Home Stock Market 2 penny stocks I’d buy after recent share price falls! – The Motley Fool UK

2 penny stocks I’d buy after recent share price falls! – The Motley Fool UK

by callingemout
One English pound placed on a graph to represent an economic down turn

I’m searching for the best penny stocks to buy following recent share price weakness. Here are two top UK shares on my radar today.

Playing the green economy

I believe Sylvania Platinum (LSE: SLP) will prove a great stock to own for two compelling reasons. I expect demand for the platinum group metals (or PGMs) it pulls out the ground to rise as lawmakers tighten emissions regulations. Around 40% of global supply is used to build catalytic converters in cars and trucks.

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Secondly, I’d buy Sylvania on account of platinum’s role in producing carbon-free (or ‘green’) hydrogen. The metal is used, for example, as a catalyst in hydrogen-based fuel cells in cars, a technology tipped to grow rapidly as petrol- and diesel-powered motors are phased out.

Green hydrogen is seen by many as the future of low-carbon technology. Unlike other forms of hydrogen it doesn’t require the use of fossil fuels to be produced, making it the most environmentally-friendly option. It’s why the International Renewable Energy Agency thinks global green hydrogen demand will hit between 133m and 158m tonnes a year. That is, if the gas is used instead of fossil fuels in transport, industrial and heating applications.

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The danger for Sylvania Platinum is that the green hydrogen industry is quite small today. In theory it has potential, but there’s no guarantee that it’ll grow rapidly as it competes against other forms of hydrogen technology and green energy sources.

Yet this is a scenario I think could be baked into the penny stock’s current price of 96p. Today Sylvania trades on a forward price-to-earnings (P/E) ratio of just 4.4 times. I think this, along with the commodities giant’s 4.9% dividend yield makes it an attractive buy for me right now.

Another ‘green’ penny stock to buy

Zinnwald Lithium’s (LSE: ZNWD) another attractive way for me to play the electric vehicle theme. As the name suggests, this penny stock is involved in digging for lithium, a critical component in the manufacture of battery-powered vehicles. However there are reasons why I like this business in particular.

It takes its name from a lithium project that’s located on the German-Czech border. That location is all-important as it puts it on the doorstep of Europe’s car-building country. What’s more, the Zinnwald project — which has a 30-year mining licence and contains around 125,000 tonnes of lithium — can be found in an area where mining goes back centuries. This means the company has a lot of the infrastructure in place to try and make it a success.

Risk vs reward

It’s important to remember that Zinnwald Lithium isn’t actually producing any of the material right now. Development of the project continues with a view to producing maiden lithium around the middle of the decade. It therefore has a long way to go and any setbacks could result in the business tapping shareholders for cash or raising more debt to keep going.

However, I believe the rewards of owning this penny stock could outweigh the risks. I’d happily add this UK share to my own portfolio alongside Sylvania Platinum.

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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.

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