£1,000 to invest? 4 dirt-cheap penny stocks to buy now

Photo booth operator Photo-Me International (LSE: PHTM) has been under the cosh in recent years. But it’s my opinion that now could be a great time to buy back in. The penny stock trades on a forward price-to-earnings growth (or PEG) multiple of just 0.4. A reminder that a reading of 1 suggests a UK share could be undervalued.

Activity at its photo booths has shown signs of strong recovery of late. But this isn’t why I’d buy Photo-Me today. I’d snap it up as recent restructuring gives it exposure to some other fast-growing self-service businesses. As well as providing self-service laundry services the penny stock operates food vending machines and digital printing kiosks. I’d buy it despite the threat of rising Covid-19 crisis to footfall in areas where its machines are located.

The leisure giant

Marston’s (LSE: MARS) is another dirt-cheap UK share on my radar right now. That’s even though food price inflation is currently running at “terrifying” levels, according to industry experts. The pub operator trades on a forward price-to-earnings (or P/E) ratio of just 8 times today, a reading I think makes it ultra-attractive for long-term investors like me.

A stark warning from Ian Wright, chief exec of the @Foodanddrinkfed about impending food price inflation.
“In hospitality which is a precursor of retail it is currently running somewhere between 14% and 18%. That is terrifying,” he told @CommonsBEIS.

— Joanna Partridge (@JoannaPartridge) October 19, 2021

Britons are spending an increasingly large portion of their disposable incomes on eating out and drinking. This naturally bodes well for Marston’s, which operates 1,500 pubs, eateries and hotels the length and breadth of the country. The leisure giant noted just last week that it has witnessed “a continuous improvement in trading” since Covid-19 restrictions were lifted on 12 April.

Read all about it

I also think Smiths News (LSE: SNWS) could be worth serious attention. Its forward P/E ratio sits even lower than that of Marston’s, at below 4 times. This penny stock is the largest magazine and newspaper distributor in the UK. So it could be argued that it’s in severe peril as digital publishing takes over from traditional print media.

Still, at current prices I think Smiths News could be a speculative stock worth buying. Attempts to improve efficiency to offset falling volumes have so far proved extremely successful. And as my Foolish colleague Roland Head recently commented, the company’s massive transport network provides opportunities to explore other profits-enhancing activities.

Another penny stock on a roll!

Meanwhile currency manager Record’s (LSE: REC) share price has exploded during the past 12 months. Yet it still looks pretty cheap in my opinion, the business trades on a forward PEG ratio of just 0.2. Trading here is going from strength to strength and total assets under management equivalents (or AUMEs) rose 5% in the three months to June. I think its move into sustainable investments could reap rich rewards too as responsible investing becomes ever-more-popular.

Record’s drive to modernise and diversify is resulting in massive costs at the business. This could go some way to explaining its ultra-low valuation. But at current prices I still think it’s an attractive penny stock to snap up today.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Marstons. 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.