Fresh Covid-19 lockdowns affecting the hospitality sector would put profits at Finsbury Food Group (LSE: FIF) under pressure. But despite this threat, I still think the company looks attractive from a risk-to-reward basis. Today, the bread, cake and pastries manufacturer trades on a forward price-to-earnings (P/E) ratio of just 9 times.
I don’t think this rating properly reflects Finsbury Food’s exceptional progress in overseas territories, for one. Revenues from its European markets jumped 13.4% year-on-year during the 12 months to May. I also like the investment its making in machinery, such as boosting artisan bread capacity by half to capitalise on soaring demand for fancy breads. Finsbury Food trades at 96p per share right now.
Another penny stock on my radar
There’s no shortage of top housebuilding shares that offer great value today. One that’s attracted my attention is Inland Homes (LSE: INL). At 53p per share, the construction business trades on a P/E ratio of below 8 times. It’s not the sort of valuation I think reflects the strength of trading here recently.
Inland Homes enjoyed record profit of £195m in the 12 months to September, financials this month showed, while its order book for partnership housing leapt 56% year-on-year to £164.7m.
It’s possible that booming inflation in Britain might prompt severe interest rate hikes by the Bank of England. This could, in turn, damage broader homes demand as buyer affordability comes under the cosh.
There’s also the danger that severe supply chain issues hitting the building materials market could persist. This could cause sustained cost pressure and even damage production rates if the company fails to source product. Still, it’s my opinion that these risks are baked into Inland Homes’ rock-bottom valuation.
A top renewable energy stock
Grabbing a slice of the renewable energy market is also on my investing wishlist today. The COP26 climate summit this month underlines how investment in green power looks set to explode. And as a share investor this gives me the chance to make some decent profits while helping to fight the climate crisis.
US Solar Fund (LSE: USFP) is a penny stock I’m considering buying to ride this phenomenon. As the name implies, this UK share invests in solar farms that are located in the States, more specifically in North Carolina, California, Utah and Oregon. This gives it an edge against many other renewable energy stocks.
US legislation surrounding green energy is also some of the most favourable towards operators like this anywhere on the planet.
A word of warning however. Generating energy from the sun can be extremely unreliable, even in the US. Maintaining solar farms can also be an expensive business and this can eat into profits. But despite these risks, I still think US Solar Fund could be a great share to buy and own for the next decade. Today, the company trades at 72p per share.
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Inland Homes. 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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