Penny growth stocks can be some of the most lucrative yet perilous investments out there. While many penny stocks end up being worthless, the ones that succeed can deliver absolutely massive returns and take you from rags to riches.
However, you need to be highly selective, as the outcome of losing your entire investment is very much possible. The key is to scoop up quality penny growth stocks with strong top-line expansion and profitability metrics that limit dilution risk. If you can find penny stocks meeting these criteria, considering the upside potential, the downside isn’t too bad. Sometimes, the risk-reward ratio for these hidden gems swings greatly in your favor over the long run.
Here are seven such penny growth stocks to look at.
Payfare (PYFRF)
Payfare (OTCMKTS:PYFRF) is shaping into an exciting fintech play in the gig economy space. As a financial technology company providing instant payout and digital banking solutions to gig workers, Payfare is poised to ride the growth in freelance and on-demand jobs. The gig economy is ballooning as employers realize the cost savings from avoiding traditional employment benefits and workers appreciate the flexibility. With partnerships with leaders like Doordash (NASDAQ:DASH) and Uber (NYSE:UBER), Payfare already has its foot in the door.
Payfare’s platform enables gig workers instant access to earnings and robust digital banking, addressing a major pain point. This focus on financial inclusion for overlooked workers could drive rapid user growth. Another potential catalyst is onshoring and migration trends that may expand the gig workforce utilizing Payfare’s services. The company has already achieved profitability, with revenue nearly doubling from $135 million in 2023 to $245 million in 2025, per analysts. EPS could rocket from $0.27 to $1.1 in that same timeframe. So you are buying at only 5.5 times 2025 EPS estimates, an incredible bargain in my view. As the gig economy and Payfare’s reach expand, this undervalued fintech play could deliver exponential returns.
Jubilee Metals Group PLC (JUBPF)
Jubilee Metals (OTCMKTS:JUBPF) offers upside exposure to critical industrial commodities like platinum group metals, chrome, zinc, lead and other ores. While the stock trades around $0.09, there is explosive potential if execution meets targets.
Jubilee Metals operates in geographies like South Africa, Zambia and Australia, which gives it a global production footprint. The company has been optimizing its assets and ramping up production. Experts like SeekingAlpha’s Sarel Oberholster have noted that Jubilee Metals could significantly boost margins at core facilities like the Inyoni PGM project. If management can deliver on enhancing recoveries and expanding production, the impact on profitability could be immense.
Gurufocus estimates $0.35 as a fair value for JUBPF by the end of 2026, with revenue potentially rising from $212 million in 2024 to $329 million in 2026. If Jubilee can expand its net margin from 8.7% to just 12% in that timeframe, we could see profits of $40 million. That makes the current valuation seem like an incredible bargain. Jubilee Metals has all the ingredients for a potential multibagger return if execution meets targets. This is a penny stock I would grab before the crowd catches on.
Delivery Hero (DELHY)
Delivery Hero (OTCMKTS:DELHY) has pioneered on-demand delivery around the globe, now operating in over 70 countries. While growth has slowed from peak pandemic levels, Delivery Hero can reach profitability across its segments soon. That would unlock a significant upside for the stock, which has languished 77% off its 2021 high.
The company aggressively pushes into quick commerce, aiming to deliver products in under an hour. While it looked to sell some Asian units last year, Delivery Hero recently terminated that deal, believing it had reached an “inflection point” in profitability prospects. Already around 75% of its Platform segment is profitable.
We could see a massive re-rating as Delivery Hero expands margins across its footprint. The path to profitability is coming into focus, especially as management gains optimization experience. In my view, the growth story still has room to run. Delivery Hero pioneered on-demand delivery and still leads the field through constant innovation. I would take advantage of the current discounted valuation before the crowd catches on to the improving profitability metrics.
Aemetis (AMTX)
Aemetis (NASDAQ:AMTX) operates in high-growth renewable fuels and biochemicals, aiming to replace petroleum-based products with sustainable alternatives. This aligns perfectly with global decarbonization megatrends, signaling massive potential demand growth ahead. However, Aemetis has been a rollercoaster stock, plummeting 85% off its 2021 peak. A full recovery will take time, given profitability is not expected until 2027.
However, once profits materialize as projected, the growth trajectory could steepen exponentially. You are buying at just three times 2027 EPS estimates and less than 1 times 2032 EPS estimates. Per analysts, revenue is forecast to climb from $367 million in 2024 to $1.53 billion by 2028. If even half of those projections are reached, the long-term upside is immense, in my view. However, Aemetis does have a history of overpromising, so some caution is warranted. Still, if renewable fuel demand growth is expected, this could deliver multibagger returns for patient investors.
AAC Technologies (AACAY)
AAC Technologies (OTCMKTS:AACAY) provides exposure to mobile communications growth as a leading producer of miniaturized smartphone components like microphones and haptics. While hardly a high-flyer historically, AACAY is making moves, gaining 54% over the past year.
This could start a sustained breakout as analysts expect a pivot to accelerated revenue growth, potentially rising from $3.5 billion to $6.2 billion between 2024 and 2029. We could see significant upside if AAC matches projections while expanding margins. AAC already boasts superb profitability metrics, with an FCF margin of 17% that beats 90% of hardware peers.
The stock price has substantial room to run if execution aligns with targets. AAC Technologies could shift into a higher gear growth-wise soon, making now a compelling entry point.
NagaCorp (NGCRF)
NagaCorp (OTCMKTS:NGCRF) operates an integrated casino and entertainment resort in Cambodia. It offers a unique growth avenue. The company’s flagship NagaWorld property has a 70-year license and regional monopoly through 2045, conferring tremendous competitive advantages.
After plummeting 83% off its peak, NGCRF has rebounded 72% as business recovers from the pandemic slump. With revenue and earnings growth projected to accelerate, I see the rally continuing. NagaCorp boasts superb 35% net margins, dwarfing 94% of resort/casino peers.
Trading at just 18 times forward earnings, NGCRF remains reasonably valued for such a high-quality operator. If tourism and gambling activity continue recovering, this undervalued stock could deliver outsized returns over the coming years. The long-term growth story remains intact.
NanoXplore (NNXPF)
With the graphene market forecast to grow at a 31% CAGR through 2030, NanoXplore (OTCMKTS:NNXPF) is poised to capitalize as a leading producer. This advanced material is 200 times harder than steel and five times lighter than aluminum, conferring tremendous industrial potential.
NanoXplore supplies graphene for transportation, electronics, packaging and other markets. It also produces graphene-enhanced batteries for electric vehicles. With the booming demand for EVs and grid storage, this application holds particularly strong growth prospects.
NanoXplore already grew revenue 32.5% in fiscal 2023. With projections of growth revenue from $96 million in 2024 to $229 million in 2027, the stock at 74% off its 2021 high, presents a compelling risk/reward profile. If graphene demand outpaces estimates amid rapid adoption, substantial upside could emerge. NanoXplore has ingredients for multibagger returns as industrial graphene usage accelerates.
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Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Omor Ibne Ehsan did not hold (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.