Business at construction products supplier SIG (LSE: SHI) is booming today. Yet a look at the penny stock’s share price performance of late might suggest otherwise. I think this could provide a great dip-buying opportunity for me as long-term investor.
SIG provides insulation, roofing, interior, and exterior products alongside a raft of other construction-related goods. It’s therefore in one of the best seats to exploit rising homebuilding rates in its European markets (and especially in the UK). What’s more, this cheap UK share is also benefitting from healthy conditions in the renovation maintenance improvement in its domestic and overseas territories. I expect these markets to remain robust for years to come too.
Profits at SIG could take a significant whack if supply chain issues cause product shortages and drive costs higher. But I think the penny stock’s sinking share price more than reflects this growing threat.
Another dirt-cheap penny stock
It seems as if the British economy could be set for a long and rocky recovery following the Covid-19 crisis. It’s a prospect that could damage the profitability of cyclical stocks like structural steel manufacturer Severfield (LSE: SFR). But as a long-term investor I still think the business is an attractive buy and particularly following recent heavy selling of its shares. This penny stock trades on an ultra-low forward price-to-earnings ratio of 9.4 times and boasts a big 4.4% dividend yield.
Trading at Severfield has comfortably beaten expectations in recent times. Indeed, its order book in the UK and Europe stood at record levels of £376m as of 1 September, giving the company decent earnings visibility for the next 12 months and beyond. I’d use recent share price weakness as an opportunity to buy this solid (and cheap) UK share.
Even better value for money?
The Raven Property Group (LSE: RAV) share price has headed in the opposite direction to Severfield’s in recent weeks. This penny stock specialises in providing warehousing space in and around various Russian cities (as well as some office space in St Petersburg). It’s therefore an indirect beneficiary of the recent rise in gas prices, a phenomenon that’s boosting economic conditions in Russia.
Despite these gains, however, Raven Property Group shares still look mighty cheap today. The property powerhouse trades on a dirt-cheap P/E ratio of just 4.1 times. It’s a reading that, in my opinion, fails to reflect the rate at which e-commerce is growing in Russia and how this could supercharge demand for the company’s warehouses. Statista think online retail in Russia will be worth $34.8bn by 2025, up $6.4bn from 2021’s projected total.
I’d also buy Raven Property Group because of its inflation-beating 5.2% forward dividend yield. The business may fail to capitalise fully on its excellent market opportunities if it fails to secure decent assets for its property portfolio. Still, right now things are looking extremely bright for this penny stock.
The post Penny stocks: 3 of the best cheap UK shares to buy right now! 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.