Top 5 ASX Penny Stocks That Outperformed the Market in 2025

Penny stocks have long been associated with high-risk, high-reward investing. For investors with a high tolerance for risk, these stocks can deliver substantial returns. However, they can also result in significant losses. In 2025, a select group of ASX penny stocks defied the odds, outperforming the broader market and delivering impressive gains. In this blog, we will examine five such stocks, exploring why they performed so well and what makes them stand out.

 

What Are Penny Stocks?

Penny stocks, by definition, are shares of companies that trade at low prices, typically under $5 per share. While the cost of entry is low, these stocks are often considered speculative investments. The companies behind penny stocks tend to be small, often in their early stages of growth, and may lack the financial stability or market recognition of larger, more established companies.

What attracts investors to penny stocks is the potential for significant returns. A small increase in the price of a penny stock can result in massive percentage gains. However, they also come with a high degree of risk, and many penny stocks fail to meet their growth expectations, resulting in heavy losses for investors.

 

Why Do Penny Stocks Outperform the Market?

Some penny stocks outperform the broader market due to a combination of factors:

Undervalued Potential: Many penny stocks are undervalued by the market because of their small size or lack of awareness. When the market recognises their true potential, the stock price can rise rapidly.

Sector Growth: Some sectors, such as clean energy, lithium, and technology, are growing at an exponential rate. Companies in these sectors can experience massive growth, driving their stock prices higher.

Strategic Partnerships: Penny stocks may form strategic partnerships with larger companies, gaining access to more resources and broader market reach, which can drive their growth.

Innovation and Technology: Companies that innovate within their sectors, whether through technology or new products, often distinguish themselves in the market and see their stock prices rise.

 

Alfabs Australia (ASX: AAL)

Alfabs Australia (ASX: AAL) is an emerging small-cap company operating in the mining services and heavy engineering sector, with a focus on underground coal mining, protective coatings, logistics, and consumables. Based in Kurri Kurri, New South Wales, the company was listed on the ASX in June 2024 and quickly gained attention from investors due to its strong financial performance and operational stability. In its FY2025 half-year report, Alfabs recorded $43.45 million in revenue and a net profit of $5.74 million, representing year-on-year growth and solid earnings momentum. The company also declared its first-ever dividend of 1.5 cents per share, fully franked, an indication of strong cash flow generation and management’s confidence in the business outlook.

Currently trading around A$0.37 with a market capitalisation of approximately A$105 million, Alfabs remains one of the top-performing ASX penny stocks in 2025. Its performance is further supported by low operational overheads and an expanding pipeline of mining and infrastructure projects. However, risks remain, including revenue concentration from large contracts and exposure to commodity price cycles, particularly in the coal sector. Overall, Alfabs stands out as a promising small-cap opportunity with strong fundamentals, consistent cash flow, and strategic positioning in Australia’s resurging mining services industry.

 

EZZ Life Science Holdings (ASX: EZZ)

EZZ Life Science Holdings (ASX: EZZ) is a high-growth Australian company operating in the genomic health and life sciences space, offering nutraceuticals, skincare, and wellness products under its EZZ and EAORON brands. The business has established a strong presence in Australia and New Zealand and has expanded rapidly into Asia and North America. In the first half of FY2025, EZZ reported a revenue of $30.29 million, representing a 40% increase year-on-year, and delivered a net profit after tax of $3.2 million, up nearly 180% from the previous corresponding period. The company also declared a fully franked interim dividend of 1 cent per share, reinforcing its robust cash flow position and shareholder focus.

EZZ’s rapid growth has been supported by several strategic developments, including FDA approval for select products and the signing of multi-year international distribution deals. Notably, EZZ secured a three-year supply agreement worth over A$21 million with ROFA Enterprises for Southeast Asian markets and entered a partnership with Pinehills to deliver its products to China and Vietnam. These agreements significantly expand the company’s global reach and revenue base. In addition, EZZ maintains a healthy financial profile with no debt and over A$19 million in cash reserves, allowing it to fund expansion initiatives without relying on external financing.

However, the company’s consistent profitability, growing dividend, scalable business model, and international growth strategy make it a compelling option for investors seeking exposure to the health and wellness sector. As it continues to expand its footprint across major global markets, EZZ is well-positioned to sustain its upward momentum in the years ahead.

 

GTN Limited (ASX: GTN)

GTN Limited (ASX: GTN) is a global provider of broadcast media advertising services, specialising in integrated traffic and information reports used by commercial radio and TV stations. The company operates in Australia, the UK, Canada, and Brazil, making it one of the few ASX-listed media companies with a global footprint. In the first half of FY2025, GTN reported a revenue of A$96.7 million, a modest increase of 2% year-on-year, and achieved a net profit after tax of A$4.9 million, up 11% from the previous period. The company declared an interim unfranked dividend of 2.47 cents per share and announced a share buyback program, reflecting its consistent cash generation and shareholder-focused approach.

With a current share price of around A$0.63 and a market capitalisation of approximately A$103 million, GTN remains a solid performer among ASX-listed penny stocks in 2025. Its steady earnings and conservative balance sheet have helped it maintain investor confidence, even during periods of advertising market uncertainty. GTN’s recurring revenue model, long-term client contracts, and diversified geographic operations provide a level of stability uncommon among micro-cap media stocks. However, the business remains sensitive to broader economic cycles that impact advertising budgets, and limited growth in traditional radio markets poses ongoing strategic challenges.

 

IVE Group (ASX: IGL)

IVE Group (ASX: IGL) is one of Australia’s largest diversified marketing, communications, and print services companies, serving corporate and retail clients across multiple sectors. The business delivers integrated solutions including creative services, data analytics, print and distribution, retail display, and logistics. In the first half of FY2025, IVE reported revenue of A$510 million, maintaining its position from the previous year, while increasing EBITDA to A$74.1 million, a 12.6% improvement due to cost efficiencies and operational scale. The company’s net profit after tax surged to A$27.1 million, nearly doubling from the prior period. It declared a fully franked interim dividend of 9.5 cents per share, offering a dividend yield of over 6.3%, one of the highest among ASX-listed small caps.

With its current share price trading around A$2.90, IVE has a market capitalisation of approximately A$440 million. The company’s financial strength has been further demonstrated through ongoing share buybacks and strong free cash flow generation. IVE’s recent acquisitions, including JacPak, have expanded its reach and vertical integration across the marketing supply chain. While revenue remains cyclical and can be impacted by shifts in corporate advertising spend, IVE’s broad service portfolio, recurring contracts, and solid margins make it a relatively defensive stock within the print and marketing sector.

 

Bisalloy Steel Group (ASX: BIS)

Bisalloy Steel Group (ASX: BIS) is a specialist manufacturer of high-strength, quenched and tempered steel plates used in the mining, defence, construction, and energy sectors. Based in New South Wales, the company is Australia’s only manufacturer of these specialised steel products and has a strong export presence in Southeast Asia, the Middle East, and the United States. As of July 2025, Bisalloy’s share price is trading between A$4.03 and A$4.15, giving it a market capitalisation of around A$190 to A$197 million. In its most recent financials, the company reported revenue of approximately A$147 million and a net profit of A$16.2 million, delivering earnings per share of approximately A$0.28 to A$0.30, with a P/E ratio of around 12x.

Bisalloy is also a high-yield stock, offering an annual dividend of A$0.33 per share, fully franked, equating to a yield of around 7.8%. This attractive yield, combined with strong profitability and low debt, has made Bisalloy a popular income stock among small-cap investors. The company continues to benefit from steady demand in defence and mining infrastructure, with long-standing relationships and certification in military-grade steel applications. However, like many industrial businesses, Bisalloy is exposed to fluctuations in global steel prices, input costs, and geopolitical trade disruptions. Despite these risks, its niche market dominance, export strength, and shareholder returns position it as a top-performing small-cap stock in 2025.

 

The Risks of Penny Stock Investing

Investing in penny stocks can be appealing due to their low entry price and potential for high returns, but it also comes with elevated risk. These stocks are typically issued by small-cap companies with limited market recognition and lower trading volumes, which can lead to significant price volatility. Even small news events or investor sentiment shifts can cause sharp movements in share prices. Liquidity is another concern; penny stocks often have fewer buyers and sellers, making it harder to exit a position quickly without affecting the market price.

Many of these companies are still in their growth phase and may lack a consistent revenue stream or long-term profitability. Financial reporting may be limited, and analyst coverage is often minimal, which means investors must rely on their due diligence. In some cases, businesses may rely heavily on one market, product, or contract, increasing operational risk. For these reasons, while penny stocks offer upside potential, they require a strong risk appetite and a disciplined investment approach.

 

Conclusion: Is Investing in Penny Stocks Right for You?

In 2025, several ASX penny stocks have shown they can deliver strong returns, with companies like Alfabs Australia, EZZ Life Science, and Bisalloy Steel standing out for their solid performance and growth. These stocks have demonstrated solid earnings growth, successful expansion, and, in some cases, regular dividend payouts, uncommon for small caps. They can be a valuable part of an investment strategy aimed at high growth.

However, penny stocks are not suitable for every investor. Their volatility and speculative nature mean they should only make up a small portion of a diversified portfolio. Investors need to be comfortable with price fluctuations and be willing to monitor their investments closely. If you have the time to research thoroughly and the tolerance for short-term risk in pursuit of long-term gain, penny stocks can be a rewarding opportunity. Otherwise, sticking to larger, more stable companies may provide more consistent and predictable returns.

 

What are the Best ASX Stocks to invest in right now?

Check our buy/sell tips

 

FAQs

• What are penny stocks?

  Penny stocks are shares of small companies that typically trade for less than $5 per share. They can offer high potential returns, but they are also highly volatile and carry significant risks.

• How can I invest in ASX penny stocks?

  Investing in ASX penny stocks can be done through a brokerage account. Ensure you do thorough research and consider your risk tolerance before investing.

• Are penny stocks suitable for long-term investing?

  Penny stocks are typically not ideal for long-term investing due to their volatility. However, they may present opportunities for short-term gains if managed correctly.

• Can penny stocks recover from market downturns?

  While some penny stocks can recover from downturns, many fail to do so. It depends on the underlying fundamentals of the company and market conditions.

• What should I look for in a penny stock before investing?

  Before investing in penny stocks, look for companies with solid fundamentals, a clear growth strategy, and an established market position. Always be cautious of speculative and unproven stocks.