While blue-chip stocks play an essential role in a well-balanced portfolio, investors should always leave room for high-growth stocks to add to gains during bull market cycles. Those who invest in a range of penny stocks with outsized growth potential may see mixed results. That’s largely due to the nature of such companies, in the high-risk, high-reward world of smaller market capitalizations.

Penny stocks, or those that trade for less than $5 per share, or with small market caps and low floats, are higher risk by nature. Many such companies go bust, leaving investors who took on the risk to bear the burden of these losses. Thus, it’s important when considering investing in this space to use a small slice of one’s portfolio. Also, investors should use money they don’t mind losing.

Therefore, even if one or two winners from a group of, say 10, penny stocks provide 10x returns, investors are ahead of the game. The idea is to hold onto these companies until they mature, get bought out, or the thesis changes.

Let’s explore three such penny stocks I’ve got on my buy list right now.

Surge Battery Metals (NILIF)

Surge Battery Metals (OTCMKTS:NILIF) is a lithium mining company unknown to many investors. Previous press releases center around the company’s high-grade lithium clay deposits in Northeastern Nevada.

Also, NILIF owns the rights to a vast plot of land in Nevada, near known lithium deposits. Having garnered investment from other major lithium players, these deposits are increasingly vetted. And, the numbers look solid.

Recent drilling and sampling efforts led to the publication of the maiden mineral resource estimate. That reveals a substantial resource of 4.7 million tones at 2,900 parts per million. It has a high-grade segment of 4.1 million tones at approximately 3,100 parts per million. This would make Surge Battery Metals’ deposit one of the most extensive and highest-grade lithium resources in the U.S.

The company is collaborating with lithium processing expert Dr. Vijay Mehta and Cameco consultants to enhance the lithium extraction process. Spring and summer drilling programs aim to boost resource size and grade. Also, a preliminary economic assessment is planned for late fall. Additionally, expansion efforts with the Bureau of Land Management seek approval for a 250-acre drilling operation.

If the company can fulfill its plans in the coming years, it could be a major player in lithium mining one day.

Nikola Corp. (NKLA)

When it comes to penny stocks with massive upside potential, green energy player Nikola (NASDAQ:NKLA) is one company many investors may not want to touch. That’s partly due to the company’s stark decline in recent years. Shares of the embattled hydrogen and battery truck maker are sinking to the $1 level at the time of writing.

And so, the company is making progress in its goals of becoming a major player in possibly a big industry. Recently, Nikola announced the company delivered 35 hydrogen fuel cell trucks in Q4 and secured $230 million in equity capital, enhancing its R&D efforts.

The company aims to deliver up to 350 hydrogen-powered trucks in 2024, following cost reductions and its first revenue from these vehicles. A minor Q4 loss highlighted the company’s most recent earnings report. But, as the company scales up like it intends, possible profitability could be a few years away.

Finally, it’s unclear whether investors are willing to wait that long for this trend to improve. Personally, I think a $1 per share price is a great entry point. But it may still be too early.

Therefore, this is a more speculative play in a sector with an obscure outlook. So, there’s big long-term upside potential, or more big losses, in store for investors. This is one penny stock I’d only buy in a group. Nevertheless, it’s a company I think could certainly be an interesting risk/reward bet right now.

SpireGlobal (SPIR)

Surging more than 20% after announcing its Q4 2023 results last March 6 is SpireGlobal (NYSE:SPIR). Its recent partnership with Signal Ocean utilizes satellite data for maritime digitalization developments and international security services.

The company prided itself on excellent revenue growth, which reached 34% year over year (YOY). Also, SpireGlobal witnessed improvement on their growth margins which rose from 15% to 65%. The numbers have provided resilience for its stock price, as have key partnerships with various aerospace companies. Utilizing nanosatellites, SPIR monetizes data analytics services. Its business model can be demonstrated with a substantial NASA NOAA contract worth $476 million.

As a data provider leveraging satellite and aircraft data, SPIR could see a significant surge over time, if the market understands its true potential. The company recently collaborated with Nvidia (NASDAQ:NVDA) to enhance AI-driven weather predictions. This deal offers big upside potential to those who believe this company’s services can be monetized over time. Like the other picks on this list, SpireGlobal is certainly a high-risk bet. But it’s one I think is intriguing at current levels.

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Read More: Penny Stocks — How to Profit Without Getting Scammed

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.