I think having exposure to emerging markets is a great way to tubocharge earnings growth. One cheap UK share which operates in fast-growing economies is Telecom Egypt (LSE: TEEG). As the name implies, it provides telecoms services in North Africa and recent trading is encouraging me to consider investing here.
Egypt is the continent’s third-biggest economy and is experiencing soaring demand for communications services. Telecom Egypt said last month that “the strong data momentum witnessed during the pandemic has persisted throughout 2021” and expects double-digit revenues growth in 2022. I was also impressed by forecasts that EBITDA margins are predicted to grow “in the mid to high thirties.”
Today, the Egyptian economy derives around a quarter of GDP from petroleum. Thus the steady transition from fossil fuels to greener sources could pose a significant indirect risk to Telecom Egypt. But I think progress elsewhere in the economy could offset this threat.
A top green penny stock
Supply chain issues are also causing huge problems in the construction industry. Costs are spiralling and developers are reappraising the economics of certain projects. Even if the will remains, huge raw material shortages are preventing building work from starting, or continuing in many cases.
In this environment, building products supplier Alumasc Group (LSE: ALU) faces a not-insignificant threat to profits in the short-to-medium term. However, I’m still considering adding this penny stock to my shares portfolio today.
Why? For one, through its Timloc brand it offers a broad range of construction products for the housebuilding sector. It’s therefore well-placed to exploit the housebuilding boom of the coming decade (the government aims to create 300,000 new homes a year by the mid-2020s).
Secondly, I like Alumasc’s focus on manufacturing sustainable building products, something that will stand it in good stead as governments and businesses aim to become greener. In the company’s words, most of its products “manage the scarce resources of water and energy in the built environment, and improve quality of life for the owner/occupier using recyclable materials.”
5.2% dividend yields!
XPS Pensions Group (LSE: XPS) is another cheap UK share on my radar today. This particular company is the largest pensions consultancy in the country. It therefore stands to make big profits as the local population rapidly ages (government statistics suggest one-in-seven people will be aged over 75 by 2040).
I also like XPS Pensions because it operates in a market which remains stable at all points of the economic cycle. This makes it a dependable bet for those seeking a steady flow of passive income. Incidentally, the yield here sits at an appetising 5.2% for this fiscal year.
I’d buy XPS Pensions despite the threats created by its acquisition-led growth strategy, which could lead to disappointing profits or unexpected costs on buying mis-steps. However, the business has had decent success on this front, although past performance is no reliable indicator of future performance.
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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