3 UK penny stocks to buy right now?

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I’m always wary of penny stocks that are very cheaply priced, literally only trading for pennies. And when a company’s market capitalization drops to a few tens of millions or less, I would definitely abstain.

Big bounce

But sometimes I see stocks rise from such depths, and I start to wonder if I’m looking at a potential buy. renold (LSE: RNO) is the one who just crossed my path.

Renold’s shares fell as low as 4p at the start of 2020, and the company was worth very little. But since then the price has risen to 24.75p. The company currently has a market capitalization of £56 million. It’s still a little marginal, but it’s more respectable.

Renold manufactures industrial chains and related power transmission products, and has been reporting declining profits for years. But the results for the year ended in March were headlined “Significant rebound in revenues and profits… Record order book… Continued net deleveraging“.

It’s still a very small company. And it’s written on the Alternative investment market (OBJECTIVE), which is less regulated and generally more volatile. I am therefore extremely cautious. But I think it deserves further analysis.

Dividends too

Structural steel specialist Severfield (LSE: SFR) has seen its share price fall over the past 12 months. As I write, it sits at 57.8p.

The company has seen its profits drop a bit during the pandemic, but not by much. And last week, the company released an upbeat trade statement.

Several current contracts are “should generate significant profits in H2“. And Severfield has a “Backlog in the UK and Europe amounting to £483m as of September 1“.

The biggest threat appears to be the current economic outlook. I suspect soaring inflation and rising supply chain costs are likely to impact all aspects of the construction industry.

But on the other hand, I think Severfield’s expected price/earnings (P/E) multiple of less than nine looks cheap. Especially with dividend yields hitting 6% and above, based on market forecasts.

Back to shops

Hammerson (LSE: HMSO) Shares have lost a third of their value over the past 12 months, falling to 21.7p today.

The owner invests in commercial properties, including shopping centers such as the Bullring/Grand Central in Birmingham. And just as the pandemic has subsided, we now have crippling inflation, reducing the desire to spend.

But Hammerson posted a 154% increase in adjusted profit in the first half, as like-for-like rental income rose 48%.

Disposals reduced net debt somewhat. It still stood at £1.7bn as of June 30, which is a threat. Still, the company values ​​its property portfolio at £5.3 billion.

The dividend picture is a bit confusing. Hammerson declared an interim cash dividend of 0.2p per share, or an enhanced stock dividend of 2p as an alternative. This is expected to be the latest improved stock dividend alternative, so we can’t infer much about future cash payouts at this time.

I would wait to see the second half performance. But if we get even close to pre-pandemic dividends, Hammerson could prove to be a buy.

About Tina G.

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