Whether they’re labeled promising penny stocks or not, this speculative class of investment is not for the faint of heart. Low-priced, low-volume securities tend to move wildly. Even when catching a big wave northward, it’s impossible to know exactly when the floor will collapse.

Of course, there are myriad other concerns to factor in as well. One area to watch is the wide bid-ask spread. Basically, that means your trades need to be really profitable before you can net a positive return. As well, the low volume levels may mean that you might not be able to offload your shares quickly enough.

That’s just the tip of the iceberg. If you’re still okay with the extreme risk profile, then consider these promising penny stocks.

Wag! Group (PET)

Technically falling under the software application field, Wag! Group (NASDAQ:PET) develops a proprietary marketplace technology platform, which is available as a website and mobile app. It enables independent pet caregivers to connect with pet owners. In simple terms, it’s a gig economy community with a focus on household pets.

Financially, the company could use some work in terms of overall stability. For example, its cash-to-debt ratio sits at 0.64X, which is quite low for the industry. On the flipside, Wag! enjoys a three-year revenue growth rate of 90.5%, beating out the sector median of 8.6%. That’s not going to last. However, the metric does demonstrate the viability of the broader U.S. pet care market.

Even better, covering experts project continued robust growth. In fiscal 2024, they’re looking at sales of $108.43 million, up 29.2% from last year’s print of $83.92 million. The following year, revenue could fly up to $131.97 million, up 21.7% from projected 2024 sales. Thanks to the combination of fundamental and operational strengths, PET is one of the promising penny stocks.

CuriosityStream (CURI)

Falling under the communication services category, CuriosityStream (NASDAQ:CURI) operates as a factual content streaming service and media company. Per its corporate profile, CuriosityStream provides premium video and audio programming services in various categories of factual entertainment, including science, history, society, nature, lifestyle and technology. It operates via a direct subscription video-on-demand (SVoD) business model.

Financially, the company offers many positive attributes that are surprising for a speculative entity. Notably, its cash-to-debt ratio lands at 8.81X, beating out the industry median of 1.26X. However, it’s not without faults. One major concern is the fall in sales growth.

Still, the company is attempting to right the ship. For fiscal 2024, experts believe CuriosityStream will post a loss per share of 18 cents. That’s a big improvement over last year’s loss of 92 cents. On the top line, revenue may land at $60.49 million, up 6.3% from last year’s haul of $56.89 million.

Here’s the thing. By fiscal 2025, revenue could rise to $66.89 million, which would be up 10.6% from projected 2024 sales. So, it’s worth keeping on the radar of promising penny stocks.

Upland Software (UPLD)

Another enterprise in the software application field, Upland Software (NASDAQ:UPLD) provides cloud-based applications under the Upland brand. It offers solutions that enable organizations to plan, manage and execute projects. It also helps streamline areas such as marketing, sales, project management, information technology and other organizational functions. With businesses always looking for a competitive edge, it’s possible that Upland could see increased demand.

To be fair, UPLD represents a trickier idea among promising penny stocks. For example, shares trade hands at only 0.33X trailing-year revenue. That’s a subterranean multiple but that doesn’t necessarily mean it’s a good thing. Its three-year revenue growth rate has gone negative, which of course is problematic.

For fiscal 2024 and 2025, the consensus revenue target calls for a gradual erosion in the top line. Obviously, that’s now what investors want to hear. However, analysts are also bullish on the idea.

Yes, it’s a moderate buy on the slimmest of margins: two buys, two holds. However, the forward 12-month target calls for an average price of $7. That’s up over 108%.

AXT (AXTI)

Based in Fremont, California, AXT (NASDAQ:AXTI) operates in the semiconductor equipment and materials sector. Per its public profile, AXT designs, develops, manufactures and distributes compound and single-element semiconductor substrates. It offers indium phosphide for use in data center connectivity. It’s also utilized in 5G communications, fiber optic lasers and detectors and passive optical networks, among other solutions.

Undeniably, AXT is a relevant enterprise yet its financials don’t show that. Per Gurufocus, the company suffers from six red flags. In addition, it’s notable that because of the declining revenue trend along with the choppy price action, AXTI trades at a lowly sales multiple of 2.1X. On the surface, this might seem like a pure value trap.

However, analysts anticipate that for the current fiscal year, sales will rise to $104.2 million. If so, that would represent a 37.5% lift from last year’s haul of $75.8 million. A year later, revenue might swing up to $128.39 million or 23.2% up from projected 2024 sales.

If this forecast holds true, AXTI could be undervalued. Therefore, it’s one of the promising penny stocks to consider.

Rigetti Computing (RGTI)

Operating in the computer hardware arena, Rigetti Computing (NASDAQ:RGTI) builds quantum computers and superconducting quantum processors. Per its corporate profile, Rigetti offers a cloud in the form of a quantum processing unit. It also sells access to its quantum computers through quantum computing as a service. Given the anticipated growth of the underlying category, RGTI ranks among promising penny stocks.

Financially, Rigetti has many flaws, in particular its profitability (or lack thereof). With operating and net margins deep into the abyss, it may be a while for investors to see positive numbers on the bottom line. That said, the top line is a different story. Over the past three years, the sales growth rate clocks in at 147.5%.

That’s not going to last. However, analysts anticipate ongoing top-line expansion. In fiscal 2024, they’re targeting sales of $16.1 million, up 34.1% from last year’s tally of $12.01 million. And in 2025, they believe $30.87 million is possible. If so, that would be 91.7% up from projected 2024 revenue.

Experts rate shares a unanimous strong buy with a $3.17 price target, implying almost 146% upside potential.

Stem (STEM)

Operating as an infrastructure software specialist, Stem (NYSE:STEM) operates as a digitally connected, intelligent and renewable energy storage network provider worldwide. According to its public profile, the company offers energy storage hardware sourced from original equipment manufacturers (OEMs). The company also provides edge hardware to aid in site-collection data and real-time operation and control.

In terms of fiscal stability, Stem could use some serious work. For instance, its cash-to-debt ratio is 0.21X. That’s subterranean in a bad way. Also, its deeply negative margins suggest that profitability may be some ways off. Still, the positive side is that Stem enjoys a three-year revenue growth rate of 57.6%.

Further, in fiscal 2024, analysts believe that revenue will land at $643.01 million. If so, we would be talking about a 39.3% lift from last year’s result. In fiscal 2025, sales could rise to $836.57 million, representing another 30.1% gain from projected 2024 sales.

Enticingly, the blue-sky revenue target for 2025 stands at $1.21 billion. That could be a gamechanger. For that and other reasons, STEM ranks among the promising penny stocks.

Luna Innovations (LUNA)

Operating in the scientific and technical instruments space, Luna Innovations (NASDAQ:LUNA) provides fiber optic test, measurement and control products worldwide. According to the corporate profile, Luna offers test and measurement equipment for fiber optic components and sub-assemblies. It also provides polarization control products to help effectively manage fiber optic networks.

While it’s not the most exciting idea among promising penny stocks, Luna benefits from a relevant business model. Essentially, it provides the “backstage” items necessary to keep the show running. Financially, it could use some work in the stability department. Nevertheless, a key focal point for the enterprise is its three-year revenue growth rate of 14.9%. That’s well above the industry average.

For the current fiscal year, analysts are looking for earnings of 31 cents per share. That’s a decent improvement over last year’s print of 25 cents. Moreover, the top line could rise 35.8% to $165.24 million. Enticingly, LUNA was already undervalued, trading at 0.81X trailing-year revenue. However, if the company meets its top-line projection, it could an even better deal.

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, 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.