These three penny stocks have caught my eye in recent days. Would they make brilliant buys for my Stocks and Shares ISA?
Building huge profits
Cairn Homes (LSE: CRN) is a penny stock that I’ve had my eye on for a long time. I have exposure to the strong UK housing market through FTSE 100 stocks Barratt and Taylor Wimpey. And I’m thinking of riding the robust Irish market too by snapping up Cairn for my ISA.
“Demand for new homes has never been stronger and the lack of supply has never been more acute,” Cairn announced this month. And the Dublin-based company is turbocharging build rates to make the most of the country’s severe homes shortage. It aims to build 2,500 new homes by the end of next year. I think the UK share is a great buy despite the pressure that rising building product prices is placing on its bottom line.
A high-risk penny stock?
Will the solid economic recovery in Britain supercharge profits at Staffline Group (LSE: STAF)? A KPMG survey showed the rate of job hiring on these shores hit 23-year highs in June as Covid-19 lockdowns eased. This might be seen as a good omen for this UK share. Staffline provides blue-collar workers in a vast array of industries like farming, driving, retail, food production, logistics and manufacturing.
I’m not so sure that Staffline is the slam dunk that it might appear at first glance, though. This isn’t just because the rampant Delta variant is pushing Covid-19 infection numbers higher again, a rise that is casting huge doubt over the economic rebound. It’s also due to the number of available workers in the UK slumping at their fastest pace on record. This is a problem that could persist too following stricter immigration rules following Brexit.
A better ISA buy
For this reason I’d hold off buying Staffline shares today and use my money to snap up Serabi Gold (LSE: SRB) instead. Buying UK shares which dig metals or drill for oil is high risk as their complicated operations can be prone to profit-sapping setbacks. As well, natural resources stocks are also vulnerable to sharp falls in the prices of the commodities which they produce.
That said, I think Serabi could be a great penny stock to add to my Stocks and Shares ISA. This is because I expect gold prices to remain strong for a long time yet. I think concerns over high inflation will remain as central banks will likely keep their ultra-loose monetary policies in place. There’s also the threat of a long and lumpy economic recovery following the coronavirus crisis that could fuel demand for safe-haven assets too.
And finally, I’m encouraged by the string of positive exploration updates which Serabi has published since the turn of 2021 as well as the company’s impressive production levels. The UK mining share pulling 16% more gold out the ground that it had been expecting during quarter one.
The post Should I buy these penny stocks for my Stocks and Shares ISA? appeared first on The Motley Fool UK.
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Royston Wild owns shares of Barratt Developments and Taylor Wimpey. 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.