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I think these penny stocks could be strong picks to buy for May and beyond. Here’s why I’d snap them up for my portfolio.
A top gold stock
Buying gold stocks in anticipation of a fresh gold rush could be a good idea for me next month.
Markets around the world are reeling from the current situation in Ukraine… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.
But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.
Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…
We’re sharing the names in a special FREE investing report that you can download today. We believe these stocks could be a great fit for any well-diversified portfolio with the goal of building wealth in your 50’s.
Investor tension remains high as inflation soars, central banks hike interest rates and the war in Ukraine continues. These factors all drove inflows into gold-backed exchange traded funds (or ETFs) to 269 tonnes in Q1. This was the highest quarterly inflow for 18 months, the World Gold Council said.
With inflationary pressures worsening and geopolitical tension persisting I think buying Serabi Gold (LSE: SRB) could be a good idea. I feel the stage could be set for bullion prices to test summer 2020’s record highs above $2,000 per ounce.
Gold prices to rise
Having said that, it’s possible that frantic central bank policy tightening could cause gold values to sag. This could push the US dollar higher, in effect making it more expensive to buy buck-denominated assets like this.
It’s my opinion though that this risk is baked into Brazil-focused Serabi’s dirt-cheap share price. At current prices, the penny stock trades on a forward price-to-earnings (P/E) ratio of just 4.9 times.
I also think Serabi could be a bargain given the success of recent exploration work and the huge potential of its Coringa asset. Development work is continuing with a view to producing maiden material in 2023. When it’s up and running Coringa will transform the penny stock into a multi-project business and double its production.
A lithium stock on my radar
I also think buying lithium stocks is a wise idea as electric vehicle (EV) sales soar.
One way I’m considering doing this is by buying Atlantic Lithium (LSE: ALL) shares. This commodities business is focused on developing the giant Ewoyaa lithium deposit in Ghana.
It’s important to note first off that this mining stock could be considered more risky than Serabi. It doesn’t have any revenues coming in to help bring Ewoyaa on-line. Any setbacks at the development stage could see it struggle to get that first lithium out without raising fresh funds from shareholders or taking on more debt.
Another great penny stock
Still, in my opinion the risks of owning Atlantic Lithium are outstripped by the potential benefits. The lithium market is set for spectacular growth over the next decade as EV sales take off. Profits at this firm could explode as a result.
The boffins at McKinsey & Company think lithium carbonate equivalent (LCE) demand will surge to between 3m and 4m tonnes by 2030. That compares with around 500,000 tonnes today.
I also think Atlantic in particular could be a great lithium stock to buy owing to the quality of Ewoyaa. Drilling work remains encouraging and in late March, resource estimates at the project were lifted by a whopping 42%.