Despite warnings, investors still gravitate toward the realm of speculation, thereby necessitating a discussion about the best penny stocks under $1 to buy. To be clear, you don’t want to participate with any funds that you can’t afford to lose. By nature, these market ideas feature incredible risk and volatility.
At the same time, not all speculative ventures are the same. Some incredibly low-priced securities do feature solid financials, on a relative basis, of course. Nevertheless, the concept of the best penny stocks under $1 to buy isn’t just a cheap marketing gimmick. These ideas do carry some fundamental justification.
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, these are the best penny stocks under $1 to buy.
Best Penny Stocks Under $1: Dunxin Financial (DXF)
Dunxin Financial (NYSEAMERICAN:DXF) is a microfinance lending company that primarily provides loans to individuals and small and medium-sized businesses. Known formerly as China Xiniya Fashion Limited, Dunxin’s corporate address is registered in Wuhan.
In early September, Bloomberg noted: “China’s export growth slowed more than expected in August and imports stagnated, a sign of a darkening global economic picture and weak domestic growth hit by Covid lockdowns and a property slump.” However, after flirting with a more accommodative policy, Beijing appears to have cracked down again.
That’s not great news for DXF. But a recent piece in The Economist argues that inflation worries related to China have been overhyped, with consumer-price inflation averaging only 2.3% over the past two decades. Thus, China’s central bank might not raise borrowing costs to the extent that the Federal Reserve did in the U.S.
Also, it’s worth pointing out that shares trade for less than 0.1 times book value, making them extremely undervalued.
Parks! America (PRKA)
Based in Pine Mountain, Georgia, Parks! America (OTCMKTS:PRKA) bills itself as one of the fastest-growing animal park brands. Primarily, the company attracts visitors because of its drive-through business model, enabling people to feed various wildlife. Currently, the company commands a market capitalization of $24.8 million, with shares down 48% since the beginning of the year.
According to GuruFocus, Parks! America is “significantly undervalued.” Its Shiller price-earnings ratio pings at 10.9 times, well below the industry median of 22. Also, its price-to-projected free cash flow is 0.8, below the industry median of 1.2.
However, the highlight for PRKA centers on its income statement-related performance metrics. For instance, its three-year revenue growth rate stands at 24.9%, ranking better than nearly 94% of its peers. Additionally, its net margin of 9.2% is better than almost 71% of its peers. Combined with a stable balance sheet, PRKA is one of the best penny stocks under $1 to buy.
Best Penny Stocks Under $1: Integrated Biopharma (INBP)
Based in Hillside, New Jersey, Integrated Biopharma (OTCMKTS:INBP) engages primarily in the manufacturing, distributing, marketing and sales of vitamins, nutritional supplements and herbal products. Presently, Integrated Biopharma carries a market cap of $11.5 million. Average trading volume sits at 2,280 shares, reflecting low liquidity. Since the start of the year, INBP has fallen 63%.
Understandably, the headline numbers for INBP may scream “sell!” However, according to the financial data compiled by GuruFocus, INBP is a “significantly undervalued” investment. For instance, its price-earnings ratio is 3.5, well below the industry median of 17.6. As well, its price-to-sales ratio of 0.2 is much better than the industry median of 1.
However, the main attraction for INBP centers on its high-quality business. Integrated Biopharma’s return on equity stands at 19.3%, ranked better than 84% of the industry. Its balance sheet strengths include an equity-to-asset ratio of 0.7, above 76% of its peers.
Topsports International ()
Topsports International (OTCMKTS:TPSRF) is a Hong Kong-based sports shoes and apparel retailer. Presently, the company carries a market capitalization of $3.5 billion. Due to global economic pressures, discretionary consumer spending is down. Not surprisingly, TPSRF has lost 45% year to date. However, shares have shown some near-term stability, rising 1.5% over the past week.
Fundamentally, TPSRF is risky. However, with the Chinese consumer struggling against draconian mobility restrictions, Topsports could benefit from pent-up demand once Beijing begins to ease restrictions. For now, investors can plan ahead.
TPSRF features strong profit margins relative to the industry. Shares trade for 10.4 times forward earnings, below the industry median of 14. Thus, 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: 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 $280.8 million. Shares feature average trading volume of 26,650. Since the start of the year, WFSTF has fallen 47%.
GuruFocus labels Western Forest “significantly undervalued” based on its proprietary metrics. The stock has a forward P/E ratio of 7.1, below the industry median of 11.4. And its price-to-sales ratio of 0.3 ranks better than 83% of the competition.
However, Western Front’s main spotlight arguably centers on its balance sheet. The company enjoys a strong cash balance with a cash-to-debt ratio of 1.6. This ranks above 73% of its peers.
Pax Global Technology ()
Headquartered in Shenzhen, China, Pax Global Technology (OTCMKTS:PXGYF) is a manufacturer of payment terminals, PIN pads, and point-of-sale hardware and software. As with many of the other best penny stocks under $1 to buy, global demand headwinds negatively impacted Pax’s business. What’s remarkable about PXGYF, though, is its resilience.
Year to date, shares are up more than 15%. As well, Pax has shown near-term momentum, moving up 12% over the past month. Thus, at least some speculators may be anticipating a quicker recovery for the international consumer economy. If so, PXGYF could skyrocket.
Even if circumstances stay dour for some time, the company enjoys a stout cash-to-debt ratio of 30.3, better than 83% of the industry. And Pax’s return on equity of 19.7% beats out over 86% of its rivals, making PXGYF a worthy candidate among the best penny stocks under $1 to buy.
Best Penny Stocks Under $1: Alkane Resources (ALKEF)
Based in Australia, Alkane Resources (OTCMKTS:ALKEF) stands 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 losing 43% YTD.
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 has a three-year revenue growth rate of 20.8%, better than nearly 80% 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 is 4.8 points, reflecting low bankruptcy risk. If you’re in a speculative mood, ALKEF could make for an intriguing play among the best penny stocks under $1.
On a final note, gold performed relatively well during the past several weeks, implying that the fear trade may be on. Therefore, the narrative isn’t completely speculative.
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.