The rapidly deteriorating geopolitical environment in Eastern Europe is creating a challenge for investors. Hydrocarbon prices have exploded higher as talk of sanctions against Russian oil and gas exports is becoming more widespread.

The impact these higher prices will have on the global economy is impossible to predict. It will raise the cost of doing business for every single enterprise. Governments are planning to get around this issue by investing more in renewable energy.

I think this presents a fantastic opportunity for investors. The renewable energy industry was already booming before the crisis. Now it looks as if more money is going to flood the sector. 

Against this backdrop, there are a couple of renewable energy stocks I would buy for my portfolio right now. I think these companies stand to benefit more than most from the current environment. 

Renewable energy stocks to buy

At the top of the list is wind farm owner and operator Greencoat UK Wind. The company is the largest publicly traded wind farm operator in the UK, and it has a growing portfolio of wind assets. Rising energy prices could produce windfall profits for the corporation. This could free up more capital for management to invest in other deals and expand the portfolio further. 

Still, as I noted above, this is a competitive sector. As money floods into the renewable energy industry, Greencoat might find it harder to deploy capital at attractive rates of return. This is something I will be keeping an eye on as we advance. 

Another company I believe will benefit from the current situation is the Gore Street Energy Storage Fund. As the UK energy sector invests more in renewables, it will also require more batteries systems. Battery and energy storage systems meet an essential part of the renewable energy network as they help balance the network during periods of low solar or wind generation. 

Gore Street Energy is one of the best ways to invest in this theme, in my view. It is run by an experienced management team, which is planning a substantial increase in capacity over the next few years. 

One of the main challenges the company may face is competition. Additional regulatory constraints could also impact growth. Even after considering the challenges, I would buy the stock alongside Greencoat in my portfolio. 

Long-term buy 

A highly speculative area of the renewable energy market is hydrogen energy. I would like to have some exposure to this market in my portfolio, even though it is a high-risk investment.

Ceres Power is working with some of the world’s largest industrial companies to licence its hydrogen technology. It is already generating revenues from the sales, and 2022 could be an inflexion year for the group as revenues continue to grow.

Even though it could be years before the company is profitable, I would add this stock to my portfolio as a way to take part in the growth of this budding industry. 

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Greencoat UK Wind. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

I’m looking for the best bargain penny stocks to buy following recent market volatility. Here are two dirt-cheap UK shares I’d buy to hold for the long haul.

Playing the gold price boom

Many gold-producing stocks have risen strongly as prices of their precious metals have ballooned. Shanta Gold (LSE: SHG) hasn’t recorded strong gains, however. Yet a look at the company’s share price suggests that it remains massively undervalued. Today its shares trade on a forward price-to-earnings (P/E) ratio of 7 times. I think this makes it a brilliant buy.

Demand for precious metals is rising spectacularly right now. Latest data from the World Gold Council showed holdings in gold-backed exchange-traded funds (or ETFs) rose 35.3 tonnes (or 1%) in February. The organisation thinks safe-haven demand for bullion could continue climbing too.

It says that “the risk of economic slowdown amid high inflation could complicate monetary policy decisions, further supporting investment demand for gold.” Central banks may have to maintain a landscape ultra-low rates following the Russian invasion of Ukraine. This would help gold prices and by extension Shanta Gold’s revenues.

Intensifying safe-haven demand has today driven gold to its most expensive since summer 2020, above $2,000 per ounce. Yet the tragic events in Eastern Europe aren’t the only reason why gold could keep climbing. Growing Covid-19 cases in China (which have just hit two-year peaks), for example, could also drive the yellow metal northwards.

My main concern for Shanta Gold is the highly-complex nature of its operations. Profits-sapping production problems can be common for miners. And this can have a significant impact on shareholder returns. In my opinion, though, this threat is reflected in the company’s ultra-low share price.

Another unloved penny stock I’d buy

Like Shanta Gold, the Brickability Group (LSE: BRCK) share price also offers terrific value right now. Today the building products manufacturer trades on a forward price-to-earnings growth (PEG) ratio of 0.3. This is well inside the benchmark of 1 and below that suggests a stock could be undervalued.

Brickability’s share price has been edging steadily lower since the end of 2021. And today it’s slumped to its cheapest for almost a year. This to my mind represents a great dip-buying opportunity. I think the rewards of owning this stock outweigh the potential risks that rising interest rates create for the housing market. Higher rates are bad for buyer affordability.

I’m encouraged by a steady stream of positive data showing how strongly UK homes demand continues to grow. Just today Nationwide said that homes prices rose at their fastest rate since 2007 as demand continued to outstrip supply. Average property values have now grown for eight months on the spin, according to the building society.

Britain’s major housebuilders are planning to exploit this fertile trading landscape by building their land banks and upping their production targets. This all bodes well for Brickability and its profits column. This is a penny stock that could thrive over the next decade as the building boom continues.   

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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Retiring early does not seem to be a priority for legendary investor Warren Buffett, who continues to work full-time in his nineties. Not everybody wants to be doing that, however. By applying some lessons from Buffett’s method of investing, I think it is possible to grow the value of a retirement portfolio faster, giving one the chance to stop working sooner. Here is how I would do it.

Avoiding avoidable mistakes

Buffett is critical of what he calls “unforced mistakes”. Writing about a $2bn bond purchase in which he personally had miscalculated the probabilities of gain and loss, Buffett described the deal as “a major unforced error”. In other words, while some mistakes are very difficult to spot in advance, others are traps hiding in full sight that a smart investor should be able to avoid.

So, while Buffett recognises that forced mistakes happen, he tries to avoid unforced mistakes. I think this makes sense in the context of one of Buffett’s sayings when it comes to investment strategy: “Rule number one: never lose money. Rule number two: never forget rule number one”. Buffett is again emphasising the importance of minimising the impact of avoidable mistakes. Such mistakes can have a huge impact on a retirement portfolio. Imagine that a share I own goes down by 50%. Just to get the value of my investment back to where it started, I then need the share to increase not by 50% but by 100%. Mistakes in choosing shares for the wrong reasons can make it much harder for me to grow the value of my retirement portfolio.

It could be tempting to try and improve the size of my retirement fund more quickly by increasing in very risky shares with high potential returns. But remember Buffett’s first rule is never to lose money. So, buying shares I know are very risky just because they might give me a high return goes completely against the Warren Buffett method.

Warren Buffett on circles of competence

Another thing Buffett emphasises is the importance of investing in a limited number of great opportunities rather than a large number of good ones.

“Big opportunities in life have to be seized,” according to Buffett. He goes on to explain, “we don’t do many things, but when we get the chance to do something that’s right and big, we’ve got to do it. To do it on a small scale is just as big of a mistake, almost, as not doing it at all. You’ve got to grab then when they come, because you’re not going to get 500 great opportunities”.

The approach here is very clear: in an investor’s lifetime, the  number of truly great opportunities that he has the competence to assess and that can ‘shift the needle’ on a retirement portfolio are limited. But when one comes along, an investor like Buffett will go into it on a big scale.

Sticking to what one knows

A lot of people would be able to retire sooner if they had not frittered part of their portfolio away by investing in businesses they did not understand. Buffett is emphatic about sticking to his circle of competence and only investing in businesses that he understands. That allows him to assess their future prospects better.

The reason it can be so harmful to one’s retirement savings to invest in companies without understanding them is that there are loads of businesses that will fail or see their share prices fall dramatically in future, including some huge blue chips. This is always true. It can be hard enough to assess businesses even when they fall inside one’s circle of competence. For example, Buffett bought Tesco feeling he understood the retail market, but still made a loss of around half a billion dollars on the stake. If it is possible to make such mistakes in areas one understands well, it can be even costlier investing in something one cannot properly assess. That can lead to more losses, meaning it takes longer for a retirement pot to reach its target size – if it ever gets there at all.

Focus on future value creation not just current price

When Warren Buffett considers what shares to buy and sell, he is looking at how successful he thinks a business can be in future when it comes to generating profits. For example, is its market likely to grow or shrink over time? Does the company have some unique competitive advantage that could stick around, such as the proprietary formula of Coca-Cola or installed user base of Apple? Can the company charge a premium that allows it to maintain high profit margins?

Only once he has identified a company with these desirable business characteristics does Buffett then start looking at its share price. Buffett does not buy a company just because the price looks cheap. Instead, he tries to buy slices of businesses he thinks have great potential, at a price that should allow him to benefit from the shares moving up if the business does well over the long term.

Focussing just on current share prices can lead investors to buy ‘value traps’ – shares that look cheap but in fact will see their prices fall further in future, for example, because some of their earnings will soon dry up. Making such mistakes can lead to losses, meaning one’s retirement portfolio is worth less. Like Buffett, I never buy a share only because of its price. What I am looking for is value – companies with strong business prospects whose shares trade at an attractive price.

Christopher Ruane has no position in any of the shares mentioned. The Motley Fool UK has recommended Apple and Tesco. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

In late 2021, I wrote frequently about the growing risks of a stock market crash. As asset prices rose to lofty heights, I worried about future market fragility and volatility. I worried about rising inflation (consumer prices), higher interest rates, and overpriced US stocks. I also fretted about new Covid-19 variants and increased geopolitical risks. On 29 December 2021, I warned that I was “genuinely terrified” about armed conflict between Russia and Ukraine. Today, a major European war involves almost 190m people. Here are five things I’ve noted from this latest market meltdown.

1. The higher the rewards, the greater the risks

After the worldwide stock market crash of spring 2020, share prices soared relentlessly. As profits appeared to be a one-way street, investors took on ever-greater risk. I watched as inexperienced buyers plunged into meme stocks, special purchase acquisition vehicles (SPACs), penny shares, cryptocurrencies, etc. As sanity returns to markets, these fad investors now look like ‘fashion victims’ that were seduced by the latest speculative trends.

2. Volatility makes a huge comeback

To lessen the economic damage caused by Covid-19, central banks pumped trillions of dollars of liquidity into financial markets in 2020-21. As this vast wave of money washed over markets, it dramatically pushed up asset prices. Thus, when liquidity is high, volatility tends to be low. Now that central banks are reducing or withdrawing liquidity, volatility has spiked steeply. These unpredictable fluctuations make it much harder to trade today and increase the risks of another stock market crash.

3. Stock market crash: European stocks get a lot cheaper

As we witness the largest European conflict since 1945, it’s clear that investors are nervy about owning European stocks. Since 5 January, the STOXX Europe 600 index has dived by 14.8%. Were it to fall another 5.2 percentage points (to lose 20% of its value), it would be in stock market crash territory. Given current uncertainty, I can easily see this happening in the next few weeks or months. For the record, this index has now gained just 0.9% over the past 12 months. Yikes.

4. Stock market crash: Russian assets are (practically) worthless

As I wrote last Thursday, Russian stocks and bonds have nosedived in value since Russia invaded Ukraine on 24 February. Last Thursday, the London Stock Exchange suspended almost all London-listed Russian stocks from trading. Prices of the remaining shares have collapsed brutally, with falls of 80%+ leaving shareholders reeling. Meanwhile, the Russian stock exchange underwent a severe stock market crash on 24 February, falling as much as 50% before rebounding. What’s more, the Russian bourse has not opened since Friday, 25 February. In effect, this has rendered its constituents effectively worthless to all but the most fearless (local?) buyers.

5. The first cut is the cheapest

What would happen to my wealth if I were cut off from the global financial system, as has happened to many Russian tycoons? I suspect that much of my assets would become nearly worthless overnight. In this scenario, I’d be happy to take any price for whatever assets I could actually sell. As one old City saying about selling impaired assets goes, “the first cut is the cheapest”. In other words, I’d get out while I could — as I warned in this apologetic piece from 25 February.

Finally, though I’m not rushing to buy, we do have a large cash pile waiting to be reinvested into cheap, low-risk shares paying juicy dividends!

Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services, such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diverse range of insights makes us better investors.

It has been an eventful day for Polymetal (LSE:POLY) and its share price. The Cyprus-based precious metals mining group saw its stock price leap from around 200p to almost 1,400p in early trading on Monday, 7 March 2022. The Polymetal share price had previously slipped from over 1,000p on 23 February 2022 to 170p on 4 March 2022. The price spike might have caused investors in the company — Polymetal has nine gold and silver mines and three in development across Russia and Kazakhstan — to breathe a sigh of relief.

The invasion of Ukraine by Russia and the sanctions placed on the belligerent country explain the drop in the company’s share price. Since the conflict is ongoing, with no concrete signs of resolution, the substantial increase in the Polymetal share price was surprising. It did not last. Almost immediately, stock in Polymetal was trading back around the 200p at which it opened.

Why did the Polymetal share price hit 1,400p?

At around 8:41 AM, multiple orders were placed to trade Polymetal shares on the London Stock Exchange. These orders were at 1,400p per share. Further blocks of orders at 412p, 300p, 250p were received soon after. By 9 AM, the market for Polymetal shares was back around 200p, like the price spike had never happened. 

The large Polymetal share price rise early on Monday, 7 March

Source: Financial Times

Early speculation suggested that the 1,400p price was a “fat finger” trade. Someone had made a mistake and entered the wrong price into the market. The follow-up trades at inflated prices could be blamed on algorithms acting on the price momentum. The London Stock Exchange launched an investigation into the aberrant Polymetal trades. It cancelled them just before 11 AM on Monday, 7 March.

It is not unheard of to cancel trades made in error. A notable example was the cancellation of orders in Kraft Foods stock by the NASDAQ in 2012. Kraft’s price spiked by 29% in one minute. The Polymetal share price spike of 700% is more dramatic, but the culprit orders have been closed much in the same way. Indeed, rule numbers 2120 and 3022, which the London Stock Exchanged cited, deal with erroneous trades and enforced cancellations.

Polymetal board changes

At around 10 AM UK time today, Polymetal announced that six board members were stepping down with immediate effect. This move might have been prompted by the trades that were later cancelled as erroneous. But, it is also worth noting that a board member of Evraz, another mining company with Russian focused assets, has also stepped down recently. That would suggest the directors, who are all non-Russian, are leaving in response to pressure from the likes of the Institute of Directors to step down from Russian-owned or Russian-associated companies.

Where does all this leave Polymetal shareholders? Well, the price is back where it was before the “fat finger” trades and well below where it was before the Russian invasion. The price slide has removed Polymetal from the FTSE 100. The company is suffering from repeated distributed denial of service attacks against its website. Sanctions against Russia are hurting Polymetal’s operations and threatening its precious dividend, and might get more onerous. Polymetal has lost six experienced board members, and there is still a threat of the shares being suspended from trading altogether. 

James J. McCombie owns shares in London Stock Exchange. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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With stock prices jumping around a lot at the moment, some shares are trading at a lower price than they were just a few weeks ago. I have been looking for cheap shares to buy now for my portfolio. When doing that, I have been focussing on companies I think have attractive long-term business prospects and whose shares seem like good value to me. Here are two I would consider buying today for my portfolio.

Unilever

The consumer goods maker Unilever (LSE: ULVR) is a global giant, with weekly sales of a billion euros last year. The company’s stable of instantly recognisable brands such as Domestos and Hellmann’s helped the company to a €6.6bn profit after tax.

Over the past 12 months, though, the Unilever share price has fallen 12%. That partly reflects challenges facing the company that I think are still risks to the share price. For example, rampant cost inflation means the company needs to push up its prices if it wants to maintain its profit margins. But that could lead to some customers buying cheaper alternatives, hurting Unilever’s revenues.

From a long-term perspective, though, I expect the strong cash generation properties of the company’s portfolio of brands to support share price recovery. Meanwhile, the company’s dividend at the current share price stands at an attractive 4.4%. I think the company’s broad footprint and wide portfolio of premium brands can help it weather economic storms fairly well. I would be happy to hold the shares in the coming years and see the beaten down share price as a buying opportunity for my portfolio.

Cranswick

After falling 6% in the past year, I have been having another look at meat producer Cranswick (LSE: CWK) as a possible addition to my portfolio.

Meat might not sound like an exciting high-growth industry. In some countries, meat consumption is becoming less popular. But Cranswick has honed a business that benefits from high meat demand in some very large markets. The company has raised its dividend annually for over three decades, with last year’s payout going up 16%. Currently, the shares offer a yield of 2.2%.

I reckon a number of drivers could help the business keep growing in the coming years. While meat consumption may decline in some countries, other markets will likely see demand increase as their growing economies lift average household purchasing power. There is also a mismatch between demand and supply for pork, made worse by factors such as labour shortages in parts of Europe that keep abattoirs from operating at full capacity. That could help support pork prices in years to come.

Cranswick remains a growth story – revenues increased 14% last year – and the price-to-earnings ratio is now 17. I see that as attractive and would consider buying this “pork folio” for my own portfolio.

Cheap shares to buy now

Whatever happens next in stock markets, I see these two companies as having strong businesses with ongoing prospects. Dividends are never guaranteed, but both companies have been reliable dividend payers.

At their current prices, I see them as cheap shares to buy now for my portfolio and hold for the long term.

Christopher Ruane owns shares in Unilever. The Motley Fool UK has recommended Unilever. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Extreme market volatility means that lots of top-quality stocks are trading at rock-bottom prices. I myself have identified lots of great penny stocks now that are dealing on really low earnings multiples.

The full economic consequences of the tragic events in Ukraine will take some time to become apparent. And so the impact of the conflict on UK shares is difficult to accurately ascertain. But here are two top penny stocks whose recent share price falls could make them too cheap to miss.

Taking a close look

It’s quite possible that Lookers (LSE: LOOK) will find the going tough as the cost-of-living crisis worsens. Sellers of big-ticket items like cars are particularly vulnerable to falling consumer spending power, of course. So the company’s share price has slumped recently and it now trades on a forward price-to-earnings (P/E) ratio of 7.7 times.

I believe that this recent weakness represents a great dip buying opportunity. Sales of electric vehicles in the UK continue to rise strongly as concerns over the climate crisis intensify and people switch their old polluting vehicles for greener alternatives. That’s in spite of consumer price inflation currently rising at its fastest rate for three decades. Sales of battery-powered vehicles leapt almost 200% year-on-year in February, latest data shows.

Lookers sells vehicles across more than 30 brands, giving it solid exposure to the electric car revolution. And I think sales of its low-emissions vehicles could receive a further boost from soaring petrol and diesel prices. Average unleaded prices have just hit fresh record highs of 155p per share. They look set to keep climbing too as the war in Eastern Europe hits oil supplies, boosting demand for electric vehicles still further.

A tasty penny stock

When consumer spending comes under pressure, brand power is worth its weight in gold. This is why I think Premier Foods (LSE: PFD) could be one of the best penny stocks to buy today. The food manufacturer owns brands like Mr Kipling Cakes, Bisto gravy, and Homepride cooking sauces. Shoppers stay loyal to these decades-old brands even when economic conditions worsen.

The Premier Foods share price has plummeted, though, following the awful events in Ukraine. This is in large part due to fears of rising ingredients costs and what this could do to margins. For example, wheat — a critical ingredient in Premier Foods’ cakes — has soared to record highs in recent days. And they could of course keep climbing. Russia and Ukraine collectively account for more than 25% of global wheat exports.

Still, Premier Foods’ mega-popular brands should leave it better placed than most food producers to pass these increased costs on to its customers. I think this is something that recent heavy share price falls don’t reflect. Today Premier Foods changes hands on a forward P/E ratio of just 8.9 times. This looks like a bargain in my book.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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