Anyone looking for the best penny stocks under $1 to buy likely knows how much risk this kind of speculation entails. However, it bears repeating: The ideas presented below carry incredible risk and volatility. Therefore, you absolutely should not invest any money in them that you cannot afford to lose.
At the same time, not all speculative ventures are the same. Some incredibly low-priced securities feature solid financials, on a relative basis, of course.
Each of the names below is undervalued either based on proprietary calculations or traditional metrics. In addition, they all feature a low-risk profile – again, speaking relatively. So, if you’re ready to get adventurous, here are the best penny stocks under $1 to buy now.
Best Penny Stocks Under $1: Pharma-Bio Serv (PBSV)
Headquartered in Puerto Rico, Pharma-Bio Serv (OTCMKTS:PBSV) operates in the life science industry, offering cGMP (current good manufacturing practice) compliance services throughout the product lifecycle, from research and development to commercialization, in several sectors. These include medical devices, pharmaceuticals, and food and beverage.
The company has a market cap of less than $17 million following a 29% year-to-date decline that has taken shares down to 73 cents. While you won’t find much in the way of headlines or analyst coverage related to Pharma-Bio Serv, it distinguishes itself from other penny stocks due to its surprisingly strong balance sheet.
Primarily, its cash-to-debt ratio stands at 27.3. In contrast, the industry’s median value is only 0.84. In addition, PharmaBioServ has an Altman Z-Score of 4.8, reflecting very low bankruptcy risk.
Parks! America (PRKA)
Based in Pine Mountain, Georgia, Parks! America (OTCMKTS:PRKA) bills itself as one of the fastest-growing animal park brands. Its drive-through business model enables people to feed various wildlife. Currently, the company commands a market capitalization of $31.3 million. Shares trade for 42 cents a pop after losing 34% of their value this year.
The company recently reported results for its fiscal 2022 year. Net sales and income declined due to “negative year-over-year weather trends and general economic conditions,” according to Parks! America President and CEO Lisa Brady. However, Brady also noted: “Despite the year-over-year attendance-based sales declines compared to the elevated pandemic levels, we are pleased to note our 2022 attendance-based sales, adjusted to remove the positive impact of the 2020 fiscal year purchase of the Texas park, are up more than 40%, driven by attendance gains of 12% and a nearly 30% increase in per capita spending, in comparison to our 2019 fiscal year.”
According to GuruFocus, PRKA ranks 7 out of 10 for financial strength and 9 out of 10 for both growth and profitability. Highlights include a three-year revenue growth rate of 19.9%, ranking better than nearly 94% of its peers, and a net margin of 6.8%, ranking better than 70% of its peers.
Additionally, PRKA’s Shiller price-earnings ratio pings at 13.9, well below the industry median of 23.4. Its price-to-projected free cash flow of 0.9 times also compares favorably to the industry median of 1.22.
Best Penny Stocks Under $1: Intouch Insight (INXSF)
Operating out of Ontario, Canada, Intouch Insight (OTCMKTS:INXSF) offers software and services to help its clients create better customer experiences. The company achieves this objective by assessing consumer needs through surveys, mystery shopping and operational audits, interpreting the subsequent analysis and providing actionable data.
The stock is risky, to be sure, simply due to its size. Intouch Insight is a nanocap with a market cap of less than $10 million. Shares are down 34.5% so far this year to trade at 38 cents. Yet, the company is growing. Revenue was up 38% year over year in the third quarter to $5.4 million, while EBITDA surged 115% to $831,774.
Intouch enjoys a return on equity of 10.8% compared with an industry median of just 2.6%. This stat indicates a higher-than-average capacity to convert equity financing into profits, thus implying a high-quality business. Furthermore, the company commands a solid balance sheet with an Altman Z-Score of 5.68, reflecting low bankruptcy risk.
Finally, according to GuruFocus’ proprietary calculation, INXSF is a “modestly undervalued” investment.
Based in Ontario, Canada, NamSys (OTCMKTS:NMYSF) offers fully integrated cash management software through a software-as-a-service model to deliver “cloud-based cash processing for the modern era.” The company has a market cap of $14.2 million and shares trade at 50 cents following a nearly 20% year-to-date decline.
With average daily trading volume of just 670 shares, investors should proceed with extreme caution. However, during these uncertain times, investors may appreciate the company’s balance sheet. Specifically, NamSys carries zero debt, providing it with tremendous flexibility should trouble arise. Further, it has a high-quality business as reflected by its return on equity of 26.1%. This stat ranks higher than 90% of its peers. And its Altman Z-Score rates at a stratospheric 17.1, reflecting extremely low bankruptcy risk
Shares look like a steal at the current price. GuruFocus rates the stock as “significantly undervalued.” Meanwhile, NMYSF trades at 12.4 times trailing 12-month earnings compared with an industry median of 25.2 times. Finally, NamSys’ price-to-FCF of 11.5 is better than 78% of its peers.
Best Penny Stocks Under $1: Western Forest Products (WFSTF)
Based in Vancouver, British Columbia, Western Forest Products (OTCMKTS:WFSTF) is a lumber company. Per its website, Western Forest manufactures high-quality wood products and sustainably manages forests. Presently, the company carries a market cap of $265.7 million. Shares feature average trading volume of 21,540. Since the start of the year, WFSTF has fallen 51% to 82 cents.
Although GuruFocus warns the stock is a “possible value trap,” shares are undervalued based on traditional metrics. For example, they carry a forward price-earnings ratio of 7, well below the industry median of 10.1 times. Also, their price-to-sales ratio of 0.26 is better than 80% of the competition.
However, investors’ main focus should be on the company’s balance sheet. Western Forest enjoys a strong cash balance, with a cash-to-debt ratio of 1.6. This ranks above nearly 74% of its peers.
Topsports International (TPSRF)
Topsports International (OTCMKTS:TPSRF) is a Hong Kong-based sports shoes and apparel retailer. Presently, the company carries a market capitalization of $4.3 billion. Due to global economic pressures, discretionary consumer spending is down. Not surprisingly, TPSRF has lost 31% year to date to trade around 70 cents per share.
However, shares are showing bullish momentum, up 12.2% over the past month and more than 50% since the end of October. Fundamentally, TPSRF is risky, but with China relaxing its Covid-19 restrictions, pent-up demand could drive sales and shares even higher.
Topsports features strong margins relative to the industry. As well, GuruFocus considers the stock “significantly undervalued” based on its proprietary calculation.
If you’re looking for a contrarian deal among the best penny stocks under $1 to buy, TPSRF is a strong candidate.
Best Penny Stocks Under $1: Alkane Resources (ALKEF)
Based in Australia, Alkane Resources (OTCMKTS:ALKEF) is poised to become its nation’s next multi-mine gold producer, per its website. Predominantly, Alkane’s projects concentrate in Australia’s central west region. Average trading volume is only 3,370 shares. Currently, the company commands a market cap of $261.3 million after the stock lost 43% YTD, falling to 4o cents a share.
Despite its volatility and questionable relevance as global central banks attempt to reduce money supply, Alkane Resources attracts contrarians for its overall solid financial profile. For instance, on the income statement, the company commands a three-year revenue growth rate of 20.8%, better than 79% of its peers. On the bottom line, the company has a net margin of 42.6%, better than 93% of the sector.
Just as importantly, Alkane enjoys a stable balance sheet. Its Altman Z-Score of 4.6 reflects low bankruptcy risk. If you’re in a speculative mood, ALKEF could make for an intriguing play among the best penny stocks under $1.
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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.