I don’t have bottomless reserves of cash I can use to buy UK shares. But here are three top penny stocks I’d like to buy for my ISA as soon as I do have money spare.
Digging for commodities can be a problematic and expensive process right from the exploration phase. Junior miners are especially vulnerable to setbacks as they don’t have broad mine portfolios or strong balance sheets to absorb trouble at one or two assets.
But I believe the possible benefits of owning Andrada Mining (LSE:ATM) shares could outweigh the risks. This is because demand for the lithium, tantalum, and tin that it produces in Africa is projected to soar as the electric vehicle and consumer electronics markets boom.
The quality of Andrada’s flagship Uis mine in Namibia also makes the company a great investment in my book. The company has described the asset as “a globally significant lithium and tin resource” and this month upgraded its lithium resource estimates there to 587,000 tonnes. This was up 30% from prior forecasts.
Recruitment and training business Staffline Group (LSE:STAF) trades on a price-to-earnings (P/E) ratio of just 10 times today. As someone with a great love of value stocks, I’m considering adding it to my portfolio right now.
Recruiters like this can see profits tumble during economic downturns. When company profits come under pressure, hiring activity can freeze. Yet this penny stock’s focus on the more resilient temporary employment market could cushion this blow.
In fact, Office of National Statistics data this week suggests Staffline could remain busy as the cost-of-living crisis endures. It showed 113,000 economically inactive people returned to work between October and November.
Staffline’s revenues could also rise if unemployment increases and demand for its training services increases. A surge in the number of people seeking to change career in this post-pandemic landscape could also fuel income here.
Gensource Potash (LSE:GSP) has significant appeal to me as a long-term investor.
The increasing global population means that demand for food is also trekking higher. Furthermore, improving wealth levels in emerging markets is also rapidly boosting consumption for edible goods. This means that sales of potash — a key ingredient in fertiliser production — are also rising.
Encouragingly for investors, Gensource has ambitious plans for its Tugaske potash project in Canada. Late last year the business hiked its production capacity target to half a million tonnes of material a year.
Now there is some uncertainty surrounding financing of the mine’s development. Last month chemicals giant Helm withdrew its 33% ownership offer for the company Gensource has created to run Tugaske (KClean Potash). The penny stock said this was due to “an unappealing risk-return ratio for new investors”.
But I still believe the potential long-term benefits make the small cap a compelling buy. Indeed, the bright outlook for the potash market means sourcing capital from private equity may not be an obstacle.
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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.