It feels strange to write an article about the best penny stock to buy on the same day Federal Reserve chairman Jerome Powell upended equity markets. In his testimony before the U.S. Congress, the Fed chairman reiterated that there would be no “Powell pivot” on interest rates. But he also said the Fed might have to raise rates more aggressively than planned if the economy continues to run hot.

Now, many investors may be looking to sell, not buy. And if you are buying, penny stocks may not be on your watchlist.

But if you’re a contrarian investor, that may be a mistake. Penny stocks have significant risks. Many companies are not profitable, and some don’t even have revenue. But if you catch these companies at the right time, they can deliver the 10x gains or higher than many investors dream of.

In this article, we’re giving you three options for stocks that make the cut as the best penny stock to buy. If you’ve got speculative money to put at risk, these penny stocks may reward your patience.

Sandstorm Gold (SAND)

It’s still early in 2023, but so far, gold is continuing the run it started in 2022. Gold outperformed all three major indexes in 2022. And some analysts believe the yellow metal could top the $2,000 per ounce mark this year. If you believe that’s the case, now is the time to get in on Sandstorm Gold (NYSE:SAND).

Sandstorm is a gold royalty company. In this business model, the company receives a percentage of a mining company’s gold production or revenue. In exchange, Sandstorm provides the miners with an upfront payment. This is a win-win situation as miners don’t have to tap capital markets, and Sandstorm gets a (somewhat) predictable form of revenue.

SAND stock may be the best penny stock to buy, but it’s not likely to be a penny stock for much longer. The company is growing revenue at an impressive clip. And the company is already profitable. And with a profit margin of 62%, the company has a profit margin that is four times the sector average.

American Lithium (AMLI)

If gold doesn’t excite you, perhaps I can interest you in lithium. And among lithium companies, American Lithium (NASDAQ:AMLI) is flying under the radar of lithium stocks, but maybe not for long.

Many companies, particularly EV companies, are keenly interested in lithium. That’s because the country will need one million tons of new lithium carbonate production by 2030. A key application behind that need is the lithium-ion batteries needed to power EVs.

American Lithium is a relatively small company, but it’s one of the largest lithium developers in the world. One of the company’s key projects is its Tonopah Lithium Co. (TLC) project in Nevada. This is an advanced-stage lithium project and one of the only such projects in the United States.

The company recently received over $13 billion in grant funding to improve things. This will help it build out its manufacturing capability without diluting its shares.

That said, American Lithium is not profitable and is currently generating no revenue. But for investors who have the time to wait, AMLI stock makes an intriguing case for being the best penny stock to buy.

Wag! Group (PET)

The last entry for the best penny stock to buy is the Wag! Group (NASDAQ:PET). The company matches independent pet caregivers with pet owners. The company’s platform allows these caregivers to procure services such as dog walking, pet sitting, advice from licensed pet experts, and more.

Many current investors don’t remember the dot-com crash. But one of the cautionary tales of that event was a company called Pets.com. Like many of its bubble-infused brethren, Pets.com went out of business in 2000 because it couldn’t make a profit. But, in theory, the company made sense.

And Wag! Group and companies such as Chewy (NYSE:CHWY) are proving that pets are big business. Pets.com existed at a time before Web 2.0 and smartphones. Today, consumers are conditioned to use their smartphones to find everything from plumbers to potential life partners. So why not use it to screen individuals you entrust with your pet’s care?

Wag! Group is not profitable, but it does have some revenue coming in. Could it go the way of Pets.com? I suppose so, but I feel this will have a happier ending.

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, Chris Markoch 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.