Despite best efforts to dissuade investors from seeking extremely speculative market ideas, the concept of penny stocks to buy continues to rank among popular search query items. Perhaps human nature is simply fascinated with macabre, which may explain why horror films generate much popularity. None of us want to experience truly terrifying events in real life but we do want the adrenaline kick.
Well, penny stocks can certainly provide that fix and much more. Prior to engaging in this sector, market participants must realize that both the fun and the pain are real. And if you bet too heavily in this arena, the devastation may be irreversible. Therefore, please do not put more money into these speculative ideas than you can afford to lose. Seriously.
With that caveat out of the way, if you’re still interested in penny stocks, this may very well be the most ideal list. Each one of these names features shares priced under a buck; that’s right, there are no smoke and mirrors in this story. So, if you want to dial up your risk-reward profile to the extreme, here’s how to roll the dice with some of the top penny stocks to buy.
|PAFRF||Pan African Resources||$0.22|
|WFSTF||Western Forest Products||$0.84|
Pharma-Bio Serv (PBSV)
Source: John Brueske / Shutterstock
Billed as the leader in the life science industry, Pharma-Bio Serv (OTCMKTS:PBSV) offers cGMP (current good manufacturing practice) compliance services throughout the product lifecycle, from research and development to commercialization in several sectors. These include categories such as medical devices, pharmaceuticals, and food and beverage. It’s one of the top penny stocks to buy.
Founded in 1993, PharmaBioServ operates out of Dorado, Puerto Rico. At present, the company commands a market capitalization of just under $20 million. As of this writing, shares trade hands at 87 cents. On a year-to-date basis, PBSV gave up 15.5% of equity value.
Although one of the nano-capitalization plays, Pharma-Bio Serv distinguishes itself from other penny stocks with its strong balance sheet. Specifically, the enterprise features a cash-to-debt ratio of 27.3 times, well above the underlying sector ratio of only 0.9 times. In addition, PharmaBioServ has an Altman Z-Score of 5.31, reflecting a very low bankruptcy risk.
Pan African Resources (PAFRF)
Based in the U.K., Pan African Resources (OTCMKTS:PAFRF) represents a mid-tier African-focused gold producer. Currently, Pan African commands a market cap of 403.3 million GBP (translating to approximately $466.4 million). Shares trade hands at only 22 cents a pop. From the start of January, PAFRF stock gained a bit over 3%, a surprising result given the Federal Reserve’s efforts to subdue inflation, which typically is “good” for commodities.
Another factor that will likely raise eyebrows for Pan African is the quality of its financials. Across the board, the company enjoys significant strengths. For instance, its Altman Z-Score hits just over 4 points, indicating low bankruptcy risk. On the income statement, Pan African’s three-year revenue growth rate stands at 21.3%, ranked higher than 80% of its peers.
On the bottom line, the mining firm’s net margin pings at 19.8%. In contrast, the underlying sector’s median net margin is only 3.5%. Finally, PAFRF represents great value compared to many other penny stocks, trading at less than 4-times forward earnings.
Top Glove (TGLVY)
Founded in 1991, one of the top penny stocks to buy, Top Glove (OTCMKTS:TGLVY) hails from Malaysia. Per its corporate profile, Top Glove represents a glove manufacturer which also specializes in face masks, dental dams, and other products. At the moment, the company carries a market cap of 7.10 billion MYR (roughly translating to $1.5 billion). Since the beginning of this year, TGLVY (which trades hands for 56 cents a share) dropped almost 76% of equity value.
While highly risky (I mean, we are talking about literal penny stocks) it’s also fair to point out that TGLVY experienced some positive momentum recently. In the trailing month, shares gained 13%. In addition, the fundamentals undergirding Top Glove present a surprisingly robust picture. Primarily, the company enjoys strong growth. Its three-year revenue growth rate stands at 54.3%, ranking above more than 93% of its peers.
In addition, TGLVY brings a compelling discount to the table. Currently, shares are priced at 6.25-times trailing-12-month (TTM) earnings. In comparison, the price-earnings ratio for the medical devices and instruments industry is 25.8 times.
Parks! America (PRKA)
If you’re an animal lover and also trade penny stocks, Parks! America (OTCMKTS:PRKA) offers a two-for-one deal. Headquartered in Pine Mountain, Georgia, Parks! America represents a distinct experience, providing drive-thru animal parks. This attraction enables park visitors to get up and close to wildlife, fostering both entertainment and educational opportunities.
Currently, Parks! features a market cap of just over $30 million. Since the start of the year, PRKA shed 36.5% of its equity value. In the near term, though, positive momentum picked up, with shares gaining 11% in the trailing month.
Still, the main attraction from an investment perspective centers on the financials. Another growth machine, Parks! carries a three-year revenue growth rate of 24.9%, beating out nearly 94% of its peers. Also, its book growth during the same period pings at 22.7%, rising above almost 92% of the industry.
Finally, PRKA separates itself from other penny stocks with its stable balance sheet. Its Altman Z-Score hits 4.45, reflecting low bankruptcy risk.
Western Forest Products (WFSTF)
Founded in 1955, another one of the top penny stocks to buy, Western Forest Products (OTCMKTS:WFSTF) is based in Vancouver, British Columbia. As the name suggests, Western Forest represents a lumber company. Currently, the company commands a market cap of 354.5 million CAD, roughly the equivalent of $264.1 million. WFSTF shares trade hands for 84 cents a pop. Since the start of the year, the stock dropped slightly over 50% in equity value.
On the charts, Western Forest presents significant risks, not dissimilar to most other penny stocks. However, what distinguishes the company from purely speculative endeavors is the financials. It’s surprising, really. By purchasing WFSTF, you get in part a cash-to-debt ratio of 4.6 times, ranked better than 84% of the underlying sector. On the top line, Western features a three-year revenue growth rate of 9.1%, beating out 78% of its rivals.
Moreover, the company’s net margin stands at nearly 10%, comparing favorably to the industry median of 5%. Finally, for all these attributes, WFSTF trades for 2.4-times trailing earnings. Clearly, Western Forest is one of the penny stocks you can’t afford to ignore.
Alkane Resources (ALKEF)
Founded in 1969, Alkane Resources (OTCMKTS:ALKEF) calls the “Land Down Under” home. According to its website, Alkane is poised to become Australia’s next multi-mine gold producer. Although it features projects throughout the country, management focuses predominantly on the New South Wales region.
As of this writing, Alkane carries a market cap of $395.2 million AUD or about $257.4 million. ALKEF trades hands for 41 cents a share. Against the January opener, the stock dropped almost 39% in equity value. However, in the trailing five days, ALKEF popped up over 10%, reflecting a possible bullish resurgence.
On the financials, Alkane is arguably best known for its revenue trend. Its three-year sales growth rate stands at 20.8%, beating out 79% of its competitors. Also, the company delivers on the bottom line, particularly with a net margin of 42.6%. This stat ranks above 93% of the industry. Finally, Alkane enjoys a return on equity of nearly 30%, reflecting a very high-quality business. So, don’t let the cheap price fool you. ALKEF may be one of the hidden gems among penny stocks.
Chinasoft International (CFTLF)
Headquartered in Beijing, China, Chinasoft International (OTCMKTS:CFTLF) is a provider of software and information services. Specifically, it’s involved in the development and provision of end-to-end IT services, including consulting services, technical services, outsourcing services and training services. Currently, Chinasoft has a market cap of 19.7 billion HKD (or roughly $2.51 billion). Shares trade hands for 76 cents. They’ve lost about 40% of market value since the start of the year.
Primarily, what stands out for CFTLF compared to many other penny stocks centers on valuation. Simply put, Chinasoft carries a substantial discount. Per Gurufocus.com, shares trade at 12.9-times trailing earnings. This compares to the software industry’s median PE of 24.6 times. Also, CFTLF trades at 10.7-times forward earnings, which ranks favorably below 86% of its peers.
Another factor to keep in mind is that Chinasoft enjoys a stable balance sheet. Its equity-to-asset ratio is 0.69 times, whereas the industry median ratio is 0.58 times. Also, its Altman Z-Score is 3.74, indicating low bankruptcy risk. While penny stocks represent great danger, if you’re going to gamble, you might as well do so on rational wagers like CFTLF.
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Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.