UK share prices soared in value in the decade following the 2008–09 banking crisis. The FTSE 100 more than doubled in value nine years after that stock market crash. The FTSE 250 more than trebled. A vast number of penny stocks soared in price during the bull market too, and a lot of British stock investors made a fortune in the process.
It’s possible that the economic recovery could be bumpy as the Covid-19 crisis rolls on. So share investors need to continue doing proper research during this rocky period. But I believe the prices of UK shares — which have largely remained flat since last spring — will eventually recover strongly from the 2020 stock market crash. History shows us that stock markets have always bounce to new highs following social, economic, and political crises.
Here are four of the best penny stocks — that is companies whose shares cost less than £1 each — that I’d buy for the new bull market.
#1: A top penny stock for the ad market rebound
The budgets that businesses allocate for advertising and marketing usually pick up fast when economic conditions improve. And this plays into the hands of media companies as their ad revenues pick up strongly. This is why I think events and marketing specialist Centaur Media could be one of the best shares to buy for the new bull market. Indeed, latest financials showed that trading has continued to improve in recent months.
Beware, though, that the growing trend of businesses bringing their marketing activities in-house could pose long-term problems for this UK share. Centaur Media’s shares trade at 37p apiece.
#2: Life jacket
Curiously, demand for life insurance and assurance products isn’t as resilient as people’s commitment to buying general insurance is when times are tough. This was shown in Hansard Global’s latest financials which revealed new business premiums fall nearly 5% in the six months to December.
But as consumer confidence picks up during the economic rebound so does spending on these financial products. This likely bodes well for this penny stock’s share price over the next 12 months. Remember, though, that the rapidly-evolving regulatory landscape across the globe could harm profits later down the line. Hansard Global’s shares sell for 50p a pop.
#3: Profits set to race ahead
I also think Surface Transforms is a great penny stock to buy for the new bull market. This UK share manufactures ceramic brake discs that are used by mainstream automotive OEMs and smaller specialist carbuilders. Spending on cars by individuals and businesses usually picks up swiftly when broader economic conditions improve. So I reckon this engineer should see profits pick up strongly in the next couple of years. Beware, though, that severe exchange rate fluctuations is a not-significant risk to Surface Transforms’s profits. The auto parts giant trades at 70p per share.
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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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