I’m searching for the best penny stocks to buy following recent market volatility. Here are two low-cost shares on my radar roday.
Good as gold
Getting exposure to gold remains a good idea in my opinion as inflation shoots through the roof. The yellow metal rises in value when prices rocket and it increased again following some shocking data today from the US. The Consumer Price Inflation (CPI) rate in the US jumped to 7.9% in February, a fresh 40-year high. It’s likely to keep advancing too as the price of energy grows.
I’d buy shares in Shanta Gold (LSE: SHG) to make money from gold’s move towards new record highs. Investing in producers of the metal instead of the commodity itself — or a financial product that tracks price movements like an ETF — involves a higher degree of risk because it exposes investors to the complicated and often expensive business of mining.
However, purchasing certain gold-producing stocks gives me the chance to receive dividends while piggybacking on the gold price too. The dividend yields over at Shanta Gold are pretty handy, if not exactly spectacular. A predicted reward of 0.2p per share creates a decent yield of 2.1%.
I don’t think Shanta’s current price of 9.4p per share fully reflects the bright outlook for gold prices as tragic events in Ukraine drag on and global inflation soars. This gives me a chance for me to nip in and grab a bargain. Today the Tanzania-focussed miner trades on a forward price-to-earnings ratio of just 7.2 times.
Another penny stock I’d buy today
The soaring cost of raw materials in response to sanctions on Russia poses a significant threat to electric vehicle sales in the near term. Prices of critical commodities like nickel, copper, and zinc have all leapt on concerns of metal shortages and disruptions to supply chains. A sharp slowdown in auto production and a spike in vehicle costs could well be coming down the pipe.
Both of these threats could hit revenues at Trident Royalties (LSE: TRR). The royalties company holds stakes in a variety of base and precious metals assets across the world. And two of its key holdings are the Thacker Pass and Sonora lithium projects, in the US and Mexico, respectively. The former is due to start producing the key battery-making material in the next few months. And first production from the Latin American project is scheduled for 2023.
However, as a long-term investor I still find Trident Royalties highly attractive. Electric vehicle sales might take a whack in the short-to-medium term. But over an extended timeline, sales of these low-carbon vehicles still look set to soar as concerns over the climate worsen. The gradual phasing out of petrol and diesel vehicles over the next decade should certainly supercharge demand for the company’s lithium.
I also like Trident Royalties because it has exposure to various commodities across the globe. This gives it excellent strength through diversification. Like Shanta Gold, this is a penny stock I’d happily invest in right now.
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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.