Penny stocks can offer tremendous upside for investors who are willing to take on higher risk. While many penny stocks fizzle out, the ones that gain traction can surge 10X or more within a year. As we approach 2024, I believe several compelling penny stocks are sitting at extremely low valuations relative to their growth potential, and getting in now could lead to explosive returns.
In my view, many penny stocks tend to be mispriced because they fly under Wall Street’s radar. However, valuations can skyrocket when these small companies begin to scale rapidly. This creates an opportunity for eagle-eyed investors who spot these minnows before they become whales.
Of course, you have to be comfortable with volatility and the possibility of near-term drawdowns. But for those with high-risk tolerance, penny stocks can turbocharge overall returns. The key is distinguishing the tiny fraction with truly transformative business models and top-notch leadership. That said, below are the three explosive penny stocks that I believe have 10X potential over the next year. I would stress that this potential should not be construed as probably. So, for those looking to make an investment, I recommend keeping expectations realistic.
Spire Global (SPIR)
As infrastructure expands into orbit, space-based companies like Spire Global (NYSE:SPIR) stand to be big winners. This first-mover has rapidly built out a massive constellation of proprietary satellites to provide customers with a unique satellite-to-cloud data service.
Spire captures radio frequency data through its satellites and beams this down to earth, where it is processed by proprietary analytics companies to unlock unique insights for customers. Use cases span weather forecasting, climate monitoring, maritime vessel tracking, aviation analytics, and more. This is only possible due to Spire’s cutting-edge approach of deploying small satellites into low-earth orbit. Traditional satellites situated much farther from Earth do not provide the real-time global coverage needed for these applications.
In its most recent quarter, Spire grew revenue by 37% and added 32 net new customers, expanding its annual recurring revenue to $112.8 million. This momentum reflects surging demand as organizations seek space-based solutions to navigate risks and optimize operations amidst a rapidly-changing world. Spire is ripe to capitalize on its first-mover advantage, in this regard.
Importantly, Spire is moving down the cost curve as its satellite network expands. This allows the firm to generate high margins, while still providing competitive pricing. The company’s gross margins recently climbed to 64%, and Spire anticipates it will produce positive cash flow from operations by Q4 2023. Spire’s efficient business model and recurring revenue profile provide confidence that profitability is within reach. The average Wall Street analyst projects an impresive 281% upside in one year. Thus, I believe 10x upside is certainly in the cards, if Spire continues growing to even half the price it had at its peak.
ClearSign Technologies (CLIR)
Climate change is reshaping business landscapes, as companies adjust to new emission regulations and growing public pressure for sustainability. ClearSign Technologies (NASDAQ:CLIR) provides an innovative solution that allows oil and gas companies (and those in other industries as well) to slash emissions and meet increasingly stringent targets.
ClearSign’s novel burners can reduce NOx and CO emissions by over 80%. This is achieved without using expensive catalysts or ammonia injection. The company’s patented Duplex technology controls combustion via a double flame that stops NOx formation.
Furthermore, regulatory pressures and ESG investors concerned with carbon footprints have validated ClearSign’s offering. In California, where adoption is already occurring, new regulations taking effect over the next few years will force businesses to cut NOx dramatically, or face stiff fines. ClearSign burners provide a cost-effective way for facilities to achieve compliance.
While the 16-employee company is still proving its technology and working to commercialize products, results from recent field tests have been promising. This year, ClearSign booked its first-ever product sales, and aims to have burners installed and operating at multiple sites by the end of the year. This third-party validation can propel adoption. Despite all this progress, CLIR stock trades at just a $39 million market cap today. Analysts put the consensus one-year upside potential for CLIR stock at nearly 500%.
Iris Energy (IREN)
As a pure-play crypto miner, Iris Energy (NASDAQ:IREN) provides direct exposure to Bitcoin (BTC-USD), without investors actually having to own any. While Bitcoin prices can be extremely volatile, crypto miners can still generate profits by turning electricity into coins. The key is securing extremely low-cost power sources.
Iris has done just that at its flagship data center in Texas, locking in advantageous renewables contracts that translates to an average electricity cost of around 1.4 cents per kWh. This allows the company to mint Bitcoin profitably, even with prices trading at these low levels. Iris also operates specialized data centers, ensuring maximum uptime for its specialized mining rigs.
The company is now working to scale up operations from today’s 5.6 exahash to 30 exahash. While this aggressive growth requires dilutive equity financing in the near-term, it positions Iris to significantly grow production as crypto sentiment improves.
Before the Fed’s rate cuts and the upcoming Bitcoin halving takes place, Iris can patiently accumulate Bitcoin in anticipation of the next bull cycle. But make no mistake, as a crypto-focused company, IREN stock remains ultra speculative. The consensus upside potential with this name sits at 323% over the next year.
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, Omor Ibne Ehsan 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.