I’m searching for the best cheap stocks to buy for my shares portfolio. Here are two top penny stocks that have grabbed my attention.
Copper colossus
Investing in early-stage mining companies can be a risky business. By the time a certain commodity is ready to be hauled out of the ground, the prices which it can command could be much lower than expected. There’s also the problem than smaller operators don’t tend to have the financial clout to weather significant setbacks. This leaves shareholders in peril of being tapped for cash.
So where does this leave Phoenix Copper (LSE: PXC)? Well, I say the risks of investing in firms like this are high. But I also think the possible rewards here could be explosive.
Let’s look at the outlook for copper demand first of all. Copper will be the “main beneficiary of the energy transition,” according to World Bank analysts, with consumption set to increase “for electric vehicles, charging, renewables generation, and grid storage.” This has the capacity to drive prices significantly higher over the latter half of the decade, in my opinion.
A top-quality mining resource
Then there’s the quality of Phoenix Copper’s Empire Mine, which is due to come online next year. As well as containing significant quantities of copper, the company’s Idaho asset also houses decent amounts of zinc and gold. It’s also been suggested that Phoenix Copper could have access to a high-grade copper sulphide resource below the open pit and a vast molybdenum and tungsten system.
Past performance is not always a reliable indicator of future success. However, I find the steady stream of positive exploration and development news coming out of Phoenix Copper highly encouraging. I’m also reassured by its strong balance sheet, one which sets it apart from many other early-stage mining plays and potentially lessens the chances of it tapping its investors for cash. It might be riskier than many other UK shares, but I’m still tempted to buy this penny stock today.
Another penny stock on my radar
Serabi Gold’s (LSE: SRB) another mining share on my radar today. It’s not just due to soaring precious metal output at its Palito mine rocketed 34% year-on-year between June and August. It’s also not because operations at its Coringa project have just got under way. It marks an important stage in the firm’s objective to produce 100,000 ounces of gold.
I also like the Brazil-focused business due to the bright outlook for gold prices. In particular, I think yellow metal prices will rise as global inflation shoots through the roof. Consumer price inflation in the US clocked in at 6.2% in October, the highest reading for 31 years. Inflation in China meanwhile, just shot to 13-month highs of 1.5%.
Gold prices can go down as well as up, of course. Progress in the fight against Covid-19, in tandem with severe central bank policy tightening, could well serve to drive precious metals prices much lower. Still, all things considered, I think Serabi Gold could still deliver terrific shareholder profits now and in the future.
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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