The 5 April deadline for Stocks and Shares ISA investors to max out last tax year’s annual allowance has been and gone. But the good news is that those who already fully utilised their financial quota for the last tax year can start investing in their ISA again! I’m currently hunting for top penny stocks (shares that cost less than £1) to add to my own ISA.
The problem with cheap UK shares like these is they can experience huge price volatility. However, eagle-eyed investors can use this characteristic to their advantage. Such choppiness means penny stocks tend to be avoided by many investors, despite their excellent long-term profits outlooks.
Consequently those who are on the ball can nip in and grab a bargain or two. So here are a couple of top penny stocks I’d happily snap up for my own Stocks and Shares ISA today.
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A penny stock for soaring sports car sales
Investing in the sports car market is a brilliant idea for UK share investors like me, in my opinion. But rather than looking at the Aston Martin share price, for instance, I’d much rather buy shares in Surface Transforms (LSE: SCE). This engineer produces patented carbon-ceramic materials and brakes that allow drivers to keep their performance vehicles on the road.
The global sports car segment looks set to experience stunning growth over the next several years, at least. Analysts at Knowledge Sourcing Intelligence reckon the market will expand at a compound annual growth rate of 10.1% through to 2025 as the number of millionaires and billionaires continues to rocket. Therefore, Surface Transforms can expect demand for its products from OEMs to keep flying.
This penny stock’s goods are proven to be of an extremely high standard. But remember that a failure of its critical components could cause demand to fall off a cliff. Right now, Surface Transform’s shares sell for 74.5p apiece.
Making a bid for big returns
The Covid-19 outbreak has improved the long-term outlook for a great many industries. The global video games market is one of these, with demand for entertainment software booming from new and existing gamers during lockdowns. Studies suggest that rampant sales growth is here to stay too.
For this reason I’d invest in Bidstack (LSE: BIDS), a tech company which allows advertisers to beam their messages into virtual worlds. Indeed, this particular penny stock could perform really strongly in the next few years as advertising spending usually recovers very strongly during the early stage of economic recoveries. Today this UK share trades at 5.25p per share.
Remember though, this UK share is smaller than many of its competitors. This means it has less firepower to develop better technology than its rivals. This issue could well affect its ability to secure business in the future.
