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2 penny stocks to buy after the stock market correction!

I'm looking for the best-value penny stocks to buy following market volatility. Here are two low-cost UK shares I'm thinking of picking up. The post 2...

The tragic events in Ukraine mean that stock market volatility remains quite extreme. Companies of all shapes and sizes — from the biggest FTSE 100 share to the smallest penny stock — have been heavily sold. Even companies that retain solid long-term earnings outlooks have been thrown aside in the panic.

Here are two great penny stocks I’m considering buying despite the rising near-term risks they face. I think they could be too cheap to miss following recent crashes.

Topps Tiles

I’d buy slumping Topps Tiles (LSE: TPT) as it carries attractive all-round value right now. As well as trading on a forward price-to-earnings (P/E) ratio of just 9.6 times, the retailer carries a chunky 5% dividend yield.

The home improvements phenomenon that took off during Covid-19 lockdowns in 2020 is yet to run out of steam. In the 12 months to September, a record 247,500 planning applications for home improvement and extension were made, latest figures show.

This suggests demand for Topps Tiles’ building products could remain strong in 2022. But this is not the only reason why I’m optimistic for the retailer. The homes market remains ultra-strong as low interest rates and government support for first-time buyers continues. And so sales of its flooring products to homebuilders should also stay lively as construction rates ramp up.

Topps Tiles could of course see sales slump as the cost of living crisis worsens. However, I think this is reflected in the company’s recent share price reversal and that rock-bottom earnings multiple.

The Restaurant Group

Leisure shares like The Restaurant Group (LSE: RTN) are also in danger from the rising cost of living. The strong revenues recovery following the end of Covid-19 lockdowns could run out of steam if people stay at home to save cash. What’s more, costs at the company’s restaurants could well balloon as commodities like wheat, sugar, cocoa and other essential foodstuffs rise in price.

That said, as a long-term investor I’m still thinking of buying The Restaurant Group shares today. The penny stock’s plunge to 14-month lows leaves it trading on a forward price-to-earnings growth (PEG) ratio of 0.1. This marginal reading is a long way inside the benchmark of 1 and below that suggests a company might be undervalued.

I like The Restaurant Group because of the strength of its brands like Frankie & Benny’s and Wagamama. The huge investment the penny stock has made to revitalise these brands has exceeded many people’s expectations (including my own). This is reflected by sales at group level outperforming those at other major restaurant chains in recent times.

I’d also buy The Restaurant Group as a way to capitalise on changing consumer priorities. What I mean by this is that Britons have been spending an increasingly large percentage of their incomes on experiences like dining out. This is a trend that’s recovering strongly in the post-pandemic environment as people strive to get out and about again.

The post 2 penny stocks to buy after the stock market correction! appeared first on The Motley Fool UK.

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More reading

Buy the dip! 2 penny stocks to buy following market volatility
2 ‘nearly’ penny stocks I’d buy to hold for 10 years!

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.

© 2022 The Daily Encrypt. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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