The risk with penny stocks is significant. If the business can take off, the stock can mint millionaires. However, there are more misses than hits. Having said that, it’s important to consider some exposure to penny stocks if the investment objective is massive wealth creation. In my view, there are several potential 10-bagger penny stocks to consider at current levels.
The idea is to screen non-speculative penny stocks that represent business with decent fundamentals. Further, there are few specific triggers that can spark a massive rally. This column focuses on these impending catalysts for multibagger returns.
In the euphoria of 2021, there were penny stocks that delivered 10-bagger returns in a matter of months. I would, however. be conservative, but I believe that the stories discussed can be 10-baggers in the next five years. Of course, if specific business catalysts play out, the expected returns can come within 24 to 36 months.
Let’s discuss the reasons to be bullish.
Bitfarms (BITF)
In my view, Bitfarms (NASDAQ:BITF) stock can deliver 10-bagger returns in 24 months. However, on a conservative basis, these returns are likely in the next five years.
Bitfarms is a Bitcoin (BTC-USD) miner and the Company’s outlook depends on the cryptocurrency surging higher. There seem to be several catalysts for a Bitcoin rally. The possibility of a Bitcoin exchange traded fund can trigger meaningful upside. Further, Bitcoin halving is due in 2024 and historical instances point to a big rally for the digital asset after the halving event.
Bitfarms has been steady increasing its mining capacity and the company is a low-cost miner. Further, financial flexibility is high with a total liquidity buffer of $65 million. Bitfarms also expects to be debt-free by Feb. 2024.
Standard Chartered believes that Bitcoin can touch $120,000 by the end of next year. If this scenario holds true, BITF stock will be the quickest 10-bagger in the list of penny stocks discussed.
Tilray Brands (TLRY)
Tilray Brands (NASDAQ:TLRY) is another massively undervalued penny stock that holds 10-bagger returns potential. If there was a federal level cannabis legalization scenario today, I would bet on 5x returns in the next few months. However, even if legalization is delayed, TLRY stock is poised for multibagger returns.
In the last few quarters, Tilray Brands has focused on diversification. With multiple acquisitions, the company is now the fifth largest craft beer brewer in the United States. The craft beer market is expected to grow at a CAGR of 7.2% through 2030. The segment is therefore attractive for Tilray and will support overall growth.
Further, with presence in the United States, the company has established a strong strategic infrastructure. This will help in pursuing aggressive growth in a federal level cannabis legalization scenario.
For Q1 2024, Tilray reported healthy revenue growth of 15% on a year-on-year basis to $177 million. The company has further consolidated on its leading cannabis market share position in Canada. Further, international cannabis revenue increased by 37%. With multiple positives, I am bullish on TLRY stock.
Solid Power (SLDP)
I believe that Solid Power (NASDAQ:SLDP) is the best emerging name among companies pursuing commercialization of solid-state batteries. SLDP stock has disappointed, but I would not hesitate in accumulating at current levels for potential 10-bagger returns.
One reason to like Solid Power is the fact that Ford (NYSE:F) and BMW (OTCMKTS:BMWYY) are the company’s automotive partners. In Dec. 2022, the company licensed its “cell design and manufacturing processes to the BMW Group to allow for parallel research and development activities.”
Further, the company has continued to execute its “joint development agreements and further extended” its agreement with Ford. These partnerships will help in accelerating the process towards commercialization of solid-state batteries.
It’s worth noting that Solid Power has commenced large-scale production of EV cells. The company is targeting to deliver A-sample EV cells to partners in 2023 for validation testing. This is another important milestone and positive results can translate into a big rally for SLDP stock.
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.
