Recent market volatility means a lot of top stocks are trading at dirt-cheap prices. There are plenty of penny stocks in particular which appear to have been oversold in recent days and weeks. Small-cap shares like these are often among the first to be sold when market confidence buckles.
I don’t plan to run for cover however. In fact I plan to follow the example of billionaire investor Warren Buffett and go hunting for bargains to buy.
Here are a couple of penny stocks that have caught my attention at current prices. Each has the potential to supercharge my returns in the coming years.
A top retail share
Many UK retail shares have sunk as investors have considered the impact of soaring inflation on their profits. Card Factory (LSE: CARD), for instance, has fallen 12% so far in 2022 in value as concerns of rising costs and falling consumer spending power have grown.
Okay, Card Factory still remains around a fifth more expensive than it was this time last year. But following that recent share price weakness I think it could be considered too cheap for me to miss. At 52.6p per share, the retailer trades on a rock-bottom forward price-to-earnings (P/E) ratio of 8 times.
I think investors may be making a mistake by heavily selling Card Factory shares. People don’t stop sending cards and celebrating with balloons, poppers and similar party paraphernalia when times get tough. What they do however, is try to buy these items for the cheapest price possible.
In my opinion this means shoppers might shun the likes of more expensive retailers like Clinton Cards and march through value operator Card Factory’s door instead.
I do worry about how Card Factory could fare against the trendier offerings of online-only operators like Moonpig and Thortful. But I believe this threat is more than reflected in this penny stock’s rock-bottom earnings multiple.
Falling into penny stock territory
UK shares with interests in Russia and Eastern Europe have suffered particularly badly in recent days. Take Tritax Eurobox (LSE: EBOX) as an example.
This property stock — which lets out properties in European countries, including Poland — has seen its share price slump to 14-month lows this week. It now sits inside penny stock territory around 99.2p having fallen 16% over the past 12 months.
The situation in the region is truly dreadful, and we all hope it can be resolved soon. But I like Tritax Eurobox’s long-term prospects and think a fall in its share price is worth looking at. I know the current situation could cause demand for big-box property assets to fall in its Central and Eastern Europe territories. But as a long-term investor, I see the advantage of owning Tritax Eurobox shares. I think profits could soar as e-commerce turbocharges the need for warehouse and logistics spaces.
I like the company’s ongoing expansion in fast-growing markets (this week it paid €144.3m to acquire a property in the Netherlands). I think this UK share is particularly good to help me boost my passive income; its forward dividend yield sits at 4.5%.
The post Buy the dip! 3 penny stocks I’d buy after recent market volatility appeared first on The Motley Fool UK.
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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.
