Penny stock rallies can be ferocious. At the beginning of 2023, Carvana (NYSE:CVNA) stock was trading below $5. Currently, CVNA stock trades at $83. Of course, not all penny stocks to buy will be 10x or 20x in quick time.

However, ample opportunities can double or triple in a few quarters. The important point to note is that it’s difficult to find an entry point during a penny stock rally. Investors, therefore, need to identify potential undervalued opportunities and hold with patience. When the time comes, the upside will more than compensate for the time correction.

This column focuses on three penny stocks to buy that can blast higher anytime in the next few months. Once the rally commences, these penny stocks might not take long to deliver 2x or 3x returns. The important point is that these ideas are non-speculative, and the upside potential is likely to be backed by positive business catalysts.

Bitfarms (BITF)

Bitcoin (BTC-USD) has skyrocketed with halving due to the possibility of expansionary monetary policies. There are some attractive Bitcoin miners to buy, and among penny stocks, Bitfarms (NASDAQ:BITF) looks undervalued. It’s worth noting that BITF stock has surged by 195% in the last 12 months. However, considering the fundamentals and expansion plans, the best part of the rally is due.

From a fundamental perspective, Bitfarms reported a liquidity buffer of $118 million as of Q4 2023. Further, it has a zero-debt balance sheet that provides high financial flexibility. Financing aggressive hash rate capacity expansion is unlikely to be a concern.

Regarding growth plans, Bitfarms reported a hash rate capacity of 6.5EH/s as of February. The company plans to boost capacity to 21EH/s by the end of the year. If this big expansion is associated with sustained upside in Bitcoin, stellar revenue growth and cash flow upside are in the cards.

IAMGOLD (IAG)

Gold has surged above $2,100 an ounce in a strong breakout rally. I am bullish on the precious metal with potential rate cuts impending. It’s, therefore, a good time to consider some quality penny stocks from the gold mining space.

IAMGOLD (NYSE:IAG) is an undervalued name to consider. IAG stock has trended higher by 22% in the last six months—however, the stock trades at an attractive forward price-earnings ratio of 21. If gold remains bullish, I expect IAG stock to go ballistic.

I must add that the upside of the gold price is not the only reason to be bullish. IAMGOLD expects to deliver significant production growth in 2024 as the Cote mine asset commences production. The company is, therefore, likely to benefit from a higher realized price coupled with higher production. Free cash flows will likely swell significantly during the year.

Another positive is that IAMGOLD ended Q4 2023 with a strong liquidity buffer of $754.1 million. The company has pursued acquisitions to boost its reserves, and with high financial flexibility, further inorganic growth is likely.

Archer Aviation (ACHR)

Archer Aviation (NYSE:ACHR) stock has been in a correction mode in the last two quarters. This is a good time to accumulate with the company on track to commercialize eVTOL aircraft in 2025.

Among the various positives, Archer ended Q4 2023 with a liquidity buffer of $625 million. This provides ample flexibility for investments as it prepares for commercial deliveries in the near year. It’s worth noting that Archer’s volume manufacturing capacity is due for completion this year and can produce 650 aircraft annually.

Another note is that Archer has a potential order book of $3.5 billion. This is on the assumption that one eVTOL aircraft is priced at $5 million. With global expansion plans, I expect the order backlog to swell further. The company has partnered with local players to expand to the UAE and India in 2026. I also believe there will be bigger orders from the U.S. Air Force in the coming years.

With the company close to U.S. Federal Aviation Authority certification, ACHR stock should skyrocket this year.

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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.