Penny stocks are presenting as attractive buys right now as the valuations of larger-cap firms continue to stretch. The price-to-earnings (P/E) ratio of the S&P 500, for example, sits at 24.59x earnings, roughly in line with its long-term average.

However, big tech still dominates the returns of the index, according to a recent report. At some point, bulls will need to eventually concede that the valuation of these companies is too rich. So, no matter the attraction of their future prospects, it then opens the door for things like penny stocks to pick up that missing market breadth.

Notably, the risks of investing in the following companies is substantial. But for those with high risk tolerances and long time horizons, they may be suitable as part of a diversified portfolio. Further, these three penny stocks could benefit from the speculated market rotation into lesser-capitalized companies. Let’s explore a diversified mix of assets from which investors can choose.

NextPlat (NXPL)

NextPlat (NASDAQ:NXPL) operates as a diversified holding company focusing on acquiring and managing businesses in various sectors. It has interests in e-commerce, healthcare, and global distribution networks. Generally, NXPL focuses on growth markets that will show strong returns.

This level of diversification is a good reason for NextPlat to be a promising penny stocks for investors to consider.

Also, the company’s most recent quarterly result was highly promising. Revenues surged 481% to $15.3 million from the same quarter last year. And, net income increased to $2.6 million, up from a net loss of $5.7 million year over year (YOY).

Castor Maritime (CTRM)

Castor Maritime (NASDAQ:CTRM) is a global shipping company specializing in dry bulk cargoes.

This company trades at an extremely low valuation with a trailing P/E of 0.84 times earnings, together with an EPS of $0.58.

In fact, CTRM’s attractiveness is due to the momentum of recent quarterly results. Indeed, this could carry over into this year and set the stage for it to surge higher. Additionally, CTRM reported $46.4 million in cash from operating activities in Q4 and $123.8 million for the full year.

Also, as of year-end, the company had zero net debt with $142.3 million in unrestricted cash on hand.

Additionally charting its own destiny via the sale of one of its tankers, it expects to bring additional liquidity to its balance sheet. This is in the context of a wider corporate restructuring which could be accretive in nature.

Zomedica (ZOM)

Zomedica (NYSE:ZOM) operates in the veterinary health sector, focusing on creating diagnostic solutions for pets.

This company has a share price of a mere $0.19 at the time of writing. Interestingly, its market cap is $184 million, which is around four times higher than the other companies on this list.

And, last quarter was largely positive for ZOM. It reported revenues of $6.35 million, an increase of 32.8% YOY.

On the downside, its top-line surge was met by a significant burn of its cash equivalents and short-term investments on its balance sheet. Therefore, it shrank to $118.0 million, with the same item being $158.5 million for the same quarter last year.

However, at just $0.19 cents per share, combined with a rollout of products to target previously unserved segments, it remains one of those penny stocks for investors to consider.

On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.  

Read More: Penny Stocks — How to Profit Without Getting Scammed 

On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.