It's not hard to see stocks that trade at mere pennies and imagine the types of returns you'd get if shares were to rise to the price of an average candy bar. News can sometimes cause penny stocks to post big gains, and companies in this highly volatile category can even see dramatic valuation swings for seemingly no reason at all. As exciting as that is, penny stocks actually tend to be pretty terrible as investments. 

Whether you're looking for huge growth potential, more conservative value plays, or a risk-to-reward profile somewhere in between, you'll tend to fare much better by seeking companies that are backed by appealing businesses and offer an appropriate degree of visibility into what the future might hold. It's tough to get that with the large majority of penny stocks, so these three Motley Fool contributors have identified three companies that offer much better prospects. Read on to see why they think Baozun (NASDAQ:BZUN)Booking Holdings (NASDAQ:BKNG), and Garmin (NASDAQ:GRMN) could be big winners.

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Image source: Getty Images.

A fast-growing e-commerce leader

Keith Noonan (Baozun): The Chinese tech sector is a great starting point if you're seeking huge returns and are willing to take on the higher degree of risk that comes with that territory. Baozun is an e-commerce stock that offers big long-term upside, and I think its risk-to-reward dynamic is one that is actually very favorable for patient investors -- and certainly better than you're likely to get with the vast majority of penny stocks. 

With a market capitalization of roughly $2 billion and a business that's putting up good results and has a long runway for growth, Baozun still offers investors big growth potential. The company provides customizable e-commerce websites for major Western brands that are looking for a no-hassle way to quickly enter and scale their businesses in China's hot e-commerce market. That's an appealing niche to be operating in -- even if the market is less bullish on Chinese tech stocks than it was a year ago. 

Baozun shares hit a lifetime high of $67 per share last summer but have dipped to the $36 range as China's slowing economic growth and volatility for the country's technology stocks prompted a retreat. Last year growth for the Middle Kingdom's online retail market came in at 24% year over year -- that's a good bit slower than the 32% year-over-year growth that the country's e-commerce market posted in 2017. However, that's also far from being a bad economic backdrop to be operating in, and China still accounted for more than half of the world's e-commerce spending last year.

Investors should expect some bumps in the road, but Baozun's trajectory looks appealing. The company has a leading position in its industry niche, and partnerships with bigger and more powerful Chinese tech and e-commerce platforms including Alibaba's T-Mall, JD.com, and Tencent's WeChat suggest that its business can continue to grow along with the titans of the industry rather than be cannibalized by them.

E-commerce is only going to get bigger, and for investors who are looking to benefit from the rise of online retail or just looking for attractively priced growth stocks, Baozun has the makings of a smart play. Shares trade at roughly 23.5 times this year's expected earnings.

Check out the latest earnings call transcripts for Baozun, Booking Holdings, and Garmin.

One-stop shopping for travelers

Rich Smith (Booking Holdings): You want the opposite of a volatile penny stock to invest in? Are you clever enough to realize that a company's share price doesn't matter, so long as it's earning enough to justify the price? Last question: Are you sitting down?

Because I'm about to recommend a stock that costs more than one thousand dollars a share.

Its name is Booking Holdings, but it's a stock you probably know better as Priceline. Priced at $1,715 per share, it doesn't look cheap on the surface, but with more than $83 a share in earnings, Booking Holdings actually sells for a P/E ratio of just 19.3, and a price-to-free-cash-flow ratio of just 15.8.

(For context, the average stock on the S&P 500 right now costs more than 21 times earnings.)

In other words, Booking Holdings actually is cheap, relative to most other stocks. It's also a whole lot more robust than most other stocks. Over the 22 years since its foundation, Booking Holdings has steadily marched out and snapped up most of its most dangerous competitors, brought them in-house, and incorporated them into its business. Today, with brands ranging from Priceline and Kayak (plane tickets) to Booking.com (hotels) to OpenTable (restaurant reservations) to RentalCars.com (I'll give you three guesses), consumers need look no further than Booking Holdings to find a one-stop shopping destination for just about any need they might encounter when traveling.

And investors need look no further than Booking Holdings to find a better investment than penny stocks. 

Set a new waypoint for your portfolio

Demitri Kalogeropoulos (Garmin): Investors have pushed shares of Garmin up to new highs recently, but they still might be underestimating the growth potential of this impressive business. The consumer electronics specialist just celebrated a third straight year of record sales and improving profitability in 2018, and market share wins in areas stretching from smartwatches to marine GPS navigators demonstrate two important things about the business. First, it has a broad-enough portfolio to take those inevitable sharp consumer demand shifts in stride. The recent stampede away from cheap fitness trackers toward high-functioning smartwatches barely hurt the broader business, after all, while causing huge problems for peer Fitbit.

Second, Garmin's strength isn't confined to just mass-market consumer products. Some of its best growth lately is coming from aviation and marine-based devices, which also happen to carry company-leading profit margins.

These strengths, plus world-class R&D and marketing competencies, have allowed Garmin to grow steadily since 2015 even through crashing demand for automotive GPS devices and value-priced fitness monitors. That flexibility suggests this company has a better shot at producing great long-term returns than most of its consumer electronics peers.