One of the lures of penny stock investing is the ability to control large numbers of shares with relatively little money. And if stocks that are literally trading for pennies on the dollar only move a nickel or dime higher, substantial profits can be made.

Yet more often than not -- much more, in fact -- investors lose most of their money because penny stocks many times are simply "story stocks." They have a good-sounding premise behind them, but little in the way of actual sales, let alone profits. The pink sheets are where the pump-and-dump schemers thrive.

Price alone shouldn't be a factor in an investment decision, since buying Berkshire Hathaway at nearly $330,000 a share (or its B class stock at $219) is probably a safer bet than some fly-by-night operation trading at $0.07 per share. Here are three low-priced businesses -- with products that customers actually buy -- that are reasonably priced under $20 a share. And while not risk-free, they make a better investment than most any penny stock.

Stacks of pennies on a rising stock chart

Image source: Getty Images.

Ready to start firing on all cylinders

Fuel cells might seem so last-decade because the potential of this revolutionary energy technology always seems to be just on the horizon, but never really materializes in any great way. 

Bloom Energy (NYSE:BE) is symptomatic of that, as its fortunes rise and fall based on the rebates, tax credits, and financial incentives state and federal governments bestow on fuel cells. But third-quarter earnings offered investors some fuel for hope. Bloom's number of "acceptances" of its 100-kilowatt fuel cell units -- or when one of those energy servers are installed and operating at full power -- hit a record 302 this quarter, up 47% from last year. Free cash flow (FCF) also stands at nearly $116 million year to date, double last year's cash generation, and my Motley Fool colleague Rich Smith says it is on track to produce as much as $150 million in FCF this year.

Bloom Energy's customer base includes companies like AT&T, Home Depot, and 23 other Fortune 100 companies that use the fuel cells as a primary power source or for backup. The rolling blackouts in California have heightened the interest in having reliable power separate from the grid and the aging utilities that provide electricity.

Bloom is undoubtedly a risky energy stock, but it's priced at under $7 a share. An investor looking for a low-priced stock with potential might want to take a look here for a small stake.

Navigating a difficult path

Biotech Collegium Pharmaceutical (NASDAQ:COLL) is another small-cap stock whose earnings don't look so good on the surface. But by digging deeper into what is to come, investors can discover the promise of future growth.

Collegium missed top- and bottom-line estimates from Wall Street, but its abuse-deterrent Xtampza ER opioid painkiller continues to find a foothold as the number of prescriptions grew to over 120,000 in the third quarter, up 44% year over year and generating revenue of $26.5 million. 

More important for the future of the biotech, starting Jan. 1 Xtampza will become the exclusive extended-release oxycodone for more than 35 million patients through national accounts like CVS Health (NYSE: CVS), potentially making it the most-prescribed ER oxycodone.

Other therapies like another of Collegium's opioids, Nucynta, are declining as doctors become leery of prescribing it. But the company has other national accounts beyond CVS that it has won, though it is unable to name them at this time. 

Biotech stocks are always volatile, and one targeted to the opioid market -- when the nation believes it is in the midst of an opioid crisis -- is a tricky balancing act. But producing abuse-resistant formulations is key, and Collegium Pharmaceutical seems as if it should benefit.

Serving a contentious segment 

Sportsman's Warehouse (NASDAQ:SPWH) primarily serves the hunting and shooting-sports category that is coming under investor pressure these days. Not only have gun sales fallen dramatically over the past few years, but retailers are also starting to balk at carrying certain guns -- or, in the case of Dick's Sporting Goods (NYSE:DKS), any guns at all. Dick's is contemplating doing away with the hunting category from all of its stores and recently started selling off its Field & Stream outlets.

Sportsman's Warehouse picked up a handful of those storefronts to renew its expansion program as its turnaround takes hold. Sales grew 4% in the second quarter as comparable-store sales rose 1.7% from the year-ago period.

With Walmart and Kroger now refusing to carry certain rifles and ammunition, and American Outdoor Brands running away from the firearms market by splitting off from its Smith & Wesson brand (Vista Outdoor sold off its own firearms business), the shooting-sports market is being narrowed down to more-specific channels.

Which ought to suit Sportsman's Warehouse just fine. While there are several larger operators in the space, such as Bass Pro Shops and Cabela's, Sportsman's Warehouse is the David to their Goliath and ought to benefit from the normalizing gun-buying market.