I’m searching for the best dirt-cheap UK shares to make big money in 2022 and beyond. Here are five top penny stocks on my radar.

SIG (trades at 47p)

I’ve bought building products suppliers to capitalise on strong homebuilding activity in Britain and continental Europe. Brickmaker Ibstock is a UK share I’m convinced will make me a tidy profit over the next decade.

I think SIG could be a wise stock to buy too. This business is best known for selling insulation and roofing products on these shores as well as in France, Germany, Poland, Ireland and the Benelux countries. I like the geographical diversification SIG provides and would buy it even though demand could suffer if the coronavirus crisis affects building sites again.

Abingdon Health (trades at 30p)

It seems a long and bumpy battle against Covid-19 is in the works. Learning to co-exist with coronavirus seems to be more likely rather than total eradication, scientific research increasingly shows. This means demand for Abingdon Health’s services could remain rock-solid.

The UK share makes rapid lateral flow tests and has made big investments in manufacturing to meet future orders. Competition is fierce, but I’m confident Abingdon could make big bucks in its enormous market.

Speedy Hire (trades at 63p)

Speedy Hire might not have things all its own way if building product costs continue to soar. This could hamper construction projects and hit demand for its rented tools and other equipment. But as things stand, conditions are looking ultra rosy for this cheap UK share.

Revenues rocketed more than 28% between April and September, thanks to strong infrastructure and construction sectors and an equally strong home renovations market. Speedy Hire is taking steps to improve its digital operations and launch trials in B&Q hardware stores to keep sales moving upwards too.

Netcall (trades at 69p)

The rapid growth of automation is something I’d like to grab a slice of. I’m thinking of doing this by buying Netcall shares, a tech company whose software enables its customers to automate their processes and improve the customer experience.

It’s doing a roaring trade right now and demand for its cloud-based Liberty product is particularly strong (cloud revenues soared 26% in the 12 months to June). I’d buy this high-growth penny stock even though it faces massive competition from larger IT services players.

Angling Direct (trades at 54p)

Fishing is a £4bn industry in the UK and growing rapidly. According to the Angling Trust, rod licence sales soared 17% year-on-year in 2020/2021. Meanwhile, sales of fishing lines, bait and related products have gone through the roof.

The hobby’s resurgence is being tipped to endure too and this bodes well for Angling Direct, the one-stop-shop for all-things angling. I especially like the investment this penny stock has made digitally to capitalise on the e-commerce boom. I’d buy it even though supply chain problems could remain an issue in 2022.

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.

The Boohoo (LSE: BOO) share price fell an astonishing 66% in 2021. Today, I’ll take a closer look at what happened and why the market has seemingly fallen out of love with the fast-fashion giant.

It all started so well

Holders of this stock must have been being optimistic as they entered 2021. At the beginning of last year, the Boohoo share price was riding high at 340p.

An encouraging trading statement in January went some way to justifying this momentum. Strong growth across all its brands and geographies in the last third of 2020 was reported. Accordingly, the company raised its guidance on full-year revenue. News later in the month that Boohoo had snapped up a number of brands, including Debenhams, was also positively received.

In March (and facing a potential US import ban), Boohoo was once again forced to defend its supplier practices. The AIM-listed firm published a list of 78 approved manufacturers as part of its ‘Agenda for Change’ programme. After a slight dip, the share price duly recovered, helped by news of a new warehouse that would boost sales capacity to above £4bn.

The Boohoo share price starts to tumble

It’s at this point that cracks began to appear. Helped by the rise in online shopping over the pandemic, full-year results in early May showed a 41% jump in revenue to £1.75bn. A 37% rise in core earnings to £173.6m was also reported.

Away from the headline numbers however, Boohoo said the the benefits of reduced returns seen over the pandemic would now lessen, but higher costs were here to stay. The company’s decision to maintain guidance in June’s trading update (despite sales rising 32% in Q1) also pointed to management becoming increasingly cautious on the firm’s near-term outlook. 

As the months passed, a significant minority of investors appeared to be growing frustrated with the company’s founders. No less than 12% of shareholders opposed the re-election of Carol Kane to the board. A statement that the online fashion retailer would be investing £500m in the UK over the next five years did little to appease owners.

The worst was yet to come. In September, the Boohoo share price fell sharply as it warned that previously-highlighted higher costs in its supply chain and higher wages for its workers would impact margins. This was followed by a lowering of full-year guidance in December’s (unexpected) trading statement. As expected, more clothes were being returned by customers. A serious slowdown in sales abroad, issues with deliveries, and ongoing cost inflation were also blamed. Omicron wasn’t helping matters.

Boohoo briefly became a penny stock when, in mid-December, the shares dipped to 97p. They had not been this low since September 2016. Perhaps the only crumb of comfort to holders was that industry peer ASOS was also ending the year firmly out of favour.

More news soon?

As things stand, analysts believe earnings per share will fall by 23% in the current financial year. This would leave Boohoo’s stock on a P/E of 20. Whether that proves to be a bargain for long-term investors remains to be seen. 

Based on past form, the £1.5bn-cap may provide the market with another update on trading later this month. Should this be the case, The Motley Fool UK team will be on hand to update readers.

Paul Summers owns shares in boohoo group. The Motley Fool UK has recommended ASOS and boohoo group. 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 searching for the best cheap stocks to buy for 2022. Here are three sub-£3 shares on my watchlist today.

Spire Healthcare (trades at 255p)

Growing stress on the NHS bodes well for private healthcare providers such as Spire Healthcare. This particular company operates dozens of private hospitals and clinics and it’s doing a roaring trade as waiting lists for free treatment grow. Latest financials showed revenues up 39% year-on-year in the six months to June, and up 14% from the corresponding 2019 period too.

NHS waiting lists now stand at a record high of 6m. Patient numbers are tipped to keep rising too as soaring Omicron infections cause further cancellations of non-essential medical procedures. So I’m tipping the number of self-pay and insured patients passing through Spire’s doors to keep rising. I’d buy this cheap UK share, even though a worsening shortage of nursing staff could push costs northwards.

Airtel Africa (trades at 137p)

Africa’s economies are some of the fastest-growing on the planet. This offers a world of opportunity for UK share investors, and Airtel Africa is one stock I’m considering buying today. This business offers telecoms and mobile money services in sub-Saharan countries where wealth levels are rising rapidly and low product penetration leaves massive sales opportunities over the next decade and more.

Revenues at Airtel Africa soared 28% in the six months to September, at constant currencies, latest financials showed. I’d buy this near-penny stock even though its highly-regulated operations leave it in danger of profits-harming action from lawmakers.

M&G (trades at 207p)

Financial services colossus M&G is one of the biggest yielders on the FTSE 100. It carries a monster 9.2% dividend yield for 2022 and its strong cash generation means big shareholder payouts could become the norm. As well, M&G’s capital-rich balance sheet means it could continue to embark on earnings-boosting acquisition action (it recently snapped up financial adviser Sandringham Financial Partners for an undisclosed sum).

I think demand for M&G’s savings and investment services will remain strong. It’s my belief that historically-low interest rates will remain in place, meaning people will continue to need expert advice to get a decent return on their money. A word of warning though, M&G will have to peddle extremely hard to thrive in this ultra-competitive industry.

ConvaTec Group (trades at 191p)

I think Convatec Group could be a perfect cheap stock for these uncertain times. Forget about soaring inflation, the ongoing coronavirus crisis, and the threat of a Chinese property sector collapse. The colostomy bags, wound treatments and cannulas this medical equipment manufacturer provides will remain in high demand in 2022, whatever happens. This should give supreme peace of mind to even the most nervous investor.

I think ConvaTec could provide me with excellent long-term returns as well. A growing global population and rising healthcare investment in emerging regions should drive revenues steadily higher here, in my opinion. I’d buy the business even though a high-profile product failure could prove disastrous for future customer orders.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Airtel Africa Plc. 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.

Growth stocks have been battered over the past few months, as investors have shifted towards value stocks. This is due to inflationary fears, alongside the steep valuation of many of these stocks. But while there are certainly risks in investing into growth stocks, this does not mean that I’m staying away. Instead, I believe that this recent drop offers a great time to buy some on the dip and hold for the next few years. Salesforce (NYSE: CRM) is one stock I think has a particularly bright future. Here are the reasons why I’ve bought recently.

What does Salesforce do?

Salesforce is a consumer relations management platform, which provides cloud computing solutions. The company’s clientele includes government entities and a variety of companies ranging from giant corporations to small start-ups. It has also made several large acquisitions in the past few years, including Tableau in 2019 to improve its data-analytics side and most recently, Slack for $28bn, so that it can enter the modern work communication environment.

The company’s results have also been incredibly strong. In fact, in the first nine months of 2021, it reported revenues of over $19bn, a 20% increase year-on-year. For the full year, it is also expected to record revenues of around $26.4bn, demonstrating the excellent growth of the firm.

Following the company’s excellent history of integrating and growing acquisitions, I’m also confident that it can do the same with Slack. Hopefully, this will enable the firm to reach its goal of $50bn of revenue by 2026. This target requires 17% compounded annual growth each year, which seems very attainable considering results in recent years. If it’s able to reach this goal, I feel that the Salesforce share price could soar in the long term. This is why I recently bought this growth stock, and plan to hold it for at least the next five years.

Are there any key risks?

There are two main key risks. Firstly, there is the company’s large valuation, despite the recent drop. Indeed, based on its revenue predictions for 2021, it has a price-to-sales ratio of just under 10. This implies that large growth is already pencilled into the stock’s valuation. It also has a price-to-earnings ratio of 140. While this is not overly large in comparison to other growth stocks, and it’s promising to see profitability, it does mean that signs that growth is slowing will be punished.

This leads onto the second main risk that growth may be slowing. Such a fear comes after UBS analyst Karl Keirstead downgraded the stock to neutral, stating that business customers were starting to trim their spending. This could have a negative knock-on effect on Salesforce, as customers start spending less or cancel subscriptions altogether.

What am I doing with this growth stock?

Salesforce stock has significantly fallen back from its highs last November. But I feel that now is a great time to buy on a discount, and I have done this recently. Due to the company’s large growth prospects, alongside its record of making shrewd acquisitions and integrating them into the company, I’m planning on holding this investment for the long term and may continue to buy more if it dips further.

Stuart Blair owns shares in Salesforce.com. The Motley Fool UK has recommended Salesforce.com. 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.

After a strong performance in recent years, there have been growing worries about the potential for a tech crash in 2022.

But why worry about a crash? I see it as a buying opportunity for my portfolio. Here are three tech companies I would happily add to my portfolio if they tumbled in a crash. I like them because I think what they all have in common is a strong, sustainable competitive advantage.

Intuitive Surgical

The medical device company Intuitive Surgical has the sort of business model that gets taught in universities.

It makes robotic surgery equipment for medical procedures. That means that its customer base is deep-pocketed healthcare providers who are willing to pay a premium price. The initial machine installation is only the start of a customer spending money. Each procedure needs sterile peripheral equipment attached to the machine, so there is a constant stream of aftersales. The company has built a sophisticated database of procedures. So, as Intuitive grows it is able to improve its offering and therefore competitive advantage.

But with a price-to-earnings ratio of over 70, the shares look expensive to me. If they tumble in a tech crash I’d happily snap some up for my portfolio. One risk I see with Intuitive is that the attractiveness of the business model could attract more competitors. That could lead to lower profit margins.

I’d buy Google in a tech crash

For a company to become a verb indicates its wide reach. When someone refers to a digital search as “Googling something” they are referring to the flagship product of parent company Alphabet (NASDAQ: GOOG).

The company’s business model is hugely lucrative. Like Intuitive, it is also sticky. The more a user engages with Google, the more personalised a service it offers them. That can reduce their likelihood to switch to competitors.

In 2020, the company reported income of $41bn on revenue of $183bn. Not only is that a very large profit in absolute terms, it also highlights the attractive profit margins a scalable tech company can achieve. With its established customer base and technology, I think Google has set the stage for years of continued profit growth.

A key risk I see is that it is actually too successful. Like Microsoft before it, that could attract ever more regulatory intervention, which could hurt profits. But if the Alphabet price sinks in a tech crash, it is on my shopping list.

Amazon

Like Alphabet, Amazon (NASDAQ: AMZN) has a huge customer base that is deeply embedded in its ecosystem. That could be a driver of profits for decades. Last year the company recorded $21bn of earnings. I regard that as amazing for a company which, like Google, was only founded in the past several decades.

Amazon’s business model has evolved a lot. Its online retail operation remains key to its success. But its enormous web hosting service has become an important part of the company’s business too. The larger Amazon gets, the more efficient its business can become. I think that could support further profit growth. Like Alphabet, though, that risks regulatory intervention that could hurt revenues and profits. If the Amazon share price crashes, I would happily buy it for my portfolio.

Christopher Ruane has no position in any of the shares mentioned. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Alphabet (A shares), Amazon, and Microsoft. 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.

Scottish Mortgage Investment Trust (LSE: SMT) is one of the darlings of the FTSE 100 index. Long-term investors who have stuck with the Trust have been generously rewarded, as its share price over the past 5 and 10 years has risen 4x and 9x respectively.

However, during the past year the Trust has only managed to deliver a 7% return. Of course, to read too much in to just one year is hardly fair, particularly given the fact that in 2020 the Trust returned a stellar 110% as global markets crashed and then staged a remarkable recovery.

The key question for a would-be investor like myself is the likely trajectory of the share price in 2022 and beyond.

The bull case for Scottish Mortgage

One of the primary reasons I like Scottish Mortgage is how it has ripped up the rule book when it comes to investment management. The traditional approach deployed by fund managers tends to mirror the market at large: namely, quarterly earnings reports and a preoccupation with near-term price-to-earnings (P/E) ratios as the primary mechanism for defining value.

Today, there is only one constant and that is change. Scottish Mortgage managers have recognised the potent forces that are shaping the world and have been willing to place early bets where others daren’t venture – the most high-profile being that into Tesla. This trend is likely to continue, as the Trust invests 20% of its capital into unlisted companies.

As the rate of innovation continues to increase, driven by advances in the likes of synthetic biology, nanotechnology, AI, 3D printing, together with a decrease in the cost of capital needed to begin new ventures, thanks to Amazon Web Services, there is nothing to say that Scottish Mortgage won’t find the next Apple or Alphabet.

The bear case for Scottish Mortgage

The primary risk I see for me investing in Scottish Mortgage is its large exposure to the US tech sector. I myself am not averse to investing in this sector, for all the reasons just stated, but for me this part of the market has all the hallmarks of the tech bubble of 2000 and is rife for a major correction in the near-term.

Technology stocks do well in an environment when the cost of capital is low. It is no coincidence that tech stocks (and particularly software companies) have been the best-performing asset class over the past 10 years. However, we are now entering a new macro regime – one dominated by inflationary forces and an increase in the cost of capital as interest rates begin to creep up from their historic lows to tackle this threat.

In 2000, 25% of the largest US stocks were unprofitable; today, the figure stands at nearly double that. The FAANG stocks have for far too long being propping up the entire market and masking the weak fundamentals of the sector as a whole. For me, all I see is flashing red lights. The likes of DocuSign, Zoom, Peloton and Moderna have all begun to roll over. If the market does crash, then the likes of Scottish Mortgage will be one of the first in the firing line. Others will of course disagree with my arguments. What is undisputed, though, is that no bubble in history has ever ended well.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Andrew Mackie has no position in any of the shares mentioned. The Motley Fool UK has recommended Alphabet (A shares), Apple, DocuSign, Peloton Interactive, and Zoom Video Communications. 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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In 35 years of investing in stocks and shares, I’ve made every howler possible. However, I’ve learnt over decades how to control my animal spirits and invest sensibly long term. Now when I analyse a company, I try to find reasons not to buy its stock. Also, when hunting for top shares to buy, I must know five very important things about each stock before making buying decisions. Here they are.

What’s the company’s history?

Acclaimed US fund manager Peter Lynch once remarked, “Although it’s easy to forget sometimes, a share is not a lottery ticket…it’s part-ownership of a business”. Nowadays, I realise that I’m not buying stocks as such. Instead, I’m buying into businesses. Hence, I learn all about a company’s history, operations, products, and how it makes money. And if I don’t like the look of a business, then I don’t buy its shares. It’s that simple.

How much debt is the company carrying?

The second thing I must know is how much net debt a company is carrying on its balance sheet. To me, debt is like risk: the more debt a corporation has, the more risky its stock is. Right now, interest rates are close to record lows, so corporate debt is mostly dirt-cheap. But with interest rates set to rise in the US and UK, this low-cost debt could become a high-risk burden. Therefore, I tend to avoid stocks of companies with eye-watering levels of borrowing.

How highly valued are the company’s earnings?

Next I establish how ‘cheap’ or ‘expensive’ stocks are. To do this, I check the price-to-earnings ratio (P/E). This is found by dividing a stock’s current share price by its earnings per share (EPS). For example, a share costing £1 with EPS of 8p has a P/E of 100/8 = 12.5. So-called value shares tend to have low P/Es, while go-go growth shares (such as US tech stocks) often trade on double- or even triple-digit ratings. But P/Es vary widely across companies, sectors, industries, and countries. Thus, I make a judgement about the relative P/E rating of a stock before deciding whether it is worth buying or not.

Does this stock pay dividends?

I’m a huge fan of dividends — the regular cash payments paid by companies to shareholders. Typically, these are paid half-yearly or quarterly. But dividends are not guaranteed, so they can be cut or cancelled at any time. What’s more, not all stocks pay dividends. For example, in the UK FTSE 100 index, at least 11 of the 101 stocks (one company has dual-listed shares) don’t pay dividends. In the UK, reinvested dividends can account for up to half of long-term returns from shares. That’s why I’m a keen buyer of high-yielding FTSE 100 shares.

How volatile is this stock?

Stocks don’t tend to move in straight lines. They zigzag up and down, sometimes oscillating wildly. To see a share’s past price action, I check its 52-week range. For example, I own shares in pharma giant GlaxoSmithKline (GSK). Over the past year, this share has fluctuated between a low of 1,190.80p (on 26 February 2021) and a high of 1,628.78p (on 30 December 2021). The current share price is 1,586.8p, so GSK is within 2.6% of its year high. I’m glad I didn’t sell below £12 — and I’ll keep holding my GSK shares for now!

Cliffdarcy owns shares of GlaxoSmithKline. The Motley Fool UK has recommended GlaxoSmithKline. 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.

The FTSE 100 index saw a healthy rise in 2021. This was naturally reflected in an increase in share prices in its constituent companies as well. Even then, there are few stocks, I reckon, that could boast of doubling investors’ money in three years. Which is why, when I looked at the share price trajectory of this stock, I took note. 

Strong returns for B&M 

The stock in question is B&M European Value Retail (LSE: BME), which has done exceptionally well over the past three years. However, I still find myself asking whether it can repeat its performance in the future. I mean, consider its performance over the past five years, instead of the past three years. I would have had no bigger advantage investing in the stock five years ago on this date than I did in the past three years. The stock’s price rose and then fell back in the two years between 2017 and 2019. In fact, if I go back to the time it was publicly listed in 2014, I still do not have a much bigger reason to buy the stock. 

Strong trading update for the FTSE 100 stock

But there are positives to the bargain retail stores company too, which encourage me to look more closely at its numbers. In its latest trading statement, released earlier today, it has raised its earnings expectations for the current financial year after it said it “delivered a very Golden Quarter” and also its “best-ever Christmas”. This clearly indicates that the company has a fair bit going for it, and 2022 could be a good year, especially as economic recovery takes hold. 

In fact, going by the fact that B&M’s earning ratio is at a relatively moderate 14.7 times, I think there is a case for its share price to rise further. It is lower than that for the FTSE 100 index as a whole, which is 18 times. And going by the fact that it expects its earnings to be higher than earlier anticipated, its price-to-earnings ratio could fall even further if the price stays at current levels. 

The question of dividend yield

I also like that it pays a dividend. Its yield is nothing great at 2.8%, which is lower than even the average FTSE 100 dividend yield of 3.3%. But interestingly, this does not take into account special dividends paid out over the past year. If I consider those, its yield rises to a huge 9.9%!. Now, it might not be able to repeat that performance, but it does make me optimistic. Also, the stock has consistently yielded dividends pretty much since the time that it was listed on the stock exchange. This gives me confidence about its continuity as well, something I look forward to as a long-term investor. 

Also, I think the FTSE 100 could remain strong, which in turn will keep stocks like B&M buoyed. I’d buy the stock now.

Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has recommended B&M European Value. 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.