2 of the best penny stocks to buy in a Stocks and Shares ISA

Penny stock investing is a great way to find top UK shares ignored by the broader market. Here are two low-cost stocks I’d buy for my ISA.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

British Pennies on a Pound Note

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Penny stocks can experience periods of higher volatility than other, more expensive UK shares. Trading volumes of these low-cost companies tend to be much smaller than pricier stocks. Therefore, the buying or selling of a significant number of their shares can have a serious impact on the price.

As a long-term investor however, I’m not put off by the prospect of any short-term price volatility. This is because I do proper research to identify quality before buying UK shares of any price. This way I can be confident that, over an extended time horizon, any penny stocks I buy will rise in value just like any other stock. And I can potentially make lots of money in the process.

With this in mind, here are two top penny stocks I’m thinking of buying for my Stocks and Shares ISA today.

A gaming great

Online gambling has gone from strength to strength in recent years. City analysts don’t think this phenomenon is anywhere close to running out of road either, which is great news for Gaming Realms (LSE: GMR).

This UK penny stock designs and licences casino games for mobile devices, putting it in one of the box seats for the next decade. Fortune Business Insights reckons the internet betting market will be worth $158.2bn by 2028. This compares with the $74.2bn it’s been estimated at this year.

Encouragingly, Gaming Realms is making sound progress in the gigantic US marketplace too. It’s been granted supplier licences this year in both Pennsylvania and Michigan. And last month, it launched its Slingo Originals games in Michigan with industry giant BetMGM.

It’s true that Gaming Realms operates in a highly-regulated environment, representing a clear danger to future earnings. But the popularity of its brands and its games, allied with its ambitious expansion in this fast-growing marketplace, should still make its investors handsome returns, in my opinion.

A person holding onto a fan of twenty pound notes

Catch a top penny stock

Fishing has long been a popular British pastime, and the number of people taking up the hobby has boomed since the Covid-19 outbreak last year. The Environment Agency sold a staggering 1.02m individual freshwater rod licences to adults living in England last year. This was up 16% on an annual basis and bodes extremely well for penny stock Angling Direct (LSE: ANG). Sales at the retailer rocketed 27% higher in the 12 months to January.

Angling Direct isn’t just making a splash in its home markets however (turnover here rose 31% last year). Revenues in its core European territories of Germany, France and The Netherlands soared between 29% and 44% in fiscal 2021.

The penny stock’s strong online proposition has also helped to turbocharge revenues growth over the past 12 months. As has its position as a one-stop shop for everything the fisherman needs to cast off.

But competition is fierce and the likes of Amazon pose a severe threat to future profits. However, I still think Angling Direct has the mettle to also generate great shareholder profits in the years ahead.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Amazon. The Motley Fool UK has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. 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.

More on Investing Articles

Number three written on white chat bubble on blue background
Investing Articles

Just released: the 3 best growth-focused stocks to consider buying in May [PREMIUM PICKS]

Our goal here is to highlight some of our past recommendations that we think are of particular interest today, due…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

With £1,000 to invest, should I buy growth stocks or income shares?

Dividend shares are a great source of passive income, but how close to retirement, should investors think about shifting away…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

Warren Buffett should buy this flagging FTSE 100 firm!

After giving $50bn to charity, Warren Buffett still has a $132bn fortune. Also, his company has $168bn to spend, so…

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing For Beginners

I wish I’d known about this lucrative style of stock market investing 20 years ago

Research has shown that over the long term, this style of investing can generate returns in excess of those provided…

Read more »

Woman using laptop and working from home
Investing Articles

Is this growing UK fintech one of the best shares to buy now?

With revenues growing at 24% and income growing at 36%, Wise looks like one of the best shares to buy…

Read more »

Dividend Shares

Are Aviva shares one of the UK’s best investments today?

UK investors have been piling into Aviva shares recently. However, Edward Sheldon's wondering if he could get bigger returns elsewhere.

Read more »

Older couple walking in park
Investing Articles

10.2% dividend yield! 2 value shares to consider for a £1,530 passive income

Royston Wild explains why investing in these value shares could provide investors with significant passive income for years to come.

Read more »

man in shirt using computer and smiling while working in the office
Investing Articles

Nvidia and a FTSE 100 fund own a 10% stake in this $8 artificial intelligence (AI) stock

Ben McPoland explores Recursion Pharmaceuticals (NASDAQ:RXRX), an up-and-coming AI firm held by Cathie Wood, Nvidia and one FTSE 100 trust.

Read more »