Triple Point Energy Efficiency Infrastructure Company (LSE: TEEC) is a cheap UK share I’m paying close attention to right now.

Demand for renewable energy stocks like this is shooting higher as the concept of ‘responsible investing’ takes off. It’s a phenomenon I think could underpin strong share price growth as concerns over the climate emergency steadily grow.

TEEC splashes the cash on low-carbon energy projects across the UK. Its most famous investment is perhaps the acquisition of combined heat and power (CHP+) assets on the Isle of Wight. But it’s steadily building its footprint in the field of hydroelectric power too and late last month spent £26.6m to snap up a cluster of water-based power projects in Scotland.

The UK government has put ‘green’ energy at the heart of its industrial strategy for the next decade. And TEEC could be well-placed to capitalise on such political will. However, it’s worth remembering that a changing of the guard in Westminster could have serious ramifications for shares such as this.

A cybersecurity star

Cybercrime is an increasingly-large problem for individuals and companies all over the globe. As a consequence spending to prevent online attacks is going through the roof. Analysts at Researchandmarkets.com think the global security industry will be worth a staggering $539.8bn by 2030. That compares with the $183.3bn it was estimated at last year.

NCC Group (LSE: NCC) is a cheap UK share I’d buy to make money from this booming sector. It’s been no stranger to profits upgrades in recent months. And in early November it described trading since the beginning of October as “solid”.

News that its acquisition of Iron Mountain’s Intellectual Property Management (IPM) business in June is progressing well could help NCCs share price recover after recent heavy weakness. At 231p per share, NCC has basically lost all the gains it accrued during the past 12 months. However, signs of problems with integrating its new unit could conversely see the software business extend its slide.

Virtually brilliant

I invested in Keywords Studios — a provider of software development services — last year to capitalise on the booming video games market. I think motion capture specialist Oxford Metrics (LSE: OMC) could be another way to effectively ride this train. Trading at its Vicon division is extremely strong, thanks to what it describes as a “buoyant” games sector, and in particular the adoption of Virtual Production by various large production studios.

Virtual Production allows developers to go about their business in both the real and digital worlds. It’s complicated and clever stuff, but all I need to know from an investment perspective is that it’s also lucrative business.

Revenues at Oxford Metrics soared almost 18% in the year to September, to £35.6m. I’d buy this cheap UK share despite the threat posed by the high levels of competition in the tech sector it operates in.

Royston Wild owns shares of Keywords Studios. The Motley Fool UK has recommended Keywords Studios and NCC. 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.

Britain’s housebuilders can expect another decade of big profits as the market’s colossal supply/demand imbalance drags on. A shortage of new homes isn’t confined to this country, of course. It’s the same in Ireland, which is why I’m considering buying penny stock Cairn Homes (LSE: CRN) today.

Cairn recently reported that its revenues rocketed 61% in the six months to June, while its order book leapt to €655m from €214m at the start of 2021. Encouragingly, evidence shows that buyer demand has remained electrifying since then too. Average property prices in Ireland soared 12.4% in the 12 months to September, according to the country’s Central Statistics Office. This was also up from 10.9% in the previous month.

Big margins at Cairn Homes are also helping to drive profits right now (it expects a gross margin of 19% in 2021). However, I am aware that margins could start to recede if supply chain issues mean building material costs keep surging, hitting shareholder returns in the process.

Another housing hero

I think investing in Triple Point Social Housing REIT (LSE: SOHO) could be a good way to insulate myself against the danger posed by Omicron. After all, demand for the accommodation it provides (to people with special needs) remains stable during good times and bad. The business collected 100% of rents even as the Covid-19 crisis savaged the British economy.

Security isn’t the only reason I like Triple Point Social Housing. I also like the steps it’s taking to boost its property portfolio, the company adding a raft of new assets to its books for a shade under £30m last month. Such action will allow it to capitalise on the fast-growing specialised supported housing (SSH) sector to full effect.

Finally, I like Triple Point’s classification as a real estate investment trust (REIT). This ensures it has to pay a minimum of 90% annual profits out by way of shareholder dividends.  I’d buy the business despite the danger of overpaying for acquired assets which fail to deliver the desired rewards.

An electric vehicle penny stock

TI Fluid Systems is a UK share I bought last year to latch onto the electric vehicle revolution. And I’m thinking of investing in European Metals Holdings (LSE: EMH), which operates the massive Cinovec lithium project in Czechia. Most plug-in hybrid and battery-powered cars contain lithium-ion batteries, meaning European Metals can expect sales of its product to soar.

I’m also a fan of this company because it’s located slap bang in the middle of Europe’s carbuilding belt, making it simpler to sell its product to major manufacturers. Pleasingly, sales of low-carbon vehicles are booming in Europe. According to ING Bank, new registrations leapt 41% in the five years to 2020, beating the US and its figure of 28% by a wide margin.

The European Metals share price could suffer if development of Cinovec hits trouble, of course. However, all things considered, I think the reward-to-risk profile of this penny stock is highly attractive.

Royston Wild owns shares of TI Fluid Systems. 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.

Many people focus on their home countries when investing. I think this is a mistake. There are plenty of attractive investments listed in London, but there are also lots of high-qualities businesses listed over the pond.

As such, I own a handful of US equities in my portfolio. These are my three favourite US stocks to buy today. 

Stocks to buy for growth

The first company on my list, which I already own and would be happy to buy more of, is Visa (NYSE: V).

The corporation operates one of the world’s main payment networks. It connects buyers and sellers who are using Visa-branded networks and cards. With the number of cashless transactions rising worldwide, the company is one of the primary beneficiaries. 

What’s more, as one of the world’s largest payment network operators, Visa’s size is a substantial competitive advantage. It would cost a competitor tens of billions of dollars and many years to take over the firm’s position in the market. 

These are the two main reasons I would buy the stock for my portfolio today. However, the firm can’t take its position in the market for granted. Competitors are nipping at its heels. The company needs to stay alert to fend off the competition, or it could fall behind. 

Growing market 

Sticking with companies that have robust competitive advantages, I would also acquire Nvidia (NASDAQ: NVDA). 

The organisation is one of the world’s most prominent designers and producers of high-performance computer processors. The demand for these is exploding as the market for digital services also explodes. 

Nivida is reaping the benefits of this market expansion. The company’s net income lept 84% year-on-year in the third quarter. The organisation reinvests virtually all of its income back into processor development.

This spending only helps reinforce the group’s leading position in the market. As long as the firm continues with this strategy, I reckon its growth should also continue. 

Challenges it could face going forward include the supply chain crisis and rising input costs, which may increase the costs for consumers. 

Market maker 

I also think Goldman Sachs (NYSE: GS) is one of the best stocks to buy in the US today. I would acquire the shares because the company has an unrivalled franchise in the US equity markets.

The investment bank is one of the most recognisable brands on Wall Street. It manages the wealth of the rich and famous through its wealth management arm. This brings in a steady stream of recurring income. 

At the same time, the group has a leading position in the market for taking companies public. Over the past two years, this division has been a healthy profit centre for the organisation. 

Thanks to its position in these two markets, I think Goldman has a definite competitive advantage, although this is a competitive business. Keeping customers happy is one of the main challenges the business faces, or they could move to rivals.

Rupert Hargreaves owns shares of Visa. 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 outlook for the Rolls-Royce (LSE: RR) share price has changed dramatically over the past week. The emergence of the new coronavirus variant, coupled with travel bans governments imposed to try and control its spread, have brought the aviation sector’s recovery to a sudden halt. 

Before the travel bans, it appeared as if Rolls’ outlook was improving. Airlines were placing orders for new planes, and consumers were returning to the skies. The latest set of travel restrictions is a massive setback for the group. It is unclear if, or when, this latest headwind will disappear. 

As such, I have been wondering if I should change my bullish opinion on the stock. Before this week’s events, I was a buyer of Rolls-Royce shares. Now the outlook has changed, I am re-evaluating my position. 

Rolls-Royce share price outlook

The impact the latest travel bans have had on the aviation industry is evident. Shares in carriers like IAG plunged a double-digit percentage immediately after the restrictions were announced. Traffic on some long-haul routes, which was recovering, has now virtually stopped. 

Granted, many global destinations remain unaffected. Internal markets such as the US are also unaffected by the bans. However, the aviation industry operates on minuscule profit margins, and if it is not running at 100% capacity, losses quickly emerge. 

I think the latest pandemic restrictions will set Rolls’ recovery back. As of yet, it is difficult to say to what degree they will impact the group. It depends on how long the restrictions last.

If they last into the second quarter of next year, Rolls may have to revisit its earnings projections for 2022. If restrictions are rolled back in the next month or two, the impact on the group may be more manageable. 

The key summer season

In reality, it does not matter what happens over the next couple of weeks. The future of the Rolls-Royce share price will depend on what happens next summer.

If the aviation industry is able to enjoy a relatively normal 2022 summer season, profits could recover across the sector. This would improve confidence and may lead to more aircraft orders. Improved consumer confidence may also translate into more bookings, generating more revenue for airlines and justifying more aircraft orders. 

All in all, while the latest travel restrictions are frustrating for the airline industry, they are not the end of the world. It was always going to take years for the industry to recover from the pandemic. A couple of months here or there will not make much difference (assuming the restrictions only last for a couple of months).

As such, I think the Rolls-Royce share price still looks attractive as a contrarian value investment. I would buy the stock for my portfolio as the airline industry continues to recover from the lows of the pandemic.  

Rupert Hargreaves 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.

I am always looking for penny stocks to buy for my portfolio. These companies can be riskier investments than blue-chip stocks. However, they can also generate fatter profits. That is why I like to own several as part of a diversified portfolio.

With that in mind, here are my favourite penny stocks, which I would not hesitate to buy today. 

Recovery penny stocks 

Restaurant Group, Marston’s and The Fulham Shore are all hospitality businesses, but they all have very different outlooks. 

Fulham Shore was able to capitalise on the high demand for takeaway pizzas during the pandemic. Group sales remained relatively robust throughout the crisis. That put the business in a solid position to return to growth when the government lifted restrictions.  

Restaurant Group, which owns the Wagamama brand, benefitted from similar trends during the pandemic. Management has been able to capitalise on rising consumer spending as the country’s economy has opened up. 

Marston’s wasn’t able to switch to takeaways in the same way as Fulham Shore and Restaurant, but sales have rebounded rapidly as the economy has reopened. According to the group’s latest trading update, like-for-like sales since restrictions were lifted in July have totalled 102% of 2019 levels. 

As consumer confidence continues to recover, I think these penny stocks should continue to benefit from the tailwinds that have helped drive growth over the past six-to-12 months. 

Some headwinds that could hold back this recovery include rising wages and the supply chain crisis. These challenges could push costs up for hospitality firms and hurt profitability. 

Retail recovery 

As well as the hospitality sector, I also want some exposure to the retail sector. The three penny stocks I think are well-positioned to capitalise on the country’s retail recovery are Topps Tiles, Capital & Regional and Card Factory. 

I have picked these businesses because they offer exposure to three different parts of the retail sector. Capital & Regional owns a portfolio of commercial properties around the UK. These assets suffered a fall in values during the pandemic, but now the economy is reopening, initial indications suggest valuations could be stabilising. 

Meanwhile, Topps Tiles offers a way for me to build exposure to the booming home improvement and construction markets. These have also been able to escape some of the lockdown restrictions that have been in place during the past two years. 

Finally, Card Factory offers exposure to the gifting market, which has rebounded as friends and family reunions have returned. 

These companies are benefitting from different tailwinds, but they face the same challenges. These include rising wage costs and the supply chain crisis. These issues could have a negative impact on profit margins at a tough time for the companies.

This is the biggest growth headwind facing these operations today. 

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Card Factory and Marstons. 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 Diversified Energy (LSE: DEC) share price has fallen by 20% since early October and is down by around 12% so far this year. This weakness has left the US gas producer trading at under 100p and offering a 12% dividend yield.

A yield this high is unusual. In my experience it’s often a sign of problems to come. But Diversified’s payout has risen steadily since its flotation in 2017 and the company’s latest trading update didn’t seem to reveal any new problems. Is DEC an overlooked bargain I should buy for my portfolio?

What’s the story?

Diversified Energy is a slightly unusual business. The company operates around 69,000 gas producing wells in the USA, in states including Virginia, Pennsylvania and Ohio.

These wells are generally older wells that are past peak production. Diversified buys the wells from other operators and then runs them for cash until they reach the end of their useful life.

Gas production rates from Diversified’s wells are pretty low. However, Diversified’s pitch is that as a large operator, it can run these wells efficiently and have the resources needed to decommission them responsibly at the end of their useful life.

So far, this model seems to have worked well, at least for shareholders. The stock has risen by 75% since January 2017 and the dividend has risen steadily, supported by cash flow.

Why DEC stock plunged

DEC’s share price fall in October was triggered by a critical press report. This suggested that many of the company’s wells are leaking natural gas, which is mostly methane. That’s a potential concern, because methane is believed to have a much greater impact on climate change than carbon dioxide.

Diversified has denied these allegations. But in the weeks since then the company has announced plans to step up its monitoring activity and spend an extra $15m per year on reducing emissions from its wells. The company also plans to increase the number of wells it decommissions each year to 200 by 2023.

For me, decommissioning is the big worry here. A single well costs around $22,000 to shut down, based on the company’s latest update. At that rate, decommissioning all the company’s wells could cost close to $1.5bn.

Most of this spending is a long way in the future, according to CEO Rusty Hutson. But I’m concerned that the company doesn’t seem to be making any plans for this. Instead, most surplus cash is paid out as dividends each year. Debt levels are quite high, too, in my view.

DEC shares: should I buy?

For now, I think Diversified Energy’s 12% dividend yield is probably safe. The company should be benefiting from strong gas prices and also has hedging in place to protect against falls.

However, I can see multiple risks to this payout in the future, perhaps quite soon. If I’m right, then the DEC share price could have further to fall.

Although I’m tempted by the stock’s 12% yield, the situation is too speculative for me. That’s why I won’t be buying Diversified Energy shares.

Roland Head 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 FTSE 100 is packed with top-quality bargains. Here are two cheap blue-chip UK shares I’m considering buying right now.

A FTSE 100 share for the e-commerce age

To me, it’s no surprise the Royal Mail (LSE: RMG) share price has remained afloat in recent weeks. While many other UK shares face a significant Omicron-related hit, Royal Mail could likely benefit from a worsening Covid-19 crisis.

Parcels traffic at the courier soared last year as lockdowns pushed shoppers away from the high street and onto their mobiles and laptops. So it’s not a stretch to suggest that that e-commerce sales could balloon again as virus infection rates rise. Sales could surge even if further restrictions aren’t imposed, such is the scale of anxiety among shoppers, as analysts over at ParcelHero recently mentioned.

City analysts believe earnings at Royal Mail will rise 14% in this fiscal period (to March 2022). Though I think projections could be upgraded depending on the state of the public health emergency. Regardless of this, I’d still buy the delivery giant’s shares today as e-commerce looks set to keep growing rapidly anway. Dropshipping business Oberlo reckons 24.6% of all retail sales will be made online by 2025. That compares to an estimated 19.5% share for this outgoing year.

Current forecasts mean the Royal Mail share price commands a forward price-to-earnings (P/E) ratio of just below 8 times. Moreover, at current levels, the courier sports a chunky 4.6% dividend yield. This reading beats the broader 3.5% FTSE 100 average by a decent distance. Letter and parcel volumes at Royal Mail could suffer if the UK economy cools sharply. But I believe the business still looks highly attractive from a reward-to-risk perspective.

5% dividend yields

I’m also thinking about adding National Grid (LSE: NG) to my stocks portfolio alongside Royal Mail. This is because its ultra-defensive operations (it has a monopoly on maintaining Britain’s electricity grid) provide excellent peace of mind when it seems the world is going to hell in a handcart. Its services will remain essential even if the Covid-19 crisis spirals out of control and the economy tanks.

Like any UK share, of course, National Grid exposes its investors to certain risks. For example, the business of maintaining the country’s network of pylons, substations and other hardware is an expensive, profits-sapping business. These costs can unexpectedly rise in the event of extreme weather too. Furthermore, the threat that lawmakers could strip National Grid of its role as sole guardian of the grid is an ever-present risk that its shareholders face.

Still, at current prices, these are dangers I’m happy to accept. City brokers think National Grid’s earnings will soar 17% in the financial year ending March 2022. This leaves the business trading on a forward price-to-earnings growth (PEG) ratio of just 0.6. A reminder that a reading below 1 suggests a share could be undervalued by the market.

This, combined with a 5% forward dividend yield, makes National Grid excellent value for money, in my opinion.

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.

Whenever I have covered Wise (LSE: WISE) shares this year, I have consistently concluded that the company has tremendous potential. 

I believe the group can grab a significant share of the global money transfer market with its low-cost business model. By returning efficiencies to customers in the form of lower costs, it should only reinforce the competitive advantage over its peers. 

And it seems this is what has been happening. 

Taking market share

According to its results for the six months to the end of September, 3.9m consumers used the platform during the period to transfer a total of £34bn, up 44% year-on-year. 

Personal and business customer volumes grew by 39% and 61% to £25.9bn and £8.5bn respectively. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 20% to £60.6m compared to the prior-year period. Profit before tax dropped 6% as costs associated with the company’s IPO hurt its bottom line. 

Wise’s profit margins are also coming under pressure. The group’s ‘take rate’ for the period (the percentage of money it receives for each transaction) declined to 0.75% from 0.81% a year earlier. 

This is primarily due to the group’s decision to reward customers with lower costs as the business grows. Some investors and analysts might argue that this approach is counterintuitive. If a company is growing, other investors might ask why it should sacrifice profit margins to reward customers. 

I think that misses the point. The international money transfer market is highly competitive, and Wise needs to stand out. It can do this by keeping costs as low as possible and returning efficiency gains to consumers with lower prices. 

The outlook for Wise shares

This strategy appears to be working, which is why I believe the stock remains undervalued despite its recent performance. Wise still makes up only a fraction of the global money transfer market, giving it massive potential for growth over the next few years. As it is already profitable, the company has the funding required to reinvest back into the enterprise to drive growth and reach more consumers. 

Still, as I noted above, the global money transfer market is highly competitive. Wise’s peers are going to be looking for a way to gain an edge over this upstart. They could attack it with even lower costs, or use their size to draw consumers with better marketing programmes. 

The company is always going to face challenges like these. I will be keeping an eye on these headwinds as we advance. 

Nevertheless, as the global economy returns to growth following a pandemic, I think Wise should continue to prosper. As it grabs market share I think profits will continue to grow, and this should drive a virtuous cycle, leading to lower costs for consumers and higher transaction volumes. 

I think the company’s growth story is only just getting started. As such, I would continue to buy the stock. 

Rupert Hargreaves 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 outlook for UK shares is incredibly uncertain. The combination of Brexit, the pandemic and the global supply chain crisis has thrown a massive cloud of uncertainty over the country’s economy. 

Some investors may be avoiding the market for these reasons. However, I think that could be a mistake. I reckon now is the perfect time to snap up cheap UK shares while uncertainty prevails. 

Cheap UK shares

I should clarify that I am not willing to buy any stock just because it looks cheap. In my opinion, some stocks are cheap because they deserve to be.

They could be suffering from a long-term decline in profits or poor management decisions which have incurred high costs. I would avoid these businesses and those ones with a lot of debt. Too much debt is one of the most common reasons why companies fail. 

Still, even after weeding out companies with the issues outlined above, I think there are plenty of undervalued opportunities in the market. 

One such company is NatWest. This bank looks incredibly cheap compared to the value of its assets. As one of the largest lenders in the country, it is highly exposed to the UK economy. As such, it is easy to see why investors might want to avoid the stock. 

Despite this, the group is highly profitable, has a robust balance sheet, and has been returning cash to investors with dividends. I would buy the shares to invest in the UK economic recovery over the next decade while it is trading at a depressed valuation. 

Undervalued property 

I would also buy real estate investment trust Shaftesbury. Like NatWest, this company, which owns a unique portfolio of commercial properties in the West End of London, is trading at a significant discount to the value of its assets. 

Commercial property values have fallen over the past year so I can see why investors might want to avoid the stock as values could always fall further.

However, the group owns a virtually irreplaceable portfolio of properties in one of the country’s most vibrant areas. While property values might jump from year to year, I believe the value of these assets will only rise in the long term. That is why I would buy the stock for my portfolio of cheap UK shares. 

Growth play 

Even though it is one of London’s premier companies, Prudential is not really a UK corporation at all. Its primary focus is Asia, where the bulk of its business is now located. 

Demand for financial services across Asia is multiplying, and Prudential is capitalising on this. Unfortunately, this growth potential is not reflected in the stock, which trades at a discount to its peers. I would acquire the shares to take advantage of this gap between valuation and growth. Challenges the company may face include competition and regulatory headwinds in its Asian markets. 

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Prudential. 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.