Investors looking for penny stocks to buy should be careful. Low share prices don’t make penny stocks cheaper. In fact, those share prices usually are a sign of higher risk.

After all, shares that trade under $5 (the unofficial line for penny stocks) often are at those levels for a reason. Some have plunged sharply from past highs. Others have been stuck near the lows for years. To use a phrase from beyond the investing world, they often include mostly “has-beens” and “never-will-bes.”

Of course, like everything in investing, simple rules don’t apply to every situation. Penny stocks generally are higher-risk, but they’re higher-reward as well. 2020’s best-performing stocks almost without exception came into this year with share prices below $5. One exception is Overstock.com (NASDAQ:OSTK), and that stock did dip below $5 (and $4) in March.

There are values that can be found in the category. But the key is that investors need to look for penny stocks to buy for reasons that go beyond simply a low share price. There needs to be another bull case.

These seven stocks all have those bull cases. To be sure, they have risks as well. But for investors interested in finding penny stocks to buy, this group is a good place to start:

• Ambev S.A. (NYSE:ABEV)
• Genworth Financial (NYSE:GNW)
• EnLink Midstream (NYSE:ENLC)
• New Gold (NYSEAMERICAN:NGD)
• Endeavour Silver (NYSE:EXK)
• Conduent (NASDAQ:CNDT) 
• comScore (NASDAQ:SCOR)

Ambev

Ambev has an interesting risk profile. The Brazilian brewer would seem to be a somewhat defensive name. Alcohol consumption usually holds up in a recession, limiting the cyclicality of underlying earnings. Obviously, the novel coronavirus pandemic is a different animal, as bars and restaurants have closed worldwide, but from a mid- to long-term perspective, sales and profits would seem likely to be relatively stable.

The problem is Ambev’s home market. Brazil has seen the second-highest death toll from the virus, behind only the U.S. An economy that already was teetering shrunk an estimated 9% in the second quarter. Between macro factors and a sharply weaker Brazilian real, U.S. investors have dumped Brazilian stocks. The iShares MSCI Brazil Capped ETF (NYSEARCA:EWZ) has declined 38% year-to-date.

But ABEV stock has done even worse, losing a little over half its value over the same stretch, a decline that looks potentially too steep.

Ambev still is profitable (including in Q2). The company has more cash than debt. It still has dominant beers in Brazil and ownership of the largest brewer in neighboring Argentina. As bad as the pandemic has been in Brazil, normalcy will return, and that will include beer consumption.

The risks are significant. Brazil’s economy appears a long way from a recovery. The same craft beer growth that has pressured A-B InBev will add to competition. Earnings growth had been soft before the pandemic: EBITDA (earnings before interest, taxes, depreciation and amortization) increased just 1.5% in 2019.

Still, a reasonable valuation and a strong balance sheet offset at least some of those risks. ABEV stock will take patience, but it seems like it should be worth the wait.

Genworth Financial

Back in 2016, Genworth agreed to be acquired by China Oceanside Holdings for $5.43 a share. Almost four years later, GNW stock trades for less than half that price.

Incredibly, the deal isn’t yet dead. The merger agreement was extended once again, this time to Sept. 30. And so it’s still possible that Genworth does double, or come close, in the next few months.

But even if that scenario doesn’t play out (and the GNW stock price shows how skeptical the market remains), there’s still a case for upside. Genworth in Q2 settled a long-running dispute with French insurer Axa SA (OTCMKTS:AXAHY). It’s raising debt to pay off loans that mature next year. Genworth also plans an offering of part of its mortgage insurance business, which remains strong ahead of an anticipated pandemic-driven wave of home buying.

Incredibly, even after the settlement with Axa (which closed after the end of Q2), Genworth has a book value over $27 per share. That alone doesn’t guarantee upside, but against a current price below $3, it gives management flexibility to create shareholder value, even if the Chinese deal falls through.

EnLink Midstream

The case for a midstream company like EnLink is that, in theory, lower energy prices shouldn’t be much of an issue. What matters for EnLink is volume through its pipeline and processing plants. It doesn’t matter all that much what the price of crude or natural gas is; what matters is production.

Obviously, those two factors are connected. Lower prices generally lead to lower production. Still, the impact is not nearly as severe on a pipeline operator as it is on an exploration company. And so even considering the leverage on the balance sheet, ENLC should have some protection against still-low energy prices.

The problem is that ENLC stock itself somewhat disproves that thesis. Shares traded at $40 in 2014, and are below $3 at the moment. Still, at these levels, there’s a case that the decline has gone too far.

To be sure, investors who bought that case in recent months have done well: the stock has more than tripled from its lows. But there’s a case for more upside ahead. For all the carnage in the energy sector, profits were basically flat year-over-year and quarter-over-quarter in Q2. Leverage is a concern, but manageable. Natural gas demand, in particular, isn’t going anywhere, while the epitaphs written for crude look potentially premature. The bull case here isn’t quite as simple as the operating model suggests, but it’s still intriguing with ENLC below $3.

New Gold

Investors looking for penny stocks to buy will find a number of gold miners in their search. That’s true even with gold racing to record highs before a modest pullback earlier this month.

From here, New Gold looks like one of the more, and maybe the most, intriguing penny stocks. The case for NGD stock is a combination of the higher gold price plus a financial and operational turnaround. New Gold has raised capital, extended debt maturities, and sold its Blackwater project in Canada to Artemis Gold (OTCMKTS:ARGTF) for cash plus a stream on mined gold at the property.

The concern is whether those deals leave New Gold stuck in the middle: with a still-levered balance sheet, but lacking what appeared to be one of the better undeveloped assets in Canada. Less risk-averse investors might look to play gold through majors like Barrick Gold (NYSE:GOLD), though the majors have their own set of problems. Of course, risk-averse investors probably aren’t looking at penny stocks to buy in the first place.

Endeavour Silver

Precious metals investors should look at silver as well, which quietly has had a strong 2020 itself. One of the more intriguing junior miners in that space is Endeavour Silver.

Endeavour operates three properties in Mexico and has seven others in various states of development and exploration. Its mines sit in an area that has delivered silver and other metals since before the Spanish arrived in the 1500s.

As with other miners, over time EXK stock has necessarily delivered the leverage for which investors are looking. But between the operating mines and the properties, Endeavour still could be an acquisition target if silver continues to rally. And if the company can find success in its exploration efforts, EXK can rally just fine on its own.

Conduent

Conduent came into this month’s second quarter release in desperate need of good news. CNDT stock was trading around $2, against 2018 highs above $20, 18 months after it was spun off from Xerox (NYSE:XRX). The former business services division of Xerox seemed a clear and obvious victim of the pandemic and the expected “work from home” trend.

The Q2 release certainly delivered. On their face, results weren’t that spectacular. Adjusted earnings per share declined a penny from the 13 cents posted the year before, on the back of a nearly 9% decline in revenue. But in the context of the pandemic, those results don’t seem horrible — and they were much better than Wall Street expected.

CNDT gained 83% on the news, and there’s a case for more upside ahead. More cost-cutting should benefit margins in the second half and beyond. Solid results ameliorate some of the concern regarding a leveraged balance sheet. Even after the jump, CNDT remains cheap, at less than 8x analyst EPS estimates for 2021.

There are “value trap” risks here, to be sure. But Q2 suggests that Conduent’s business will hold up better than investors feared. Below $4, that should be enough.

comScore

comScore is the very definition of a “dog with fleas” stock. It’s on its sixth chief executive officer in seven years. It went through an accounting scandal. Revenue is heading in the wrong direction. And TV audience measurement seems much less valuable amid the shift to streaming. Investors are buying up the likes of The Trade Desk (NASDAQ:TTD) and selling SCOR and rival Nielsen (NYSE:NLSN).

But comScore shouldn’t be completely ignored. The company continues to undergo a strategic review which could end in a sale. Advertisers are desperate for a solution that tracks consumers across channels, and comScore still has a chance of delivering on that front. Cost-cutting has moved EBITDA into the black, minimizing (though not removing) balance sheet worries.

Indeed, as AdAge wrote last year, “the TV industry has been rooting for Comscore to get its act together.” Investors could stand to benefit mightily if the company finally can do so.

Vince Martin has covered the financial industry for close to a decade for InvestorPlace.com and other outlets. He has no positions in any securities mentioned.