As global markets continue to evolve, investors are increasingly exploring smaller-cap stocks, often referred to as penny stocks, for their affordability and growth potential. While the term "penny stocks" might evoke images of low-quality or risky investments, these smaller-cap stocks can offer unique opportunities when backed by strong financials. In this article, we will explore three penny stocks with market caps larger than US$30M that have demonstrated promising financial health and growth prospects.

1. Biohit Oyj (HLSE:BIOBV)
Biohit Oyj, a biotechnology company with a market cap of €37.04 million, has shown significant earnings growth of 50% over the past year, surpassing industry averages. Despite recent lowered revenue guidance for 2024 due to geopolitical tensions affecting sales in the Middle East, Biohit remains debt-free and maintains strong financial health with short-term assets exceeding liabilities. The company's experienced board and management team support its operational stability amidst current challenges. Although its return on equity is considered low at 15.3%, Biohit's strong financial health and experienced leadership make it an attractive investment option.



2. Hil Industries Berhad (KLSE:HIL)
Hil Industries Berhad, with a market cap of MYR293.77 million, has a strong financial health rating of ★★★★★★★. The company generates revenue from its manufacturing operations and has shown consistent revenue growth, contributing to its robust financial performance. Despite facing challenges typical of many penny stocks, such as high volatility and ongoing unprofitability, Hil Industries' experienced management team and board provide strategic guidance and financial stability. The company's plans for a reverse stock split to address Nasdaq's minimum bid price requirement and the appointment of John Lindeman as CEO in January 2025 may influence its strategic direction and profitability.



3. Ever Sunshine Services Group (SEHK:1995)
Ever Sunshine Services Group, with a market cap of HK$3.49 billion, has demonstrated robust financial health despite its classification as a smaller-cap stock. The company's earnings grew by 33.8% over the past year, surpassing industry averages and indicating strong operational performance. Its debt is well-covered by operating cash flow, and it holds more cash than total debt, highlighting financial resilience. The company's experienced board and management team have overseen the growth and expansion of the business, contributing to its strong financial performance.



In conclusion, penny stocks with market caps larger than US$30M can offer unique growth prospects and investment opportunities. By focusing on financial strength and growth prospects, investors can identify promising investments in smaller or newer companies. Biohit Oyj, Hil Industries Berhad, and Ever Sunshine Services Group are three examples of penny stocks that have demonstrated strong financial health and potential upside, making them attractive options for investors seeking affordable entry points into smaller or newer companies with growth potential.