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Investing in penny stocks is risky, but it also offers potentially spectacular rewards. These small growth stocks can bring huge returns if profits take off. However, they can sink quickly if trading conditions turn bad, and they can be prone to frequent share price fluctuations.
By focusing on companies with lower valuations, investors enjoy a cushion that can limit price losses and volatility. But this is not the only benefit. Buying small stocks cheaply can lead to big long-term returns as well.
With all of this in mind, here are two penny stocks to consider this month.
Serabi gold
Things have not been going gold’s way lately. Holders of precious metals have fallen across the board as commodity prices have fallen.
Little gold miner Serabi gold (LSE:SRB) is an exception to this trend, however. Its stock price continued to rise despite the negative impact of Donald Trump’s election victory on the billionaire’s stock. And so it is now 103% more expensive than it was at the beginning of 2024.
There is no guarantee that it can continue to defy gravity if gold jumps again. But at current prices the Brazilian miner is still worth a look in my opinion.
It trades at a price-to-earnings (P/E) ratio of just 1.8 times by 2025. This makes it one of the cheapest gold producers on the current list. London Stock Exchange.
Brokers expect wages to soar by 63% next year, following a forecast increase of 352%. because gold prices also support these predictions.
I think the demand for the safe haven metal could reverse given the ongoing conflict in Eastern Europe, recent problems in the fight against inflation, and concerns about US tariffs and how they could affect global growth.
Michelmersh Brick Holdings share price
Signs that inflation may stick around for longer than expected concern suppliers of construction materials Michelmersh (LSE:MBH).
Higher prices mean higher-than-normal interest rates, which in turn is bad for household demand. This often leads to reduced house building activity and weak demand for bricks.
However I still believe that Michelmersh is an attractive stock to consider today. For one, it offers excellent value, with a P/E ratio of 10.7 times in 2025 and a price-to-earnings (PEG) multiple of 0.5.
I am always very focused on the long-term vision of the brick maker. Britain’s rapid population growth means that housebuilding will need to continue strongly over the next decade. Under current government plans, another 1.5m homes will be built between now and 2029.
Michelmersh is well placed to capitalize on any construction boom, too. It has a capacity of 125m bricks a year, and has a strong balance sheet (with a surplus of £4.1m as of June) to start earning more as opportunities arise.
Since it also offers a tasty 4.8% yield, I think the brickmaker is a top value stock to consider.
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