By: Simply wall.st

Amid cautious sentiment in Gulf markets, penny stocks—typically lower-priced shares of smaller companies—continue to present potential growth opportunities for investors focused on fundamentals. A recent screening identified 82 such stocks in the Middle East, with three illustrative examples highlighted below.

Phoenix Group (ADX:PHX) – A UAE-based company providing crypto and cloud mining services internationally, with a market capitalization of AED 6.04 billion. It recently expanded into Ethiopia with a hydropower-backed mining facility. While revenue is forecast to grow, the company is currently unprofitable, with increasing net losses and negative operating cash flow, though its short-term assets cover liabilities.

Loras Holding (IBSE:LRSHO) – A diversified Turkish conglomerate operating in food, machinery, and real estate, with a market cap of TRY 3.23 billion. The company has shown resilience, significantly reducing its net loss in Q3 2025 and generating solid revenue. It maintains a stable financial position with strong operating cash flow coverage of debt, but exhibits low Return on Equity and high share price volatility.

Millennium Food Tech Limited Partnership (TASE:MIFT) – An Israeli investment partnership focused on food technology, with a small market cap of ₪10.49 million. The company is pre-revenue and has seen earnings decline sharply. However, it is debt-free, has a sufficient cash runway, and its short-term assets exceed all liabilities.

The analysis underscores that while selected penny stocks may offer value based on financial health and strategic positioning, they often come with higher risks, including volatility, profitability challenges, and in some cases, inexperienced management. Investors are advised to conduct thorough due diligence tailored to their financial objectives.