While the below market ideas may very well represent the best penny stocks under $3 to buy now, you must realize the dirty little secret. Usually, when publicly traded securities fall this low, it’s not for good reasons. Inherently, then, you must assume serious risks for every one of these market ideas.
In other words, the best penny stocks under $3 represent internet reviews for discount-bin consumer products. It’s not fair to compare such products to their top-of-the-line competitors. In the same vein, you must understand that as you drop into the sub-$3 menu, you’re taking greater-than-normal risks. It’s simply the nature of the beast.
Assuming that you recognize the volatility, my job is to filter out ideas that aren’t completely speculative. At the very least, each of these best penny stocks under $3 feature one redeeming factor, either fundamentally or financially.
So, if you’re ready, let’s get started.
Best Penny Stocks Under $3: Scentre Group (STGPF)
A shopping center company operating under the Westfield brand in Australia and New Zealand, Scentre Group (OTCMKTS:STGPF) involves itself in various activities surrounding its retail outlets, such as management and development. As of the close of the Oct. 19 session, STGPF trades hands at $1.63. Further, the underlying business features a market capitalization of approximately $8.57 billion.
To be sure, consumer retail in the U.S. market is more or less a burning dumpster. However, the Oceanic market features a different culture. For instance, in Australia, shoppers enjoy a deeper affinity for the brick-and-mortar experience. It plays out in the numbers too. In the second quarter of 2022, Scentre generated $337 million in net income, up 10% from the year-ago period.
In addition, Gurufocus.com labels STGPF modestly undervalued. Although its growth trajectory isn’t too hot, the company overall features solid profitability metrics. Therefore, Scentre is one of the best penny stocks under $3 to buy.
Singapore Telecommunications (SNGNF)
As the name implies, Singapore Telecommunications (OTCMKTS:SNGNF) is a telecom conglomerate in the underlying nation. It also represents one of Singapore’s big four telecoms. Following the conclusion of the Oct. 19 session, the market priced SNGNF at $1.80. Presently, the underlying company features a market cap of approximately $30 billion.
Fundamentally, what makes Singapore Telecommunications appealing is its effectively permanent relevance. While global equity indices suffered this year, SNGNF – despite its speculative profile – gained 4%. That’s a decent return for a relatively boring company. During this deflationary cycle, you might say that SNGNF is downright meteoric.
To be fair, the growth rate for Singapore Telecommunications is not great, featuring a three-year revenue expansion of -4.5%. On the other hand, the company features strong profitability metrics. In particular, SNGNF enjoys a net margin of 12.7%, better than the industry’s median of 5.9%.
For just a few bucks a share, you really can’t argue with these stats. Therefore, SNGNF is one of the best penny stocks under $3 to buy.
Best Penny Stocks Under $3: Senti Biosciences (SNTI)
A biotechnology firm, Senti Biosciences (NASDAQ:SNTI) seeks to “create a new generation of smarter medicines that outmaneuver complex diseases using novel and unprecedented approaches,” per its corporate marketing tagline. As of the Oct. 19 close, SNTI trades hands at $2.77. The underlying company features a market cap of $121 million.
Since the start of this year, SNTI hemorrhaged an alarming 70% of equity value. Let’s just get that ugliness out of the way. However, a catalyst is underway.
Per Benzinga, Senti has garnered intense interest lately because BofA Securities initiated coverage of SNTI with a “buy” rating. It also revealed a $7 price target. Fundamentally, Senti commands a compelling pipeline of cancer-targeting therapeutics along with candidates for regenerative medicine.
To be clear, speculative biotechs – even the ones called the best penny stocks under $3 to buy – represent heavy risks. However, Senti at least enjoys decent (though nowhere near outstanding) strengths in the balance sheet.
Innovid (CTV)
An independent advertising and measurement platform, Innovid (NYSE:CTV) distributes and manages digital advertisements. Per its website, the company partners with several well-known international household brands. CTV has spent most of 2022 trading below $3. Currently, Innovid features a market cap of nearly $421 million.
Initially, the fundamentals undergirding Innovid appear worrisome. As high-profile executives warned, the digital advertising space suffers from severe macroeconomic headwinds. Recent developments don’t provide much encouragement. At the same time, dwindling consumer sentiment also means that companies must fight aggressively for the available remaining dollars. Otherwise, the alternative is to simply give up.
What makes CTV one of the best penny stocks under $3 to buy is of course not merely tied to its price point. Rather, the underlying firm offers surprising financial strengths. For instance, Innovid features an equity-to-asset ratio of 0.83, higher than the industry median of 0.52.
Best Penny Stocks Under $3: Workhorse (WKHS)
Heading into the really speculative portion of the best penny stocks under $3 to buy, Workhorse (NASDAQ:WKHS) represents a blast from the past. An electric vehicle firm specializing in commercial fleets, Workhorse finished the Oct. 19 session at $2.38. Currently, the company features a market cap of just under $390 million.
Fundamentally, most folks recognize Workhorse as the company that failed to win the U.S. Postal Service contract to replace its aging fleet of mail carriers. In the EV manufacturer’s favor was that it represented the only pure-electric-powered offering. However, I argued before the ultimate decision that it wasn’t a shoo-in for the contract. Simply put, mail carriers must operate in various environments and EV tech isn’t quite fully fleshed out.
Because of the high-profile failure, WKHS easily rates as one of the riskiest names among best penny stocks under $3. Nevertheless, it’s also possible that most of the pain has been priced into WKHS. If you want to take the chance, Workhorse may be on fire sale.
Hennes & Mauritz (HNNMY)
Unless you happen to be a fashionista, Hennes & Mauritz (OTCMKTS:HNNMY) might not immediately be recognizable. However, most people may recognize the popular H&M clothing store brand. As of the Oct. 19 session, HNNMY trades hands at $1.99. Currently, the underlying company features a market cap of approximately $16.3 billion.
At first glance, the narrative for Hennes & Mauritz appears incredibly risky. In recent days, investors saw major consumer discretionary brands suffer huge demand losses and skyrocketing inventory levels. Therefore, plowing money into another consumer discretionary name seems unwise. For additional proof, HNNMY stock hemorrhaged more than 53% of market value since the start of this year.
At the same time, Gurufocus.com labels Hennes & Mauritz significantly undervalued. Highlights include decent strengths in the balance sheet and robust profitability metrics. For instance, the company’s return on equity pings over 22%. In comparison, the ROE for the apparel industry stands at 6.3%.
These are solid numbers for such a low-priced equity. Therefore, HNNMY deserves consideration for penny stocks under $3 to buy.
CITIC Securities (CIIHF)
Arguably the riskiest idea on this list of best penny stocks under $3, CITIC Securities (OTCMKTS:CIIHF) is a Chinese full-service investment bank. In particular, the company offers underwriting, research, brokerage and asset management services. As of the conclusion of the Oct. 19 session, CIIHF stood at $1.67. Presently, CITIC features a market cap of approximately $35 billion.
Fundamentally, the main concern for companies like CITIC is the threat of global economic instability. With the Federal Reserve imposing deflationary dynamics as it wrestles with stubbornly high inflation, the implications for dollar strength poses challenges elsewhere. Therefore, companies aren’t interested in taking too many risks, such as launching an initial public offering.
At the same time, deflationary forces allow the best financial services firm to distinguish themselves from the competition. While it’s easy to invest in an inflationary environment due to the rising-tide-lifts-all-boats thesis, deflationary circumstances hurt. That’s because of widespread investor panic. Still, CITIC represents an idea only for the boldest contrarian speculator.
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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.