accommodation (or PBSA) sector is becoming with investors. Despite the pandemic, they spent £5.77bn on the sector in 2020, up 5.9% year-on-year and taking out the previous annual record set in 2015.

Yet, as things stand, it’s unlikely that accommodation supply will get anywhere close to meeting demand. Data earlier this year from university clearing service UCAS showed applications from foreign, non-EU countries soared 17.1%.

Too cheap to miss?

The likes of Empiric Student Property haven’t quite seen off the Covid-19 crisis yet. A significant rise in UK cases could again cause occupancy at PBSA specialists to sink. However, it’s my opinion this risk is more than baked into this particular property play’s ultra-low valuation.

City analysts think earnings at Empiric will soar 111% in 2022. This leaves it trading on a price-to-earnings growth (PEG) ratio of 0.2, at current prices of 84p. Such a reading is well inside the benchmark of 1 and below which suggests a stock could be undervalued.

Motoring on

The impressive trading momentum at Vertu Motors (LSE: VTU) has also caught my attention recently. And despite recent share price gains (the retailer recently touched five-and-a-half-year highs) its shares seem to offer attractive all-round value.

City brokers are expecting earnings at the business to rocket 163% this year. So, at 61.8p per share, Vertu trades on a price-to-earnings (P/E) multiple of just 4.5 times for this fiscal year (ending February 2022).

Demand for automobiles tends to pick up strongly during economic recoveries, and industry data shows this is no different in 2021. However, interest in Vertu’s vehicles has been particularly impressive following last year’s Covid-19 shock.

Sales volumes across all its categories have outperformed the broader market and, in the six months to August, it shifted almost 42,300 brand new motors. This was up 33.3% on a like-for-like basis from the same 2020 period. By comparison, the broader new car market grew 31.4%, according to the Society of Motor Manufacturers and Traders (or SMMT).

Record profits!

These increased volumes, along with strong pricing of new and used vehicles, helped drive adjusted pre-tax profits at Vertu to record first-half highs of £51.8m. And this prompted the business to lift its full-year forecasts.

It’s important to note, however, that the benefit of soaring demand to vehicle prices could become a problem for Vertu if it struggles to find stock. Both the new and pre-owned markets are looking extremely tight as supply chain issues hit vehicle production. It’s possible that this tightness could last well into 2022 too.

Still, at current prices, I still believe Vertu could be a top stock for me to buy. Like Empiric Student, I’m giving it serious consideration right now.

Grounds for optimism

As Britain’s biggest geotechnical engineering specialist, I think Van Elle Holdings (LSE: VANL) could make terrific returns for its shareholders over the next decade. The business offers a wide range of ground services across multiple sectors that look primed for healthy growth in the long term.

For example, its dealings in the residential housing sector will allow it to exploit the housebuilding boom that’s tipped for the next few years, at least. Its expertise in infrastructure should also generate solid profits as spending on roads, rail and other big government projects takes off.

It’s true that Van Elle could suffer in the short-to-medium term if the UK economy stalls and material shortages damage the construction sector. September’s Purchasing Managers’ Index (PMI) gauge fell to its lowest since the start of the year. But as someone who invests with a long-term view, I think this penny stock is still a top buy.

The property powerhouse

I believe Empiric Student Property (LSE: ESP) could be one of the best property stocks out there to buy. UK universities have been extremely popular destinations with overseas students for centuries. And today, their pull is as strong as it’s ever been. According to government statistics, there were 538,600 foreign nationals studying at British institutions in 2019/2020. That represented a whopping 22% of the UK’s total student population.

A higher proportion of students from abroad generally means higher demand from accommodation providers like Empiric. The supply of student living spaces is growing, but it’s failing to match the rate it’s needed, meaning that rents continue steadily rising.

While I believe this all bodes well for Empiric Student Property, it’s important to remember that the ongoing pandemic still poses extreme near-term risks. Revenues here slumped 24% year-on-year between January and June as occupancy levels dropped to a mere 65%.

A high-risk, high-reward penny stock?

I believe Horizonte Minerals (LSE: HZM) could also enjoy excellent profits growth through the next decade, at least. This penny stock is developing two nickel projects in Brazil, operations which it hopes will help it to ride the electric vehicle boom. A recent Roskill report estimated that nickel demand from these low-emissions vehicles will surge to 2.6m tonnes by 2040. That compares starkly with the 90,000 tonnes recorded last year.

Horizonte Minerals is clearly packed with potential, stemming from the green revolution. What’s more, its Vermelho and Araguaia are high-grade, low-cost assets with long mine lives. But while I’m closely monitoring the penny stock, I haven’t yet taken the step of actually investing.

Development problems and soaring costs could significantly set back the company’s road to profit. It could also force the business to tap shareholders for cash, of course. I might wait a little longer before buying Horizonte for my shares portfolio.

A top stock I already own

Games Workshop (LSE: GAW) has a long record of consistent earnings growth. This history reflects its proud position at the top of a niche retail segment (fantasy wargaming), one which therefore withstands the pressures of economic downturns on broader consumer spending.

It also underlines the strength of the FTSE 250 firm’s online proposition which allowed it to keep growing profits despite the closure of its shops during the pandemic.

This top UK growth share was on my shopping list for some time. And last year’s resilient performance in tough times encouraged me to take the plunge and add it to my Stocks and Shares ISA. I think there’s a lot more to come from Games Workshop too as it expands in international markets and steps up its exposure to popular media.

Last year, it inked a deal with games developer Frontier Developments to bring its Warhammer fantasy franchise to consoles and PCs in 2023. The company has also been exploring the possibility of launching a television series which would boost sales of its miniatures and potentially deliver blockbuster revenues in its own right.

However, it’s worth remembering Games Workshop commands a hefty valuation today. City brokers think annual earnings will rise 5% in the current fiscal year, leaving the business trading on a forward price-to-earnings (P/E) ratio of 30 times.

Such a heady rating leaves little room for anything other than a continued stream of good trading news. Otherwise the wargame goliath could see its share price fall off a cliff.

Another great UK growth share!

I believe Empiric Student Property (LSE: ESP) could be another great UK growth share for long-term investors like me to buy.

Okay, City analysts expect earnings at the property provider to fall again in 2021 as Covid-19 continues to hit occupancy levels (its student accommodation was only 65% filled during the first half of this year). But I’m expecting profits to bounce back strongly as the pandemic gradually recedes. Indeed, brokers think annual earnings will soar 108% in 2022.

There simply aren’t enough places for university students to stay in the UK. As property investment firm CBRE has recently commented: “There remains an acute supply and demand imbalance across most markets,” a problem “which has been further impacted by construction delays as a result of the Covid-19 lockdown.”

This is an issue which will take a long time and a monumental level of effort to soothe. And it means rents at accommodation providers should remain on an upward trajectory for some time to come.

British universities have been popular places for overseas students to come and study at for centuries. And I think this will continue to support UK growth shares like Empiric Student Property, despite the threat that student immigration rules could, theoretically, change.

A penny stock for the ages

Britain’s has been a top destination for overseas students for centuries. In fact, latest data shows that UK universities are perhaps more popular today than ever before. According to the Higher Education Statistics Agency the number of non-UK students enrolled in institutions jump 12% in the 2019/2020 academic year to a record 556,625.

It seems that the long-term outlook for accommodation provider Empiric Student Property remains quite robust then, at least in my opinion. And while bookings for the upcoming academic year are lower than they would be during this point in previous cycles, activity is picking up as pandemic restrictions are lifted. I think this penny stock is a great growth share to buy, even if its more conservative approach to acquisitions could see it lose business to rivals.

Looking good

The decision to begin making hygiene products has helped save Creightons’ bacon and keep revenues and profits rising during the Covid-19 crisis. Indeed, financials this week showed sales rose 29% in the 12 months to March, to £61.6m. This was thanks to a £14.6m contribution from newly-launched ranges of soaps and similar hygiene-based goods.

I think things are looking up for the company’s traditional beauty and haircare products too, as government restrictions ease and people get out and about again.

It’s also worth noting that Creightons has its eye on expansion. Management said cash generated by the group’s growth has put it in “an excellent position to take advantage of any new opportunities that may arise,” adding it was “open to the acquisition of new brands with a digital presence.”

Remember though, that a return to lockdown conditions could drive Creightons’ recovery off the tracks.

A top value stock

Coats Group manufactures zips, trims and threads which are essential components in the clothing industry. This puts the penny stock in the box seat to ride the rebound in fashion sales as people return to all forms of socialising.

Indeed, revenues at the business rocketed 37% year-on-year in the first six months of 2021 to $732m, due to lockdown restrictions easing. However, Coats has a lot of debt on its balance sheet ($168m worth as of June) and this could cause a problem if demand for its products sinks again. Still, at current prices, I think the business could be too cheap to miss. It trades on a forward price-to-earnings growth (PEG) ratio of just 0.2.

Medical marvel

I think Zoetic International could be one of the best penny stocks to buy if one is concerned about the ongoing public health emergency. This is because the company manufactures and then sells cannabidiol (or CBD) oil products in the US and Europe to people suffering from medical ailments. And so, like any drugs developer, it doesn’t have to wring its hands worrying about how economic, political or social crises will damage its top line.

People will still move heaven and earth to get their hands on its treatments. However, it’s important to remember Zoetic operates in a highly-regulated industry. Thus, the risk of revenue-smacking law changes to the sale and usage of cannabis products are high.

A good buy despite rising online competition

Profits at Card Factory (LSE: CARD) took an almighty whack in 2020 as Covid-19 forced its stores to close. But soaring vaccination rates in Britain mean that things are starting to look up for this UK retail share. Card Factory is in great shape to ride the growth of value retail as it sells its greeting cards, balloons and other celebration-related paraphernalia at rock-bottom prices. I also like its robust position in a defensive retail market. The giving and receiving of greetings messages remains stable during economic upturns and downturns, right?

Card Factory has also been investing in its online channel to ride the e-commerce explosion. Though it’s important to remember that internet-only operators like Moonpig are grabbing an increasingly-large slice of the cards market in Britain.  

An expensive but excellent penny stock?

I’d also happily buy 1Spatial (LSE: SPA) shares as the digital revolution clicks through the gears. This UK IT services share provides Location Master Data Management (or LMDM) software, products which allow users to connect or combine data from multiple sources in different places. And it is doing a roaring trade at the moment. 1Spatial advised this week that it has “entered the new year with increased levels of committed revenue and a strengthened financial position.”

Orders are up year-on-year in the financial year to January 2022, and 1Spatial’s sales pipeline is growing across all regions. Bear in mind that investor expectations of explosive profits growth leave the company trading on a forward price-to-earnings (P/E) ratio of around 60 times. This sort of elevated reading could prompt a share price collapse if news flow out the company begins to worsen.

A UK property share

I think that Empiric Student Property (LSE: ESP) is another top penny stock to buy this July. As the name suggests, it provides accommodation for students. And it’s in great shape to ride the boom in university admissions in Britain. Bella Malins, director of admissions at University College London, recently told The Guardian that undergraduate admissions to the university were up 16% this year. This is one of many such spikes being recorded across the country.

I wouldn’t just buy Empiric Student Property for short-term gains though. British universities have been an attraction for foreign students for centuries. And recent data suggests that their appeal among overseas students is still strong, a particularly good omen for accommodation providers like this.

It’s important to remember that Empiric is nowhere near as busy on the acquisition front than rivals such as Unite Group. This could compromise the company’s ability to deliver long-term earnings growth.

A penny stock for the construction boom

The homes shortage that’s driving prices in the UK through the roof (so to speak) isn’t confined to our corner of Europe. Naturally, this means homebuilders on the continent need to get frantically building too. And this plays into the hands of SIG, a building products supplier with operations in Northern and Eastern Europe.

This penny stock’s share price just spiked to 14-month peaks around 47p per share. And I reckon it can keep rising as it recovers from 2020’s washout (like-for-like sales rose 4% in the last three months of last year). That said, there’s a risk the Covid-19 ‘third wave’ sweeping across Europe could snap off these green shoots of recovery.

A golden oldie

I believe Old Mutual (LSE: OMU) — which trades at 66p per share — is another top penny stock for long-term investors like me. I believe having exposure to fast-growing emerging markets is a great strategy for UK share investors. And this particular life insurance provider concentrates on exciting African markets south of the Sahara. These are territories in which insurance demand looks on course to boom.

American research group Brookings says that, prior to the pandemic, the African insurance market was set to grow at around 7% per year between 2020 and 2025. It noted: “This projection placed the African insurance market’s growth at approximately twice the rate of North America, more than three times the rate of Europe, and slightly higher than Asia’s 6% growth rate.”

Brookings also notes that the pandemic has delayed the continent’s insurance growth pattern rather than altered it, meaning operators like Old Mutual still have a very bright future. That said, be aware that competition here is rising as overseas operators try to get in on this lucrative territory.

Property powerhouse

I believe that investing in the student accommodation sector could be a good idea too. This is why I’d happily add Empiric Student Property (LSE: ESP), which trades at 88p per share, to my own ISA. This particular penny stock is one of the country’s largest operators in this part of the real estate market. And while it was battered by the Covid-19 crisis last year — revenues dropped 16% in 2020 as the pandemic smacked occupancy rates and forced it to dole out refunds — the sunny outlook for the sector remains.

In particular, inflows of international students continue to grow at a robust pace. As Savills notes, these particular students are 60% more likely to move into purpose-built student accommodation than homegrown students.

However, any changes to the higher education sector in Britain could damage demand for its digs going forward. But, all things considered, I think this is a great penny stock to buy right now.