In general, portfolio stocks are from the blue-chip space along with high-quality growth stocks. On the other hand, penny stocks aren’t largely a trading option for the majority of investors. However, there are emerging businesses that can make it big if a few industry or company specific catalysts are triggered. For that, investors need to hold some penny stocks with patience. Of course, the risk is high, but a small allocation can do wonders for the portfolio if the idea clicks.
The focus of this column is on seven quality penny stocks to buy for millionaire-maker potential. I believe that these penny stocks represent companies with good fundamentals. I would not lose sleep even if I had to hold these penny stock names for the next 36 months.
Further, if the business moves in the right direction, it’s likely that these penny stocks will deliver 10-bagger returns within the investment horizon. Let’s discuss the reasons to be bullish on these potential multibagger ideas.
Standard Lithium logo or icon on website page, Illustrative Editorial
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Standard Lithium (NYSE:SLI) is possibly the most undervalued lithium story to buy. At a market valuation of $335 million, SLI stock looks like an easy multibagger over the next three years. The depressed in SLI stock is largely on the back of a sharp correction in lithium this year. However, the long-term outlook is positive for lithium considering the impending demand from EVs.
Specific to Standard Lithium, the reason to be bullish is a game changing asset. In Arkansas, the Company has drilled one of the highest lithium grade brine. The asset has a base case net present value of $4.5 billion. Of course, this is not the only project and underscores my view that SLI stock is massively undervalued.
I believe that a key catalyst for a big rally would be financing the project construction. Once that is achieved and lithium trends higher, SLI stock is likely to skyrocket.
Bitfarms (BITF)
Bitcoin and crypto mining farm. Big data center. High tech server computers at work. Bitfarms (BITF) mines crypto.
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Bitfarms (NASDAQ:BITF) has already been in a massive rally mode with an upside of 483% for year-to-date. However, it’s worth noting that the rally was from oversold levels. BITF stock remains attractive and can be a potential 10-bagger from current levels if Bitcoin continues to surge in the next few years.
A strong balance sheet is the first reason to like Bitfarms. As of September 2023, the company reported cash and digital assets of $73 million. The recent fund raising of $44 million adds to the cash buffer.
With a strong cash profile, Bitfarms is positioned for aggressive mining capacity expansion. To put things into perspective, the company’s mining capacity as of November was 6.3EH/s. Capacity is likely to increase to 17EH/s by the second half of 2024.
With nearly tripling of capacity, Bitfarms is positioned for strong revenue and cash flow upside. If Bitcoin trades at new all-time highs next year, BITF stock is likely to be a quick 10-bagger.
Tilray Brands (TLRY)
Close view of Tilray (TLRY) logo on a smart phone. Tilray specializes in cannabis research, cultivation, processing and distribution. TLRY stock
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I have maintained that Tilray Brands (NASDAQ:TLRY) is massively undervalued. Assuming that cannabis was to be legalized at federal level, TLRY stock can deliver 10-bagger returns within a few quarters. Even if legalization is delayed, Tilray has opportunities for growth and value creation.
The first point in the bull thesis is diversification. Tilray, through acquisitions, is the fifth largest craft beer brewer in the United States. With the craft beer market expected to grow at a CAGR of 7.2% through 2030, the segment is likely to create incremental value.
At the same time, there is positive news on the financial front. For Q1 2024, Tilray reported international cannabis revenue growth of 37%. This was supported by the medicinal cannabis business in Europe. With operating leverage and cost cutting, Tilray expects to generate positive adjusted free cash flow for fiscal year 2024. Therefore, with multiple positive developments, TLRY stock looks attractive.
Plug Power (PLUG)
Plug Power logo on computer screen. PLUG stock.
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I believe that Plug Power (NASDAQ:PLUG) is the riskiest bet among the list of stocks discussed. Without doubt, the hydrogen economy will get bigger in the coming years. This would imply positive industry tailwinds. However, PLUG stock has plunged during the year and currently trades at $3.90.
The reasons include the company’s reliance on hydrogen subsidies, financing aggressive growth, and market doubts on execution capabilities. If Plug Power can overcome these challenges, the stock is an easy 10-bagger from current levels.
I must mention that Plug Power has chalked up ambitious plans. The company is targeting revenue of $20 billion by 2030 with a gross margin of 35%. The markets are, however, focused on near term financing needs and financial targets.
Another point worth noting is that PLUG stock has a short interest of 28%. I believe that a massive short-squeeze rally is impending and the stock can quickly double from oversold levels.
Solid Power (SLDP)
Smartphone with logo of American battery company Solid Power Inc. on screen in front of business website. Focus on center-left of phone display.
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Solid Power (NASDAQ:SLDP) stock has been depressed for an extended period. I however believe that a reversal is impending in 2024. Further, if business developments remain positive, the stock is poised for multibagger returns.
Last month, Solid Power reported Q3 2023 results and announced that the company has made first A-1 EV cell deliveries to BMW (OTCMKTS:BMWYY) to formally enter automotive qualification.
It’s worth mentioning here that in December 2022, Solid Power licensed its cell design and technology to BMW for parallel research and development. This can potentially help in accelerating the commercialization of solid-state batteries. Further, with partners like Ford (NYSE:F) and BMW, the Company is far from being just a speculative bet.
Of course, with commercialization unlikely before 2026, SLDP stock price action has been depressed. I, however, expect a strong reversal if the automotive qualification process delivers positive results.
Yatra Online (YTRA)
Plane travel. Man standing in airport waiting for flight. travel stocks to buy
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Yatra Online (NASDAQ:YTRA) stock trades at a market valuation of around $98 million. I would bet on 10-bagger returns from this online travel booking company from India. There are multiple reasons to be bullish.
First, the Indian travel and tourism market has a robust growth outlook. With a swelling middle-class and growing corporate sector, Yatra has multiple avenues to pursue growth.
To put things into perspective, Yatra has a customer base of 800 large corporations with an addressable employee base of more than seven million. This is just for the business-to-business segment. Yatra Online also has end-to-end travel solutions for business-to-consumer.
For Q2 2024, Yatra reported 14% year-on-year (YOY) revenue growth with an EBITDA margin of 3.6%. I expect revenue growth to accelerate coupled with margin expansion as tourism gains traction after the pandemic. Yatra is well positioned to benefit from positive industry tailwinds.
Blade Air Mobility (BLDE)
The Blade Air Mobility (BLDE) logo displayed on a smartphone screen.
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Blade Air Mobility (NASDAQ:BLDE) is another interesting pick from the micro-cap penny stocks space. The company is a provider of air transportation alternatives around congested ground routes in the United States.
The first point to note is that for Q3 2023, Blade Air reported robust revenue growth of 56% on a YOY basis. Further, the flight margin was healthy at 22%. With an asset-light model and strong demand, I expect robust revenue growth to sustain coupled with improvement in EBITDA margin.
I must add here that the MediMobility Organ Transport segment is the largest dedicated air transporter of human organs for transplant in the United States. This segment has been a key growth driver. My point is that being in a business of necessity, it’s likely that the segment will continue to boost growth.
Besides healthcare, the company has partnerships with corporations in the hospitality, technology, fashion, beauty, transportation, and entertainment segments. Therefore, there is a big addressable market and potential for multi-fold revenue growth.
On the date of publication, Faisal Humayun did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.
