Penny stocks to buy: professionals within the financial advisory industry constantly warn retail investors to stay away from this sector. They’re enticing, yes, because they feature a relatively low share price tied to a diminutive enterprise value. Of course, the idea here is that a solid news item can send the underlying security flying. However, the opposite is also true. Speculative entities can quickly flounder.

It’s difficult to come across hard statistics that demonstrate the probability of failure. But it’s safe to say that you’re not going to find any reputable resource telling you that putting significant risk capital in penny stocks is a good idea. Quite the contrary, virtually all organizations tell you to stay away. The ones that don’t warn you straight up that you’re taking matters into your own hands.

With all that said, not every speculative business will fail. A rare few may end up succeeding. And it’s also true that not all Wall Street analysts avoid this subsector. You may be surprised to learn that some experts are willing to put their reputations on the line to spotlight certain compelling ideas.

So, if you can handle the heat, here are penny stocks that can end up buying you a new kitchen and then some.

Natural Gas Services (NGS)

Based in Midland, Texas, Natural Gas Services (NYSE:NGS) falls under the broad energy space, specifically the hydrocarbon equipment and services industry. Financially, it’s a decent enterprise, generating net income of $9.47 million over the trialing 12 months (TTM). During this time, revenue reached $131.45 million. What’s more, the present quarterly revenue growth rate (year-over-year) clocks in at 38.6%.

The performance has been consistent in the past four quarters since the first quarter of 2024. During this cycle, NGS’ average earnings per share hit 19.25 cents. This translated to an average earnings surprise of 171.4%. Looking out to the end of fiscal 2024, experts believe that EPS may jump to $1.39. If so, that would translate to expansion of 266%.

On the top line, sales may rise to $150.3 million, implying YOY growth of 24%. In fiscal 2025, EPS may reach $1.44 on sales of $166.25 million. Another factor weighing in on NGS as one of the top penny stocks to buy is the relevance of the underlying business.

Lastly, analysts rate NGS a unanimous strong buy with a $27 price target.

PHX Minerals (PHX)

Headquartered in Forth Worth, Texas, PHX Minerals (NYSE:PHX) is also another example of penny stocks to buy within the energy sector. Here, the company operates in the exploration and production (upstream) component of the hydrocarbon value chain. Financially, it appears a relatively solid enterprise, delivering net income of $4.18 million during the TTM period. Also, revenue reached $30.95 million during this cycle.

It must be said that the present quarterly revenue growth rate sits at 41% below parity. That’s not great. Also, the bottom-line performance has been shaky in the past four quarters. The average EPS reached 2.75 cents. This translated to a negative earnings surprise of nearly 19%.

For fiscal 2024, analysts don’t seem to have much confidence in PHX stock. EPS may land at 9 cents, which would imply a YOY erosion of 77%. Also, sales may slip to $35.45 million, down 20.3% from the prior year’s print of $44.46 million.

However, experts rate shares a consensus moderate buy with a $5.03 price target. In large part, they anticipate fiscal 2025 sales to rise 34.1% to $47.55 million.

Gold Royalty (GROY)

Hailing from Vancouver, B.C. (Canada), Gold Royalty (NYSEAMERICAN:GROY) falls under the basic materials sector. Based on its name, you can figure that it’s one of the penny stocks to buy tied to the gold industry. That could be fundamentally intriguing because of the inflation narrative. Rising consumer prices have been sticky and that could cynically bolster the precious metals business.

Royalty firms offer better pricing predictability than pure-play miners because rather than mining the metals directly, they provide upfront capital to pure-play miners. In exchange for that capital, royalty firms receive all or a portion of the sales generated. Streaming is similar expect that the exchange is all or a portion of the metals extracted.

In the TTM period, Gold Royalty lost $25.08 million. However, it generated revenue of $5.17 million. Further, experts believe that by the end of fiscal 2024, sales may rise to $13.38 million. That’s up 339%. In fiscal 2025, the top line could soar to $22.07 million, up 64.9%.

Analysts rate GROY stock a unanimous strong buy with an average price target of $3.63. That’s a very tempting proposition given the fundamentals.

Rent the Runway (RENT)

Based in Brooklyn, New York, Rent the Runway (NASDAQ:RENT) falls under the consumer cyclical space. Specifically, it operates under apparel retail. Per its public profile, the company features 938 full-time employees. Its main business is a subscription model that offers various fashion items and accessories for rent (or resale). Fundamentally, the narrative could be intriguing due to pressures in the consumer economy.

While the broader economy is on a recovery track, it’s also evident that we’re facing a K-shaped recovery. Some segments of society are doing well while others are falling behind; hence the K-shape reference. Either way, households generally may not want to have their money tied down, especially for cyclical luxury items. In that sense, a subscription or rental business model may make sense.

During the TTM period, Rent lost $105.1 million. However, revenue reached $299 million. For the current fiscal year (2025), experts believe that sales may rise to $307.2 million. If so, that would be up 3% from the prior year. In fiscal 2026, sales could march to $324.4 million, up 5.6%.

RENT isn’t profitable yet, which is a concern for many penny stocks. However, RENT also enjoys a unanimous strong buy rating.

Gambling.com (GAMB)

When you linger in the arena of penny stocks to buy long enough, you’re going to come across controversial or “questionable” ideas. One of those ideas is Gambling.com (NASDAQ:GAMB). I’m not saying that the business itself is scandalous or anything like that. However, I’d be lying if I said that the gambling scene didn’t have some reputational concerns.

That said, if you’re an ideologically agnostic investor, GAMB stock seems very compelling. First, a memorable name means so much in this hyper-competitive consumer world. What better label is out there than Gambling.com? In my opinion, it’s perfect. Plus, you have rising interest in online sports betting and speculation in general. If it were not so, meme stocks would not be a thing.

Enticingly, Gambling.com showed net income of $18.96 million during the TTM period. Also, during this time, revenue hit $111.17 million. The current quarterly revenue growth rate stands at 9.5%. For fiscal 2024, analysts anticipate EPS to rise 57.4% to 74 cents. Revenue may gain 11% YOY to hit $120.55 million.

Here’s the kicker – analysts rate GAMB a unanimous strong buy with a $13 average price target.

Stem (STEM)

Headquartered in San Francisco, California, Stem (NYSE:STEM) falls under the wide technology ecosystem. Specifically, it operates under the infrastructure software industry. Per its corporate profile, Stem provides intelligent and renewable energy storage network provisions worldwide. With its advanced data analytics and real-time operational controls, it aims to maximize efficiencies of power grids and systems.

Fundamentally, this business could become enormously relevant. While investors are going gaga over artificial intelligence, the reality is that AI isn’t free. Because of the explosive demand for digital intelligence and other innovations, the U.S. power grid has become strained. And with these technologies only rising in consumptive force, we may soon have a severe crisis on our hands.

In other words, improving efficiency would be absolutely critical. That should benefit STEM stock. Now, before you get too excited, you should note that shares have cratered 70% year-to-date.

Now, to counter that negative point, analyst do believe that in fiscal 2024, revenue may rise to just under $600 million. That would be up nearly 30%. And the following year, sales could hit $772.59 million, up almost 29%.

Will that be enough? I don’t know. But STEM features a moderate buy consensus view with a $2.80 price target.

Red Cat (RCAT)

Based in San Juan, Puerto Rico, Red Cat (NASDAQ:RCAT) falls under the broader technology sphere, specifically computer hardware. According to its corporate profile, Red Cat provides products, services and solutions to the drone industry. It specializes in navigation in interior spaces along with dangerous military environments. Based on the present geopolitical backdrop, RCAT might rise on cynical catalysts.

To be sure, Red Cat is wildly speculative, with shares trading hands at only $1.02 a pop. Over the trailing one-year period, RCAT stumbled more than 18%. At the same time, Glenn G. Mattson from Ladenburg Thalmann pegged RCAT a “buy” with a $4 price target. That implies upside potential of over 292%.

During the TTM period, Red Cat incurred a net loss of $27.17 million. However, during this cycle, it posted revenue of $17.9 million. What’s more, its current quarterly sales growth rate stands at 250.7%. For fiscal 2024, it’s possible that sales may rise to $18.14 million. If so, that would translate to a growth rate of 83%.

The following year, the top line could expand to $32.6 million, up almost 80%. If you can handle the risk, RCAT ranks among the penny stocks to buy.

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.