Penny stocks are typically among the highest-risk, highest-upside bets an investor can make. Due to their low share prices, and often tiny market capitalizations, one positive development or catalyst can really affect these companies’ valuations, providing impressive returns for those willing to dig among the thousands of such options to find the best risk/reward picks.

For many investors, these stocks are also appealing due to their alignment with sectors showing current growth trends, likely to persist even in a softening economy. Additionally, while many are not well-equipped to handle an extended period of elevated interest rates, some are. These three are among the top penny stocks I’ve got on my radar right now.

Of course, it’s essential to remember that penny stocks are often highly volatile due to lower trading volume, and the advice of investing only what you can afford to lose is crucial. However, if your portfolio can accommodate the potential for substantial returns, here are three options to explore.

The companies discussed below have the potential for substantial long-term returns, benefiting from ongoing maturing trends. With patience and capital, these investments are at least worth putting on the watch list right now.

Surge Battery Metals Inc. (NILIF)

In October, Surge Battery Metals Inc. (OTCMKTS:NILIF) announced two agreements to acquire 25% of the mineral rights (amounting to 880 acres) in the North Nevada Lithium Project. The first agreement, effective from Sept. 14, involves Surge purchasing a 21.25% interest in Mineral Rights under the Private Lands. This acquisition includes a $50,000 deposit, issuance of 1,250,000 shares of Surge’s common stock upon regulatory approval, and a $150,000 payment if a Surface Agreement is entered into. 

In addition to that, the company received regulatory approval for an option agreement with M3 Metals Corp, enabling Surge to potentially acquire a 20% interest in M3M Lands with $250,000, 2,000,000 common shares, and a $250,000 exploration investment. An additional 10% interest could be secured for $500,000 and 1,000,000 more common shares. 

These deposits could be among the most resource-rich in the area, and are located near other high-density mines. Thus, investors who want to bet on surging lithium prices over the long-term (due to the electrification trend) have a very high-beta option to choose from in Surge Battery Metals.

Lithium Americas (LAC)

Sticking with this trend for a second, Lithium Americas (NYSE:LAC) is among the larger and more established lithium miners, with some of the best deposits and potential in this space. With a market capitalization of more than $1 billion, some may not necessarily qualify this stock in the “penny stock” bucket. However, the company’s relatively low per-share price, and its decline from its peak, suggest Lithium Americas could move like a penny stocking the future.

Lithium Americas recently split its Argentine assets into a new entity, Lithium Americas Argentina, allowing the company to concentrate on its Thacker Pass lithium project. The company’s Nevada-based Thacker Pass holds vast potential with 16.1 million tons of battery-grade lithium carbonate equivalent (LCE) and $650 million backing from General Motors (NYSE:GM). This underscores its role in EV battery material supply.

The U.S. government is considering a “record” $1 billion loan for Lithium Americas’ Thacker Pass mine to support lithium production for electric vehicles (EVs). LAC stock surged on this significant development, which could make Thacker Pass North America’s largest lithium source and reduce reliance on Chinese supplies.

Although the metals and mining industry commonly faces cash flow fluctuations, this company maintained a low debt-to-equity ratio of 0.16. It’s a strong choice for those interested in the battery revolution due to its robust financial position.

Terran Orbital Corp. (LLAP)

Terran Orbital (NYSE:LLAP) manufactures small satellites for the aerospace and defense industry. Despite stock price volatility, it boasts a substantial $2.6 billion backlog, plans to convert 80% to revenue, and ramp up production to 1,000 satellites annually by 2025. Though it has dilution risk and thin margins, comparable space companies trade at high valuations. 

Analysts predict EBITDA positivity in 2025. With shares at all-time lows, Terran Orbital presents an attractive risk-reward opportunity, with a consensus price target implying 526% one-year upside potential.

Additionally, Terran presents substantial upside potential. Its $2.6 billion backlog far surpasses its market cap, even factoring in dilution. Comparatively, paying 2.6 times its projected 2025 earnings seems appealing. Risks are present, with competition and time for backlog conversion. Terran benefits from experienced leadership and prestigious customers like NASA and the Department of Defense, with Lockheed as a subsidiary following strategic investment.

On the date of publication, Chris MacDonald 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.