Dividend Stocks

The Best Penny Stock to Buy Now ZH vs CATX vs LMFA

For those who laugh in the face of extreme financial danger, the concept of acquiring the best penny stock to buy now might get the heart racing. Given this category’s often rock-bottom share prices, these wildly speculative ideas command much attention. At the same time, you got to know what you’re doing. Basically, even enterprises labeled as the top penny stocks to buy may succumb to devastating losses. According to the website Quantified Strategies, securities in this category yield an average negative annual return of 24%. As well, the site claims that over 90% of equities in this arena fail. To be quite blunt, I can’t independently verify the above statistics.

However, when you’re talking about investing in penny stocks, the framework checks out. All too often, we’ve seen ourselves or heard stories of people losing everything in this wildly unpredictable ecosystem. Still, there’s always a chance that gamblers can strike gold. Below are three intriguing ideas to consider for this penny stock comparison.

ZH Zhihu $1.03
CATX Perspective Therapeutics $0.51
LMFA LM Funding America $0.74

Zhihu (ZH)

Source: John Brueske / Shutterstock

Based in China, Zhihu (NYSE:ZH) is a “…leading online content community in China where people come to find solutions, make decisions, seek inspiration, and have fun,” according to one of its filings with the U.S. Securities and Exchange Commission (SEC). Further, the document states that the company grew from a question-and-answer forum to one of the top comprehensive online content communities.

Fundamentally, given China’s massive population size, Zhihu may be a worthwhile idea for the best penny stock to buy now. If it finds a niche market, it could be wildly successful, even if it never expands beyond its borders. Unfortunately, ZH represents a wildly risky security. Priced at just $1 right now, shares slipped almost 29% since the beginning of this year. Surprisingly, though, two analysts cover ZH within the past three months, pegging shares a moderate buy. In addition, their average price target lands at $2.25, implying 125% upside potential. Financially, Zhihu carries a mixed profile. That said, it features a decently robust balance sheet and commands a three-year revenue growth rate of 74.7%. Thus, it could be one of the top penny stocks to buy.

Perspective Therapeutics (CATX)

Source: Vitalii Vodolazskyi / Shutterstock.com

Headquartered in Richland, Washington, Perspective Therapeutics (NYSEAMERICAN:CATX) bills itself as a developer of game-changing therapies for cancer patients. According to its website, Perspective gains attention for its new, proprietary class of theranostics, which enable the ability to see a specific tumor and then treat it. This process potentially improves efficacy and minimizes toxicity associated with many other types of cancer treatments.

To be sure, the company commands significant scientific relevancies. And so far, the retail investment community responded heartily to the enterprise. Since the Jan. opener, CATX skyrocketed nearly 108%. In fairness, it’s a volatile idea, with shares dropping more than 12% in the trailing month. Still, it has the qualities to rank as a candidate for best penny stock to buy now. Interestingly, Oppenheimer’s Jeff Jones pegs CATX as a buy. The expert forecasts shares hitting $1.20, implying almost 141% upside potential. As well, the analyst made this call several days ago, so it’s not a “leftover” assessment.

Financially, Perspective suffers from negative profit margins. However, it delivers a surprisingly stout balance sheet. Moreover, its three-year EBITDA growth rate pings at 35.8%. Thus, it might work out for those investing in penny stocks.

LM Funding America (LMFA)

Source: John Brueske / Shutterstock.com

In my opinion, LM Funding America (NASDAQ:LMFA) easily ranks as one of the riskiest ideas among the top penny stocks. Headquartered in Tampa, Florida, LM Funding focuses on cryptocurrency mining. Additionally, it seeks to broaden the framework and utility of crypto-based initiatives. For example, it specializes in blockchain contracts, public company financing and specialty financing.

Earlier in the economic cycle, I could see the appeal of such blockchain-driven endeavors. However, with the economy in limbo regarding national debt obligations, stubbornly high inflation and also high borrowing costs, I’m not so sure how a blockchain enterprise can be superior to traditional options. Nevertheless, if you want to speculate on cryptos without directly buying cryptos, LMFA might work out for you. Enticingly, Maxim Group’s Matthew Galinko pegs shares a buy, targeting a $2 price target. If LMFA reaches that point, investors would accrue a 174% return.

However, I still think it’s the riskiest idea in this penny stock comparison in part because of the financials. Yes, LM Funding carries a decently stable balance sheet. However, investors must be aware of the negative profit margins and revenue “growth” rate.

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.

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.