Think big. Start small.
That’s the philosophy behind many of the biggest success stories in the share market. While blue-chip giants dominate headlines, savvy investors know that penny shares—yes, those often-overlooked stocks trading under $1—can be hidden gems in disguise.

Now, let’s be clear: high-risk stocks like these aren’t for the faint of heart. But with risk comes the possibility of explosive returns—growth penny stocks have historically outpaced larger peers during bullish cycles. As we move through 2025, rising innovation, improving balance sheets, and underappreciated earnings are making certain cheap ASX stocks highly attractive.

We’ve filtered through the noise to bring you three small cap stocks on the ASX that offer a powerful mix of upside potential, improving fundamentals, and niche market leadership.

1. EZZ Life Science Holdings (ASX: EZZ)

Biotech meets booming beauty demand

 Business Snapshot:

Industry: Health, wellness, and skincare

Markets: Australia, New Zealand, China

FY24 Revenue: $66.4 million (+78% YoY)

Free Cash Flow FY24: $5.73 million (up from $3.9M FY23)

Dividend Yield: 2% (fully franked)

PE Ratio: 8.4

🧪 What’s Driving Growth?

The self-care and beauty industry has exploded post-COVID, and EZZ has ridden the wave with its genomics-based skincare products and nutritional supplements. Its exclusive rights to distribute EAORON in ANZ and aggressive expansion into China give it a competitive edge.

Management has made clear their focus on margin growth, capital-light expansion, and digital-first product launches—perfect for a lean, fast-moving player in the personal health space.

Why It’s Undervalued

Trading at a PE of just 8.4, EZZ Life Science is significantly cheaper than other healthcare players. That makes it one of the best penny stocks ASX investors should monitor.

Final Take:

With surging revenue, cash flow growth, and international distribution strategies, EZZ isn’t just a pretty face in the skincare world—it’s a serious contender among Australian small caps. If you’re looking for growth penny stocks with a solid base and scalable business model, EZZ is hard to ignore.

2. LaserBond Ltd (ASX: LBL)

Engineering solutions with staying power

 Business Snapshot:

Industry: Industrial technology (surface engineering)

FY24 Revenue: $42 million (up from $22 million in FY20)

Net Profit: $3.5 million

Dividend Yield: 2.25%

PE Ratio: 15

 What’s Driving Growth?

LaserBond builds durability into critical components for the mining, manufacturing, and energy sectors—industries with zero tolerance for downtime. Its patented LED laser cladding technology reduces machine wear, helping clients cut replacement costs and reduce environmental waste.

The company has global ambitions, with ongoing expansion efforts into India and the U.S., and has shifted its capital expenditure toward IP and facility development, not asset-heavy operations.

 Innovation and IP-Led Moat

Few ASX mining companies or engineering firms own the kind of proprietary tech that LaserBond does. With customers in recurring maintenance cycles, LBL benefits from repeat business and high margins.

 Final Take:

LaserBond might not have the flashiest stock chart, but it has something even better—consistency, innovation, and a track record of compounding growth. It’s one of those cheap ASX stocks that reward patient investors. As demand rises in resource-heavy sectors, LBL is well-positioned for long-term success.

GTN Ltd (ASX: GTN)

Turning traffic into cash flow

 Business Snapshot:

Industry: Broadcast and radio advertising (traffic-based)

FY24 Revenue: $184.23 million

Net Profit: $5.6 million (+51% YoY)

Dividend Yield: 6.5%

PE Ratio: 19.5x

Price-to-Sales: 0.6x

 What’s Driving Growth?

GTN delivers live traffic updates via radio in exchange for advertising airtime, creating a unique low-cost, high-margin revenue stream. As people return to office commutes post-pandemic, radio listenership and traffic data usage have rebounded sharply.

It recently acquired KLMSA, broadening its national reach in the commercial and defense infrastructure space—aligning with Australia’s booming public infrastructure pipeline.

Financial Strength

With zero debt and strong operating cash flows, GTN is exceptionally well-positioned in a volatile advertising market. The high dividend yield is supported by real earnings, not aggressive borrowing—a rare trait among high risk stocks.

Final Take:

GTN’s business model may sound old-school, but it works—and throws off serious income. If you’re hunting for small cap stocks with both growth and yield, GTN delivers both, quietly but powerfully.

 Why These Penny Stocks Matter in FY26

The Australian economy is navigating tighter monetary policy, shifting commodity cycles, and new waves of tech disruption. In this environment, cheap ASX stocks with real earnings, differentiated business models, and access to capital can offer attractive risk-adjusted returns.

Whether you’re looking to bet on the best penny stocks ASX, diversify into resource sector stocks, or gain exposure to overlooked aussie stocks, companies like EZZ, LaserBond, and GTN deserve a spot on your radar.

They may be penny shares—but their potential is anything but small.

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