THE DAILY ENCRYPT

October 3, 2022

2 falling penny stocks I’d buy for my Stocks and Shares ISA!

I think these two penny stocks could be too cheap for me to miss right now. Here's why I'd buy them for my Stocks and...
Photo by Batyrkhan Shalgimbekov

I’m searching for the best penny stocks to buy following recent price falls. Here are two I’d buy for my Stocks and Shares ISA before April’s end-of-year deadline.

A penny stock for the EV boom

I think Bluejay Mining (LSE: JAY) could prove an excellent stock to own as demand for electric vehicles (EVs) soars. You see this particular UK mining share is developing a series of projects in Greenland which contain elements like nickel, copper, cobalt and lead.

It also owns various copper projects in Finland which it is assessing for future development. These commodities are critical in the manufacture and the running of these low-carbon vehicles.

The problem with investing in Bluejay is that it isn’t actually generating any revenues at present, meaning it may struggle to afford to get its assets to production. Accruing lots of debt and tapping shareholders for cash are common options for companies in this scenario.

Encouragingly though, Bluejay created a joint venture with KoBold Metals — the mining technology business backed by Bill Gates and Jeff Bezos — to fund the Disko-Nuussuaq nickel, copper, cobalt and platinum project. This has helped remove a large chunk of the risk for Bluejay and its investors.

Bluejay Mining’s share price rocketed following the KoBold Metals news broke. But it’s more than halved since then to current levels of 7.4p. I think this could represent an attractive dip-buying opportunity for my ISA.

A top buy after IPO disaster

Victorian Plumbing Group (LSE: VIC) began trading in London to much fanfare last summer. Its IPO was the largest ever on the AIM market and so it came with lofty expectations. News of difficult trading conditions since then has inevitably yanked it lower.

At 54p per share, Victorian Plumbing trades at an eye-watering discount to its IPO price of 262p. The now-penny stock has been hitting by slowing sales and rising costs as a consequence of broader inflationary pressures. And this threatens to continue for some time (consumer price inflation just surged to 6.2%, data shows today).

However, I still believe in the long-term outlook for Victoria Plumbing. And as someone who loves value I’m highly tempted to load up on the business. At today’s prices, Victorian Plumbing trades on a forward price-to-earnings growth (PEG) ratio of just 0.5. Any reading below 1 suggests that a stock could be undervalued.

I like Victorian Plumbing’s online-only trading model and the steps it has taken to create a cutting-edge internet presence. Its focus on e-commerce is enabling it to exploit the rising popularity of online shopping with consumers and is keeping costs down. The strength of its online offering is one reason for its ‘excellent’ rating with customers on Trustpilot.

I also believe Victorian Plumbing will continue to benefit from a strong housing market. The favourable mortgage rates of recent years look set to persist, meaning sales of Victorian’s plumbing to both sellers and buyers should be robust.

I fully expect Victoria Plumbing to recover from that disastrous IPO and deliver rock-solid shareholder returns.

The post 2 falling penny stocks I’d buy for my Stocks and Shares ISA! appeared first on The Motley Fool UK.

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More reading

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Top UK shares to buy before the ISA deadline
FTSE 100 stocks I’d buy with £20k today
Oil and gas stocks are booming: will they go higher or have they peaked?
Should I ditch fund managers to improve my ISA returns?

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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