Investors are attracted to penny stocks because of the small amount of capital needed for a large amount of exposure and upside potential. On the other hand, penny stocks carry a lot of risk for investors. They are some of the most volatile stocks in the market. It’s not uncommon to see over 50% swings in just a single day.
Penny stocks are best in moderation, as a supplementary piece to an overall investment portfolio. This is because of the inherent risk of huge losses that could happen at any time. But, if you can scale a position properly with a penny stock that has tons of momentum, it has the potential of being an extremely profitable investment.
Having some exposure to penny stocks for their growth potential is good, but don’t be too heavily reliant on them. Below are three different hidden gem penny stocks with huge upside potential.
Mullen Automotive (MULN)
Mullen Automotive (NASDAQ:MULN) manufactures and distributes electric vehicles (EVs). Its vehicles include the Mullen Five (a compact SUV), Mullen One and Mullen Campus (both commercial delivery vans).
On May 3, the company announced a 1-for-25 reverse stock split, which will leave the company with fewer, but higher-priced, shares. The will keep Mullen Automotive in compliance with the minimum bid requirement for listing on the Nasdaq.
The stock has recently seen massive trading volume due to increased short interest and retail investor interest. The stock is down more than 80% year to date (YTD). However, the company has received purchase orders for its vans and trucks equaling over $263 million.
Investors aren’t sure whether the company is just another crash-and-burn EV stock or if there is real potential going forward with Mullen Automotive. However, this is definitely a stock to keep an eye on.
Uranium Energy Corp (UEC)
Uranium Energy (NYSE:UEC) is one of the largest North American uranium companies, with operations in Canada, Paraguay and the U.S. The company has some mines that operate conventionally and others that use a more environmentally friendly method called ISR mining. ISR mining allows the uranium underground to be collected with minimal damage to the surrounding land.
The company’s most recent earnings report stated a nearly fourfold increase in total revenue and net income of about $11 million. That’s compared to a loss of $5.5 million a year earlier. Therefore, the company’s financials are clearly moving in the right direction.
Back in October, Uranium Energy struck a deal with Rio Tinto (NYSE:RIO), a mining company, to acquire its developmental stage uranium project located in Saskatchewan, Canada. Uranium Energy gave Rio Tinto $80 million in cash and over 17 million UEC shares in the terms of the agreement.
HUB Cyber Security (HUBC)
HUB Cyber Security (NASDAQ:HUBC) is a cybersecurity company established by veterans of the Israeli Defense Force. The company focuses on the protection of sensitive information for commercial and governmental entities.
In March, the company announced that former Deputy Secretary for the U.S. Department of Defense John C. Rogers joined its advisory board. In the announcement, Hub Cyber Security acknowledged Rogers’ industry expertise and ability to potentially enhance the company’s U.S. market position.
Additionally, on May 4, Hub Cyber Security announced an investment of $16 million by The Lind Partners for research and development purposes. Ideally, this will spark confidence among other fund managers and garner more investments.
HUBC has publicly traded on the Nasdaq for just over two months. It went public via a special purpose acquisition company (SPAC) merger with Mount Rainer Acquisition Corp. The stock is down nearly 60% since it started trading on the Nasdaq.
Once the company becomes more established and garners more investments, HUBC could offer substantial upside potential. Therefore, HUBC may be a great penny stock to add to your portfolio.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Noah Bolton did not have (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.
