Even with a relatively small portfolio allocation, penny stocks can have a big impact in terms of total portfolio returns. The reason is that when some of the hottest penny stocks surge, the rally is not limited to 20% or 30%. Instead, penny stocks can deliver multibagger returns in a matter of weeks.
Having said that, the outlook for 2024 remains mixed. The good news is that potential rate cuts will support asset markets. On the other hand, growth and geopolitical tensions are headwinds. I would therefore keep my expectations relatively muted for penny stocks.
This column discusses seven of the hottest penny stocks that are likely to double in 2024. It’s important to note that the rally in these penny stocks will be backed by fundamental developments and not speculation.
Let’s discuss the business factors that are likely to be potential catalysts for a big rally.
IAMGOLD (IAG)
IAMGOLD (NYSE:IAG) is among the hottest penny stocks to buy considering the recent upside in gold price. The gold miner has positive business fundamentals and with higher realized gold price, the growth outlook is robust. With IAG stock remaining sideways for the last 12 months, a big breakout seems imminent. I would be betting on IAG stock doubling in 2024.
Being a penny stock, the first point to note is that IAMGOLD reported a liquidity buffer of $1 billion as of Q3 2023. This provides flexibility to make aggressive investments in an attractive project pipeline that includes Côté, Gosselin, Nelligan and Chibougamau district.
Another major positive is the fact that Côté gold mine is 90% complete. With first gold in Q1 2024, IAMGOLD is positioned for healthy production growth in the coming quarters. This comes at a time when higher realized price will translate into EBITDA margin expansion. This is likely to translate into IAG stock upside. Further, if gold remains bullish, potential initiation of dividends is likely this year.
Curaleaf Holdings (CURLF)
Curaleaf Holdings (OTCMKTS:CURLF) is among the best cannabis penny stocks to buy. It’s worth noting that after a sharp downside, CURLF stock has trended higher by 27% in the last six months. I expect the positive momentum to sustain on the back of strong business fundamentals. In my view, CURLF stock can potentially trade in double digits before the end of the year.
For Q3 2023, Curaleaf reported revenue growth of 2% on a year-on-year basis to $333 million. While revenue growth was muted, the Company reported healthy adjusted EBITDA margin of 23%. Further, Curaleaf has indicated that its “bullish for a strong end to 2023 and an exciting 2024.” This possibly signals growth acceleration and will be a catalyst for stock upside.
I would also like to mention that Curaleaf is present in 17 states in the U.S. Further, the Company is making aggressive investments for international expansion. For Q3 2023, international revenue increased by 120% on a year-on-year basis to $16 million. Europe is likely to be a game-changer as Curaleaf focuses on evidence-backed medicinal cannabis.
Polestar Automotive (PSNY)
Polestar Automotive (NASDAQ:PSNY) seems like an interesting bet among penny electric vehicle stocks. PSNY stock is undervalued after a correction of 60% in 12 months. With new product launches and focus on cost cutting, I am bullish on the stock trending higher this year.
In terms of new product launches, the delivery of Polestar 4 has already commenced towards the end of last year. The model is positioned between Polestar 2 and 3 in terms of size and price. Further, the launch of Polestar 5 is also due this year. The new EVs are likely to boost deliveries growth.
PSNY stock has also suffered due to sustained cash burn. However, the Company has initiated cost cutting measures and expects cash flow break-even in 2025. If EBITDA losses narrow in the coming quarters, PSNY stock is likely to skyrocket.
I must add here that in the second half of 2025, Polestar plans to add a manufacturing facility in South Korea. This will be for the domestic markets as well as for exports to North America. Margins will also be supported on the back of operating leverage.
Blink Charging (BLNK)
Blink Charging (NASDAQ:BLNK) is another penny stock that’s likely to fire in 2024. The EV charging infrastructure Company has continued to report stellar growth. Further, there are hopes of EBITDA level break-even towards the end of 2024. This is a big catalyst for BLNK stock surging higher.
For Q3 2023, Blink reported revenue growth of 152% on a year-on-year basis to $43.4 million. It’s worth noting that service revenue increased by 119% to $6.7 million. As the number of charging stations installed increases, service revenue will continue to swell. Another growth trigger is the Company’s DC fast-chargers. For the first nine months of 2023, the Company installed 1,435 fast-chargers with $27 million in recognized revenue.
From a growth perspective, the U.S. markets needs an investment of $100 billion by 2040. Further, Blink is expanding in Europe, which is another big market. With a big addressable market and operating leverage, the outlook is optimistic for BLNK stock. Besides operating leverage, the increased adoption of L2 chargers in the U.S. will support margin expansion.
Bitfarms (BITF)
Bitfarms (NASDAQ:BITF) stock has gone ballistic with an upside of 550% in the last 12 months. However, the rally for this Bitcoin (BTC-USD) miner was from deeply oversold levels and I expect further upside. Of course, the basic assumption is that the trend remains bullish for Bitcoin.
Specific to Bitfarms, aggressive expansion plans will translate into robust revenue and cash flow upside. As of December 2023, Bitfarms reported hash rate capacity of 6.5EH/s. On a year-on-year basis, capacity swelled by 44%.
By Q2 2024, the Company expects to boost capacity to 12EH/s. Further, if Bitfarms exercises the option to buy additional miners, capacity will swell to 17EH/s in the second half of the year. This is likely to translate into stellar growth.
It’s worth noting that as of Q3 2023, Bitfarms reported direct cost of Bitcoin mining at $16,900. Given the rally in Bitcoin, I expect robust EBITDA margin expansion. As financial flexibility increases, Bitfarms will be positioned for its next leg of expansion.
Nordic American Tankers (NAT)
Nordic American Tankers (NYSE:NAT) is a dividend paying penny stock that’s trading at an attractive forward price-earnings ratio of 8.1. Considering the valuations and a dividend yield of 5.59%, I expect high total returns from NAT stock this year.
As an overview, Nordic American is an owner and operator of crude oil tankers. For Q3 2023, the Company reported average time charter equivalent rate of $31,325 per day per ship. For the same period, the operating cost per day per ship was $9,000. Therefore, TCE rates are attractive and has translated into healthy cash flows.
I believe that tanker rates are likely to remain strong through 2024. There are two reasons for this view. First, geopolitical risk premium with concerns related to Red Sea supply disruption. Further, potential rate cuts in 2024 that will support global growth and potential upside in demand for oil. I would therefore not be surprised if NAT stock has a strong rally this year.
Blade Air Mobility (BLDE)
Blade Air Mobility (NASDAQ:BLDE) is a micro-cap penny stock that looks promising at current levels of $3.14. BLDE stock has remained sideways in the last 12 months. However, there are several positive business developments and I expect a significant rally.
As an overview, Blade is a provider of urban air mobility alternatives to congested ground transportation for passengers and human organs for transplant. The Company is on a high growth trajectory with Q3 2023 revenue increasing by 56% on a year-on-year basis to $71.4 million. It was also the first quarter of positive adjusted EBITDA and free cash flows.
It’s worth noting that the Company’s MediMobility Organ Transport business revenue and EBITDA growth of 65% and 123.8% respectively. Considering the evergreen nature of the organ transplantation industry, this segment is likely to witness sustained growth.
An important point to note is that Blade does not own aircraft. The asset-light model is likely to ensure that margin expansion sustains with operating leverage. Given the growth and margin expectations, BLDE stock looks undervalued.
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.
