Three ASX Penny Stocks Poised for Growth in 2025

The Australian Securities Exchange (ASX) has long been a hunting ground for investors seeking undervalued opportunities. Among the most intriguing targets are penny stocks—companies with market caps under $1 billion that often fly under the radar but boast compelling growth potential. Three such stocks, Austin Engineering (ASX:ANG), Change Financial (ASX:CCA), and Gale Pacific (ASX:GAP), stand out for their distinct advantages and risks. Let’s dissect their financial trajectories and what they might offer investors in 2025.

Austin Engineering (ANG): A Diversified Growth Engine

Austin Engineering, with a market cap of A$269.76 million, is a standout in the mining equipment sector. Its operations span Asia-Pacific, North America, and South America, generating robust revenue streams across these regions. H1 2025 sales hit A$170.15 million, a clear upward trend from prior periods. A strong interest coverage ratio of 16.8x and a net debt-to-equity ratio of 7.5% underscore its solid financial footing.

While its return on equity (ROE) of 18.1% is modest compared to industry peers, its 12% revenue growth forecast for FY2025—backed by a full order book and experienced management—suggests it could outpace competitors.

Change Financial (CCA): High Growth, High Risk

At a mere A$46.71 million market cap, Change Financial is a speculative play. This fintech firm provides card payments software across 12 countries, with US$10.64 million in recent revenue. Despite being unprofitable, it has reduced losses by 5.1% annually over five years, a sign of improving efficiency. Its debt-free balance sheet and A$5.4 million in short-term assets (though slightly below liabilities) provide flexibility for expansion.

The real allure lies in its 94% annual earnings growth forecast, driven by market penetration in emerging economies. However, investors must weigh this potential against its current unprofitability and management’s mixed tenure—a seasoned operational team but a less experienced board.

Gale Pacific (GAP): Liquidity Strength, Profitability Struggles

Gale Pacific, valued at A$32.66 million, manufactures screening and shading products. Its A$173.98 million revenue is impressive, but its negative ROE (-0.29%) and rising losses over five years signal operational challenges. Despite this, its A$145 million in short-term assets comfortably cover liabilities, and its operating cash flow exceeds debt obligations.

The company’s weak interest coverage ratio (0.5x) is a concern, though its declining debt-to-equity ratio hints at progress. Trading at a discount to fair value, it could be a value play if management improves margins. However, its inexperienced operational team (average tenure of 1.4 years) raises execution risks.

Conclusion: Balancing Growth and Risk

These three penny stocks present a mix of opportunities and pitfalls:

1. Austin Engineering is the safest bet, with geographic diversification, strong financials, and a clear path to growth. Its 12% revenue growth forecast and stable ROE make it a conservative investor’s choice.
2. Change Financial offers aggressive growth potential, but its unprofitability and reliance on emerging markets expose it to macroeconomic headwinds. The 94% earnings growth projection is enticing, but patience—and risk tolerance—are required.
3. Gale Pacific is a value-oriented gamble. Its liquidity and undervalued shares make it a speculative play, but its operational challenges and weak interest coverage demand close monitoring.

For investors, Austin Engineering is the most balanced option, while Change Financial and Gale Pacific appeal to those willing to trade risk for higher upside. As always, diversification and a long-term horizon are critical in the penny stock realm.

In 2025, these companies highlight the ASX’s hidden gems—but investors must pick their bets wisely.