While volumes of financial literature will redirect you away from speculative investments, with this list of the best penny stocks under $3 to buy, you can add some intelligence to your gambling ways. Please note when you venture into securities priced this low, you’re almost certainly absorbing extremely high risk. This is no place to wager money you can’t afford to lose (because you probably will.)
Then again, the beauty of the best penny stocks under $3 to buy is fundamental leverage. For a small portion of your wealth, you potentially expand your net worth should your ideas blow up. Of course, the companies you target must succeed in the markets. Otherwise, you could be left with considerable losses.
If you can accept this risk – and perhaps the prospect of divorce papers – you might have the right attitude. With that, below are the best penny stocks under $3 to buy.
Best Penny Stocks Under $3: Profire Energy (PFIE)
An oilfield technology firm, Profire Energy (NASDAQ:PFIE) specializes in the design of burner-management systems and other combustion-management technologies. These solutions serve both the upstream (exploration and production) and midstream (storage and transportation) sectors of the hydrocarbon energy industry. As a result, it’s one of the best penny stocks under $3 to buy for fundamental relevancies.
As well, PFIE brings an enticing technical narrative to the mix. On a year-to-date (YTD) basis, shares gained only about 4%, which is rather low for the red-hot hydrocarbon space. However, speculators started to appreciate the company’s longer-term prospects. In the trailing five days, PFIE gained nearly 5% of market value. In the trialing month, shares returned exactly 12%.
Looking at the financials, Gurufocus identifies PFIE as “significantly undervalued” based on its proprietary calculations for fair market value. To be fair, against traditional valuation metrics, PFIE seems overpriced. Nevertheless, prospective speculators will undoubtedly take comfort in Profire’s balance sheet, which features a robust cash-to-debt ratio of 48.6 times.
The Marygold Companies (MGLD)
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A bit of an oddity among the best penny stocks under $3, The Marygold Companies (NYSEAMERICAN:MGLD) represents a holding firm with a diverse range of subsidiary businesses. Under the corporate umbrella, investors can gain exposure to food products, personal care, commodities-based investments and even a security systems firm. You might say Marygold has a shotgun approach to the market, which might come in handy due to the ambiguities of the new normal.
To be completely transparent, Wall Street doesn’t see it that way. Since the start of the year, MGLD dropped more than 64% of equity value. Naturally, that’s going to raise plenty of alarm bells. At the same time, over recent sessions, the volatility has died down. For example, in the trailing half-year period, MGLD dropped “only” 15%. Also, in the trailing month, shares fell less than 4%.
According to Gurufocus’s proprietary FMV calculations, the company enjoys a stable balance sheet, best characterized by an Altman Z-Score of 8.39. This indicates very low risk of bankruptcy.
Best Penny Stocks Under $3: Silvercorp Metals (SVM)
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Based in Vancouver, British Columbia, Silvercorp Metals (NYSEAMERICAN:SVM) is a Canadian-based, China-focused precious metals company engaged in the acquisition, exploration and development of silver-containing properties. While SVM might attract those seeking cynical opportunities based on the fear trade, given silver’s strong correlation with gold, Silvercorp drives much fundamental relevance.
For years, demand for silver centered on its industrial applications. Further, as Forbes pointed out, silver represents an essential commodity in the production of both solar panels and electric vehicles. Basically, its conductivity and corrosion resistance provide myriad applications. Still, the market remains dour on SVM, with shares giving up more than 19% of equity value this year.
However, this circumstance also opens opportunities for speculators. Financially, Silvercorp should appeal to gamblers because of its profit margins. For instance, its net margin stands at nearly 8%, beating out 64% of the competition. For those seeking a smart, underappreciated idea among the best penny stocks under $3, SVM is it.
US Global Investors (GROW)
Headquartered in San Antonio, Texas, US Global Investors (NASDAQ:GROW) barely made it onto this list of best penny stocks under $3. Trading hands at a penny below the namesake threshold, it’s possible GROW could rise above the line by the time you read this. However, if that happens, just know I beat the buzzer – I wasn’t cheating.
Fundamentally, US Global should appeal to contrarians that love to travel off the beaten path. Per its website, the company bills itself as an innovative investment manager with vast experience in global markets and specialized sectors. As we enter a potentially difficult phase in the market, professional investment guidance has never been more important. Therefore, GROW could make a name for itself.
On the financial side, US Global enjoys excellent strengths in the balance sheet. Notably, its Altman Z-Score stands just into double-digit territory, reflecting low bankruptcy risk. Also, the company features outstanding revenue growth and strong gross margins, possibly indicating advantageous pricing power.
Best Penny Stocks Under $3: Dynacor (DNGDF)
Based in Canada, Dynacor (OTMCKTS:DNGDF) represents gold production. At present, according to its website, Dynacor produces and explores in Peru where its management team has decades of experience and expertise. Fundamentally, Dynacor benefits more from the fear trade than Silvercorp above. Frankly, gold has more of an association as a safe-haven asset than silver.
Also, DNGDF may attract investors looking to ride the strong rally in the gold spot price. At time of writing, gold reached an average price of around $1,800. At the beginning of November, the yellow metal traded hands at approximately $1,650. Nevertheless, Wall Street remains negative on DNGDF, shedding 17% YTD. It might be one of the best penny stocks under $3 but it’s still a penny stock.
Now, what really shocked me about the enterprise was that Gurufocus identified 10 green flags and no red flags. While I can’t be for certain, this might be some kind of record. Among the attributes listed were strong financial strengths, low bankruptcy risk and predictable revenue and earnings growth.
888 Holdings (EIHDF)
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Headquartered in Gibraltar, 888 Holdings (OTCMKTS:EIHDF) owns several popular gambling brands and websites, including 888sport, 888casino and 888poker. Perhaps it’s an appropriate addition to this list of the best penny stocks under $3 given the gambling motif. Currently, shares trade hands at $1.31, which hardly classifies as territory conservative investors would consider.
As you might suspect, the market takes a rather dim view of 888 Holdings. Since the beginning of the year, shares hemorrhaged more than 67% of equity value. Frankly, with global recession fears rising, consumers gravitated toward the essentials. However, it’s possible some acclimatization has occurred. Interestingly, in the trailing month, EIHDF gained more than 12%.
Is something special brewing? While it’s impossible to answer with certainty, what can be said is 888 features a strong balance sheet. For instance, its cash-to-debt ratio stands at nearly 16 times, beating out 85% of the competition. Also, Gurufocus labels EIHDF as “significantly undervalued,” with shares trading under 7 times forward earnings.
Best Penny Stocks Under $3: Ferrexpo (FEEXF)
In my opinion, Ferrexpo (OTCMKTS:FEEXF) represents the riskiest idea on this list of best penny stocks under $3. Fundamentally, I wouldn’t ordinarily bring up such an idea were it not for the underlying company’s feel-good narrative. A Swiss-based commodity trading and mining firm, Ferrexpo’s specializes in iron ore pellets. Moreover, its operating base is located in central Ukraine.
Indeed, Ferrexpo is one of the largest employers of Ukrainian workers. Currently, the company prioritizes the safety of its employees, along with supporting humanitarian initiatives. While I’ve mentioned several stocks in the past that provide relevancies for Ukraine – usually in the form of defense companies – Ferrexpo offers a far less controversial platform.
Should you decide to buy FEEXF, you should know that it’s not all about the emotional elements of this company. Rather, Ferrexpo enjoys excellent strengths in the balance sheet. As well, its revenue growth rate and profit margins rank among the sector’s upper echelon. Finally, the market prices FEEXF at only 3.4 times trailing earnings, making it significantly undervalued.
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.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.