Gabetti Property Solutions Leads These 3 European Penny Stocks To Consider

The European penny stock market is a treasure trove of undervalued opportunities, but it’s also a minefield of risks. Among the 435+ stocks analyzed by TipRanks, three stand out for their unique catalysts, financial resilience, and growth trajectories: Gabetti Property Solutions (BIT:GAB), genOway (ENXTPA:ALGEN), and Bredband2 i Skandinavien AB (OM:BRE2). While Polska Grupa Militarna (WSE:PMG) rounds out the group, its pre-revenue status makes it a higher-risk play. Here’s why these three warrant a closer look—and how to navigate their pitfalls.

1. Gabetti Property Solutions (BIT:GAB): Navigating Regulatory Headwinds

Gabetti’s Q1 2025 revenue dropped 32% to €79.5 million due to regulatory changes in Italy that reduced tax incentives for renovations. However, the company slashed its net debt by 76% to €13 million, a sign of financial discipline. Its free cash flow of €40 million (TTM) far exceeds its €1.07 million statutory profit, indicating strong operational health.

The stock trades at 15.2% below its estimated fair value (as of April 2025) and offers a low price-to-sales (P/S) ratio of 0.3x, suggesting undervaluation. Yet investors must weigh this against risks like its 100.4% debt-to-equity ratio and a beta of 1.65, meaning its share price swings more sharply than the broader market.

Why it’s a buy: Its Abaco Team and Gabetti Franchising divisions are growing, and its cash flow stability could fuel debt reduction.

2. genOway (ENXTPA:ALGEN): Biotech’s Hidden Gem

A specialist in custom genetically modified animal models, genOway has a market cap of €28.8 million and a P/E ratio of 15.7x, below its biotech peers. While its earnings growth slowed to 16.8% in 2024 from a five-year average of 67.1%, its 8.3% profit margin and €40 million in cash reserves (vs. €13 million in liabilities) offer a safety net.

The company’s €22.06 million in biotech revenue and strong ties to pharmaceutical R&D make it a play on long-term industry growth. Investors should watch for new drug partnerships or licensing deals to reignite earnings momentum.

3. Bredband2 (OM:BRE2): Telecom’s Dividend Darling

With a market cap of SEK2.13 billion, Bredband2 provides broadband solutions in Sweden. Its earnings surged 28.1% in 2024, outpacing the telecom sector’s average growth. The stock trades at 70.5% below its estimated fair value, and its 4.48% dividend yield is a rare find in volatile penny stocks.

Despite short-term liabilities exceeding assets, its operating cash flow comfortably covers debt and interest, and profit margins rose to 6.3% from 5.4% in 2023. The rollout of 5G infrastructure and demand for cybersecurity solutions (a Bredband2 specialty) could supercharge growth.

The Risky Option: Polska Grupa Militarna (WSE:PMG)

This video game developer has a market cap of just €10.6 million, and while its Q4 2024 net income of PLN1.08 million hints at potential, it’s pre-revenue (under €1 million annually) and faces a negative return on equity (-5.02%). With less than a year of cash runway, it’s a speculative bet on future game releases.

Conclusion: Balance Risk and Reward

These three stocks offer distinct opportunities:
- Gabetti is a value play with improving cash flow but elevated debt.
- genOway is a biotech bargain with sector tailwinds.
- Bredband2 combines dividend appeal with telecom growth.

Investors should prioritize Bredband2 for its stability and yield, genOway for its niche biotech potential, and Gabetti only if they can stomach volatility. Avoid Polska Grupa unless you’re willing to bet on a high-risk turnaround.

In a market where 82% of penny stocks underperform the STOXX Europe 600, these three stand out—but success hinges on patience, diversification, and a clear exit strategy.

Data as of May 2025. Past performance does not guarantee future results. Consult a financial advisor before investing.