ASX Penny Stocks To Watch: Archer Materials And 2 More Promising Picks

As Australian shares face a dip, driven by a downturn in gold and other precious metals, investors are exploring diverse opportunities to navigate the shifting market landscape. Penny stocks, often associated with smaller or newer companies, present unique growth potential at lower price points despite their somewhat outdated label. In this article, we'll explore three penny stocks that stand out for their financial strength and potential for long-term success.

Top 10 Penny Stocks In Australia

Click here to see the full list of 421 stocks from our ASX Penny Stocks screener.

Let's explore several standout options from the results in the screener.

Archer Materials (ASX:AXE)

Simply Wall St Financial Health Rating: ★★★★★★

Overview: Archer Materials Limited is an Australian technology company focused on developing and commercializing semiconductor devices and sensors for applications in quantum computing, medical diagnostics, TMR sensors, and lab-on-a-chip technologies, with a market cap of A$94.29 million.

Operations: Archer Materials generates revenue primarily from its Materials Technology Research and Development segment, which accounts for A$2.06 million.

Market Cap: A$94.29M

Archer Materials Limited, with a market cap of A$94.29 million, is focused on developing semiconductor technologies but remains pre-revenue with minimal earnings from its research segment (A$2.06 million). The company reported a net loss of A$6.97 million for the year ended June 30, 2025, up from A$4.8 million the previous year. Despite being debt-free and having sufficient cash runway for over three years, Archer's unprofitability and declining revenue highlight risks typical of penny stocks in emerging tech sectors. Its experienced board may provide some stability amid high volatility and ongoing financial challenges.

• Navigate through the intricacies of Archer Materials with our comprehensive balance sheet health report here.
• Assess Archer Materials' previous results with our detailed historical performance reports.

Michael Hill International (ASX:MHJ)

Simply Wall St Financial Health Rating: ★★★★☆☆

Overview: Michael Hill International Limited is a retailer specializing in the sale of jewellery and related services across Australia, New Zealand, and Canada, with a market cap of A$148.16 million.

Operations: The company's revenue segment includes sales from jewellery and related services amounting to A$645.31 million.

Market Cap: A$148.16M

Michael Hill International, with a market cap of A$148.16 million, has transitioned to profitability, reporting a net income of A$2.1 million for the year ending June 29, 2025. Despite this positive shift, its earnings have been impacted by large one-off losses and its interest payments are not well covered by EBIT (2.7x). The company trades below estimated fair value and maintains satisfactory debt levels with operating cash flow covering debt effectively at 105.7%. Recent board changes include the appointment of Andrea Slingsby as an independent non-executive director, bringing significant governance expertise to the company.

• Click here to discover the nuances of Michael Hill International with our detailed analytical financial health report.
• Evaluate Michael Hill International's prospects by accessing our earnings growth report.

VEEM (ASX:VEE)

Simply Wall St Financial Health Rating: ★★★★★★

Overview: VEEM Ltd is an Australian company that designs, manufactures, and sells marine propulsion and stabilization systems, with a market cap of A$216.05 million.

Operations: The company generates revenue of A$68.62 million from its Machinery & Industrial Equipment segment.

Market Cap: A$216.05M

VEEM Ltd, with a market cap of A$216.05 million, is navigating challenges as it reported a decline in sales to A$68.62 million and net income to A$3.02 million for the year ending June 30, 2025. Despite this, VEEM's short-term assets exceed both its short- and long-term liabilities, indicating solid liquidity management. The company's debt levels are satisfactory with interest well-covered by EBIT at 3.4 times coverage. Recent strategic moves include a follow-on equity offering raising A$14 million and securing significant defence contracts with Northrop Grumman and ASC, positioning VEEM for potential growth within the defence sector amidst board changes enhancing its leadership team.

• Take a closer look at VEEM's potential here in our financial health report.
• Gain insights into VEEM's outlook and expected performance with our report on the company's earnings estimates.

Make It Happen

• Click through to start exploring the rest of the 418 ASX Penny Stocks now.
• Seeking Other Investments? Diversify your portfolio with solid dividend payers offering reliable income streams to weather potential market turbulence.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com