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Penny stocks are quite a risky investment, but they potentially open the door to massive growth opportunities. The Bank of England forecasts that inflation will hit 13% before the end of the year, which will require serious growth to forestall my money’s depreciation. And the interest on my savings accounts definitely cannot be paid by him.
To be fair, the BoE’s track record of forecasting inflation and subsequent recessions is staggering, with most warnings being false positives. Still, it doesn’t hurt to be prepared for the worst-case scenario. So what are the best stocks to buy with an extra £500 today?
5G penny stocks of the future
On the whole, while unpleasant, a slowdown is ultimately a short-term problem. And in the long term, demand for technologies such as 5G and eventually 6G is likely to continue to grow.
Despite the headlines, we are still in the early stages of the next generation of telecommunications networks. But now is the right time to spot potential future winners. Namely some big industry giants prefer Qualcomm A handful of small penny stocks are also making waves in this area.
The two that caught my attention are solid state (LSE: solos) and with Wireless Edge (LSE: MW).
The first is a specialist in electronic equipment. It works with small and medium-sized companies that cannot afford to develop their electronics in-house and are too small to contract with large industry players. While the target market is undoubtedly niche, the group has proven its ability to build strong relationships. And while Solid State is adding significant capacity to its capacity with its recent acquisitions, it should be able to scale its offering to meet customers’ needs.
The second is a global specialist in radio frequency communications technologies. These include flat and parabolic antennas, as well as custom solutions for businesses and the military. Management has also begun to focus on wireless water control systems for agriculture and the public sector.
see risks and opportunities
Both penny stocks have started to take advantage of the opportunities presented by the rollout of 5G. So it’s not surprising that their revenue streams are growing at double-digit rates. And although their market cap is less than £100m, both companies are profitable!
In my experience, it’s rare for smaller companies to see positive results. And while they have some debt on their balance sheets, none of them appear to be heavily indebted. These are all encouraging signs of long-term growth potential. But that doesn’t mean they’re risk-free.
I have already highlighted the strong competition. And with supply chain disruptions, particularly in the semiconductor space, sourcing the raw materials needed to fulfill customer orders is undoubtedly a challenge. When these companies are unable to fill their order books fast enough, customers may turn to competitors who can.
Needless to say, that could hurt its impressive growth so far. Nonetheless, it is a risk that I believe is worthwhile for my portfolio with a small amount of capital, e.g. B. worth £500.