To be fair, the BoE’s track record of predicting inflation and subsequent recessions is pretty dire, with most warnings being false alarms. Still, it doesn’t hurt to prepare for the worst-case scenario. So, what are the best stocks to buy today with a spare £500?

5G penny stocks of the future

In the grand scheme of things, a recession, while unpleasant, is ultimately a short-term problem. And in the long term, demand for technologies like 5G and eventually 6G will likely continue to surge.

Despite what the headlines would suggest, we’re still in the early days of the next-generation telecommunications network. But that makes it the perfect time to find the potential winners of the future. And while some big industry titans like Qualcomm are operating in this space, a handful of tiny penny stocks are also starting to make waves.

Two that have caught my attention are Solid State (LSE:SOLI) and MTI Wireless Edge (LSE:MWE).

The first is an electronic equipment specialist. It works with small and medium-sized businesses that can’t afford to develop their electronics in-house and are also too small to secure deals with larger industry players. While the target market is undoubtedly niche, the group has demonstrated its ability to build strong relationships. And with its latest acquisitions significantly expanding its capacity, Solid State should be able to scale its offerings in line with customer needs.

The second is a global specialist in radio frequency communication technologies. That includes flat & parabolic antennas and custom solutions for businesses and the military. Management has also begun delving into wireless water control systems for agriculture as well as the public sector.

Seeing the risks and rewards

Both of these penny stocks have already begun to tap into the opportunities offered by the rollout of 5G. So, it’s not surprising to see their revenue streams growing by double-digits. And despite their market capitalisations being lower than £100m, both companies are profitable!

In my experience, it’s rare to see small firms having a positive bottom line. And while there’s some debt on their balance sheets, neither appears to be overleveraged. These are all encouraging signs of long-term growth potential. But that doesn’t mean they’re risk-free.

I’ve already highlighted the stiff level of competition. And with supply chain disruptions, especially in the semiconductor space, sourcing the raw materials required to fulfil customer orders is undoubtedly challenging. If these firms cannot clear their order books quickly enough, clients may start turning to competitors who can.

Needless to say, that could quickly compromise the impressive growth delivered to date. Nevertheless, it’s a risk I feel is worth taking for my portfolio with a small amount of capital, like £500.

Well-established and growing

The company develops and manufactures “high quality” antennas for commercial, military and radio-frequency identification (RFD) markets. It’s headquartered in Israel, although the stock is listed on the London market.

One of the things I like is that the business has been around for about 50 years and listed on the stock market for about 15. And now it’s grown into an organisation with three divisions: Antennas, Water Control & Management and Distribution & Professional Services.

With so many processes and systems automated these days, I reckon MTI Wireless Edge is operating in a sector relevant to today’s needs. And the firm’s trading and financial record appears to back up that theory. Over the past few years, revenue has been moving at a compound annual growth rate (CAGR) of almost 16% with earnings per share growing at just over 10%.

Another thing I like is the CAGR of the shareholder dividend. It’s running at just under 18%. And at today’s share price level, the forward-looking dividend yield for 2022 is around 2.75%.

I think MTI Wireless Edge is a rare UK technology growth stock because it pays a decent dividend. I’m more used to seeing growth priced at a level that makes the immediate dividend yield paltry.

Strong results so far this year

In yesterday’s trading update, the company said all three divisions traded well in the nine months to 30 September and they’ve been recovering from last year’s pandemic challenges. Revenue grew by 8% compared with the equivalent period a year earlier. And earnings per share increased by 11%. But perhaps the most important figure is that operating cash flow improved by a robust 15%.

I reckon the cash performance of any business is a good indicator of the strength or weakness of the operation. And MTI Wireless Edge has been doing well in terms of cash. The business is “ungeared” and there’s a net cash position on the balance sheet worth around $9.3m.

Looking ahead, chief executive Moni Borovitz said the business is positioned well for ongoing growth from organic advances and from acquisitions. Meanwhile, the forward-looking earnings multiple is around 30 for 2022 when set against analysts’ expectations. That’s not cheap, although it does drop a bit if I account for the firm’s cash pile.

I think the consistency of the financial and trading record combines with the firm’s growth prospects to justify the rich-looking valuation. However, earnings could miss expectations for any number of operational reasons, causing the share price to fall in the future. And I could lose money on the stock.

Nevertheless, I’m watching this one closely and will likely buy some of the shares on dips and down-days to hold for the long term as the growth story rolls out. And while waiting, I’ll collect the income from the dividend.

A damning IPCC report out on 9 August said the world should expect more extreme weather events like droughts, hurricanes and rising sea levels. This is “code red for humanity”, one United Nations chief said.

So I’ve identified two UK energy stocks I think could help the world solve the water and energy crises we all now face.

MTI Wireless Edge

AIM-listed Israeli firm MTI Wireless Edge (LSE:MWE) builds and supplies 5G wireless antennas for satellites. So why is it in my UK energy stocks list? Well, its water and irrigation subsidiary Mottech Water Management Systems has expanded in Canada. And it has announced a three-year, £175,000 service contract with a “major Canadian city [which has] one of the largest municipal water irrigations systems in the world”.

With wildfires raging and extreme temperatures becoming more common, I see much greater demand for these products in future.

I’ve owned MTI Wireless Edge myself in the past, and sold it for a decent profit. I think now might be a good time for me to buy back in, given the health of the business and its international expansion. 

Q1 results to 31 March 2021 showed profit before tax was up 25%, with earnings per share up 20%. There are still risks though. MTI will need to keep investing heavily in its irrigation control systems, which will be costly.

UK energy stocks 

One way to spot potential future stars in UK energy stocks is to watch when institutions buy in. Altair Group Investment picked up 146 million shares in EQTEC (LSE:EQT) in June. The venture capital giant now owns around 20% of the company. 

EQTEC’s engineers design and build gasification facilities of up to 30MW. These energy plants can process waste materials like forest wood, vegetation and agricultural waste to produce synthetic natural gas or biofuels. 

In May, the company said it had acquired a plant in Italy that could turn waste products into energy with no hazardous emissions. If successful, such energy sources will be critical for the planet in the coming decades. 

The downside

Rich investors in venture capital take on big risks by investing in early stage UK energy stocks. An investment here could just as easily go to zero as anywhere else. And the company has raised money from the market recently, diluting early shareholders. This is a business with costly R&D, so it may well happen again. 

On a brighter note, the £109m company says it expects to become profitable for the first time with FY2021 results. Revenues should grow from €2.2m to €15.5m with a net profit of €3.2m. For FY2022 the business has set even more ambitious revenue and profit targets of €54.9m and €8.25m

Still, if the company fails to reach this high bar, the share price could collapse. 

Benjamin Franklin said nothing is certain in life, except death and taxes. To that aphorism I think we should add climate change. Investing in UK energy stocks could help insulate me and my loved ones against the worst of what’s to come, and help the planet too.

MTI has a market-cap of just £52m. But unlike many small-cap tech stocks, MTI Wireless has a 15-year history on the London market and has been profitable every year since 2013. That’s quite an unusual combination — I reckon this dividend-paying stock could be worth a closer look for me.

49 years of family ownership

MTI Wireless Edge makes radio antennas for commercial, military and RFID applications. Examples include vehicle-mounted antennas, products for 5G and Wi-Fi, and military antenna systems used on ships, and submarines. The company also has a division that supplies wireless irrigation systems.

The company was founded by Zvi Borovitz in Israel in 1972. Borovitz remains the company’s chairman. Family member Moshe Borovitz is chief executive, and the wider family still controls about 30% of the company’s shares.

I see this as a potential attraction. In my experience, companies with long-standing family ownership are often run with a focus on sustainable long-term growth. Owner-shareholders often have most of their net worth tied up in a business. They may also get much of their income from dividends.

MTI Wireless Edge has delivered a mixed stock market performance since the company’s London IPO in 2006. But investors who bought during the last five years have seen decent gains — MWE’s share price has risen by 190% since June 2016.

A steady grower

Growth slowed last year due to sales disruption caused by Covid-19. Revenue rose 2% to $40.9m, but the company’s pre-tax profit climbed 19% to $4.1m. Earnings per share were 17% higher and the group ended the year with net cash of $9.4m, an increase on 2019.

Shareholders were rewarded with a 25% dividend increase, giving the stock a yield of about 3%.

This solid progress has continued in 2021. Revenue rose 4% to $9.95m during the first quarter, while pre-tax profit was 25% higher, at $0.9m. The company says the global rollout of 5G mobile networks is creating new demand from both network operators and phone manufacturers.

MWE share price: high enough already?

MTI Wireless Edge stock surged to a high of more than 90p earlier this year, but it’s since fallen back to just under 60p. At this level, the stock is trading on 26 times 2021 forecast earnings, with an expected dividend yield of 3.4%.

In my view, the MWE share price got ahead of events earlier this year. The current level looks about right to me, although I’m not sure the stock’s cheap.

Another concern for me is that this is an overseas business with strong insider ownership. UK shareholders aren’t likely to have much influence over management, in my view.

Even so, I’ve been impressed by what I’ve learned of MTI Wireless Edge so far. This stock is a little smaller than I usually buy, but I’ve added the stock to my watch list for further research.

Edward Sheldon: Reckitt Benckiser

My top British stock for December is consumer goods company Reckitt Benckiser (LSE: RB).

There are a few reasons I’m bullish on RB right now. Firstly, the company is benefiting from the increased focus on hygiene across the world. Recent Q3 results showed like-for-like growth of 19.5% in the group’s hygiene division.

Secondly, top-level insiders, including the CEO and the Chairman, have bought stock recently. This suggests they’re confident about the future and that they see the stock as undervalued at present.

Reckitt shares have pulled back recently, and I think this pullback has created a brilliant buying opportunity. I bought more shares in the company myself in November.

Edward Sheldon owns shares in Reckitt Benckiser.

Tom Rodgers: MTI Wireless Edge

With the prospect of a Santa rally buoying UK buying interest I’m looking very closely at adding to my holdings in MTI Wireless Edge (LSE:MWE). The wireless antenna builder has hit all time highs by signing its biggest 5G contracts to date. Selling into new markets for its defence and irrigation products also bodes well. And a 3.6% forward dividend yield is pretty high for an AIM share. Fair warning: at a £53m market cap it’s at the lower end for shares I’d buy, but I’m less concerned than normal because MTI has been running since 1972.

Tom Rodgers owns shares in MTI Wireless Edge.

Rupert Hargreaves: Reckitt Benckiser

Shares in Reckitt Benckiser (LSE: RB) jumped at the beginning of 2020. Unfortunately, in recent weeks, the stock has lost value. I think this could be a fantastic opportunity to buy shares in the business for the long term.

Indeed, while shares in the maker of brands such as Dettol and Air Wick have slumped recently, I reckon the demand for these products will only rise in the long run. This suggests the firm has many years of growth ahead of it. 

The potential for sales growth, coupled with Reckitt’s dividend track record implies one will see high total returns from the stock in the years ahead. 

Rupert Hargreaves does not own shares in Reckitt Benckiser.

G A Chester: Sage 

The FTSE 100 isn’t noted for global giants in the technology sector. Sage (LSE: SGE), the world leader in accounting technology for small- and medium-sized businesses, is an exception. 

The market responded negatively to Sage’s recent annual results. I’m convinced this has provided long-term investors with a great opportunity to buy into a top-quality company at an attractive price.  

The results were ahead of expectations, but the market had a hissy fit about Sage’s plans for its current financial year. Management intends to divert up to 3% of profit margin into investing for future growth. I think the market’s response is myopic! 

G A Chester has no position in Sage.

Matthew Dumigan: AO World 

After a stellar first half financial performance, AO World (LSE: AO.) shares slid towards the end of November as investors cashed in some profits after a strong run. In the sixth months ending 30 September, revenues rose by a whopping 53% to £717m, with the company making an impressive pre-tax profit of £18.3m. 

Company CEO John Roberts believes AO’s market has changed forever and I’m inclined to agree. The pandemic has exacerbated the shift towards the dominance of online retail and e-commerce, meaning that in my opinion, the company is well situated to profit from this long-term trend. 

Matthew Dumigan does not own shares in AO World. 

Royston Wild: Clipper Logistics

I already own shares in Clipper Logistics (LSE: CLG). But I’d happily buy more for my Stocks and Shares ISA before half-year results are unpacked on Thursday, December 3.

Clipper provides “value-added logistics solutions and e-fulfilment to the retail sector.” As a consequence its profits are booming as online shopping activity takes off. The UK share declared in mid-November that it had continued to enjoy “strong trading” since its financial year began in March. I’m expecting it to announce that business has remained robust at the start of the second half in that upcoming release.

Clipper’s share price has soared 70% since the start of 2020. And I think it’s just getting going as it steadily racks up new contracts with retailers and other organisations. It’s why I bought the stock for my own ISA back in August.

Royston Wild owns shares in Clipper Logistics.

Kevin Godbold: SSE

FTSE 100 energy company SSE (LSE: SSE) is a big player in renewable energy. And I reckon the strategy targets an accelerating macro trend. Recent progress in SSE’s 50:50 joint venture with Equinor towards building the Dogger Bank offshore wind farm is exciting because it will be “the largest in the world.”

SSE is also building Scotland’s largest offshore wind farm, Seagreen. And the company owns “the UK’s most productive onshore wind farm,” Viking.

Meanwhile, the forward-looking dividend yield for the year to March 2022 is 6%, which I see as good value given the firm’s forward prospects. I’d buy some shares in this top British stock in December and beyond.

Kevin Godbold has no position in SSE shares.

Roland Head: Morgan Sindall Group

I expect construction and infrastructure firm Morgan Sindall Group (LSE: MGNS) to do well in 2021. Broker forecasts suggest the group’s profits will return to 2019 levels in 2021, but the firm’s shares still trade well below the levels seen before the pandemic.

Another attraction of this business is that CEO John Morgan has a 9% shareholding in the firm. This should ensure his interests are aligned with those of shareholders.

Morgan Sindall stock currently trades on less than 10 times 2021 forecast earnings, with an expected dividend yield of 4.1%. I think the shares have further to go and continue to hold.

Roland Head owns shares of Morgan Sindall Group.

Paul Summers: Aviva

Market sentiment may improve further in December if (and that’s a sizeable ‘if’) we get news of promising coronavirus vaccines receiving regulatory approval. As such, I think shares in still-cheap-as-chips FTSE 100 insurance giant Aviva (LSE: AV) could offer a lot of potential upside.

Recent new business wins in the UK and North America should inspire confidence and the dividends are worth grabbing. Aviva now expects to return 21p per share in this financial year. That’s a stonking yield of 6.6% based on the current share price. Good luck trying to generate that kind of return from a Cash ISA!

Paul Summers has no position in Aviva.

Manika Premsingh: Ashtead Group

FTSE 100 multinational construction and rental equipment company Ashtead (LSE: AHT) has been on my investing radar because the US contributes a substantial part to its revenue. The US economy growth forecast is somewhat optimistic for 2021.

Moreover, fiscal stimulus to support infrastructure creation is also likely. These developments should hold AHT in good stead I think.

For now, we’ll know more about its present performance when it releases second quarter numbers in December. Its first quarter (ending July 31) numbers were quite resilient already. I reckon they would have improved from there, convincing me more that I should buy the stock. For this reason, I look forward to its update, making it my top British stock for December.

Manika Premsingh has no position in Ashtead.

Jonathan Smith: HSBC

HSBC (LSE: HSBA) has been a stock out of favour with many investors this year. As a result, a share price of around 400p represents a discount of 33% from where we started the year.

It’s my favoured stock of the month due to positive recent news. Q3 net profit came in $1.4bn, higher than the $882m expected. Provisions for doubtful debt have been reduced, and the company is even hopeful of paying a dividend of some form next year.

Add all of this together, and I think the business could be turning a corner from a difficult year. 

Jonathan Smith has no position in HSBC.