The market remained flat over the last week, but over the past 12 months, it has risen by 17%, with earnings forecast to grow by a similar margin annually. For investors looking beyond well-known names, penny stocks—often representing smaller or newer companies—can offer intriguing opportunities. While the term 'penny stocks' might seem outdated, these investments still hold potential for growth when backed by strong financials; here we explore three such stocks that stand out for their balance sheet resilience and potential value.

Below we spotlight a couple of our favorites from our exclusive screener.

TOYO (TOYO)

Simply Wall St Financial Health Rating: ★★★★★☆

Overview: TOYO Co., Ltd. operates across the solar power supply chain, including wafer and silicon production, solar cell manufacturing, and PV module development in Asia and the United States, with a market cap of $199.50 million.

Operations: The company generates revenue of $549.23 million from its Machinery & Industrial Equipment segment.

Market Cap: $199.5M

TOYO Co., Ltd. has demonstrated substantial growth, with its recent earnings increasing by a very large amount over the past year, significantly outpacing industry averages. The company reported second-quarter revenue of US$118.18 million, up from US$87.56 million a year ago, and net income rose to US$17.41 million from US$6.72 million. Despite having a relatively new board and management team, TOYO's financial health is strong; it has more cash than debt and its short-term assets cover both short- and long-term liabilities comfortably. Recent strategic expansions in the U.S., including a new solar cell facility, highlight its growth ambitions amidst market volatility.

Viomi Technology (VIOT)

Simply Wall St Financial Health Rating: ★★★★★☆

Overview: Viomi Technology Co., Ltd, operates in the development and sale of home water solution products in China, with a market cap of $51.29 million.

Operations: The company's revenue primarily comes from online retailers, totaling CN¥2.43 billion.

Market Cap: $51.29M

Viomi Technology Co., Ltd. faces challenges typical of penny stocks, including a recent Nasdaq delisting notice due to its shares trading below US$1.00, with a compliance deadline set for January 2027. Despite this, the company maintains strong financial health; its short-term assets exceed both short- and long-term liabilities, and it possesses more cash than debt. The firm has also engaged in strategic share buybacks and filed a US$100 million shelf registration to bolster financial flexibility. However, earnings are forecasted to decline significantly over the next three years, adding pressure on future performance.

Summing It All Up

• Embark on your investment journey to our 311 US Penny Stocks selection here.
• Curious About Other Options? Uncover 18 companies that survived and thrived after COVID and have the right ingredients to survive Trump's tariffs.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.