THE DAILY ENCRYPT

October 4, 2022

Buy the dip! 2 penny stocks I’m buying in April

Should I buy the dip on these two penny stocks, that exhibit increasing profits and narrowing losses, in the coming month? The post Buy the dip!...
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The stock market has been volatile lately, largely due to Russia’s military action in Ukraine. This resulted in a mass sell-off in stocks. Aside from precious metal, protective equipment, and oil stocks, almost all other share prices plummeted. Two UK-based companies operating in Russia were hit especially hard, with the Polymetal International share price falling 88% in the past month and 91% in the last year. Evraz shares are currently suspended from trading. With this sell-off, however, comes an opportunity to buy the dip. I’ve found two firms that I’d like to invest in at these low prices during April. Let’s take a closer look.

Buying the dip in the Tullow Oil share price

While oil companies generally performed well during the recent sell-off, the Tullow Oil (LSE:TLW) share price is down 14.5% in the past two weeks. It is currently trading at 53.3p, down 4.8% in the past year.

As an oil exploration and production business, it primarily operates in South America and parts of Africa. In the results for the 2021 calendar year, revenue slipped from $1.4bn to $1.27bn, year on year. Despite this, gross profit rose from $403m to $634m. 

Furthermore, the loss after tax narrowed significantly from $1.2bn in 2020 to just $81m. Net debt also fell from $2.37bn to $2.1bn and cash flow guidance for 2022 remains at around $750m.

Combined with the surging oil price, I think these results are very encouraging. It should also be noted, however, that past performance is not necessarily indicative of future performance.

While there is always the risk of future Covid-19 variants halting production, the recent deal to increase interests in the Jubilee and TEN fields in Ghana is exciting news. The suggests the firm is now focused on controlled expansion.

What about Currys?

The second business I’m buying during the dip is Currys (LSE:CURY), a technology products and services retailer. The shares are currently trading at 89.45p, down 8% in the past month and 36% in the last year.

In an update for the six months to 31 October 2021, pre-tax profit increased from £40m to £48m. Despite this, revenue for the period fell by 2%, year on year. Investment firm AJ Bell suggests that results could drop off after increased trading during the pandemic. In addition, any future lockdowns could negatively impact the ability to open Currys shops.

However, the company announced a share buyback scheme of £75m. This may be an indication that the business is in a healthy position.

What’s more, sales for the six months to 31 October 2021 were up 15%, compared with the same period in 2019, but down 1% year on year. As my Motley Fool colleague Rupert Hargreaves has mentioned, however, supply chain issues may become a problem in the future.

Overall, I think both of these firms are in a strong position going forward and they seem good options for investment during the coming month. I will be buying shares in both in the coming weeks.   

The post Buy the dip! 2 penny stocks I’m buying in April appeared first on The Motley Fool UK.

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More reading

How and where I’d invest £2k in penny stocks right now
As the Ted Baker share price soars on M&A news, is this UK stock next?
Oil hits $115, yet the Tullow Oil share price sinks. What gives?
Why the Tullow Oil share price is down 15% today
Best shares to buy now: 2 cheap stocks I’m buying without delay!

Andrew Woods owns shares in Polymetal International. 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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