At the beginning of 2023, Carvana (NYSE:CVNA) stock was trading at $5. A massive rally ensured, and CVNA stock currently trades near $80. It’s the dream of every investor to get a 10-bagger or 20-bagger in a matter of a year. However, not all penny stocks fire.

An important point to note is that the rally in CVNA stock is not purely speculative. While the e-commerce platform for buying and selling used cars faced challenges, financial metrics showed improvement. Without getting into details, the point I want to make is there needs to be one or multiple catalysts backing the rally. Purely speculative upside generally results in a quick correction.

This column focuses on three penny stocks that can rally like Carvana. I would not claim these stocks can 10x in the next 12 months. However, I do see a big rally coming that could surprise investors.

Bitfarms (BITF)

Bitcoin (BTC-USD) has surged to new all-time highs, and there is a view that the crypto is likely to touch $115,000 after the halving event. I am bullish on selected Bitcoin miners for multibagger returns in quick time. Bitfarms (NASDAQ:BITF) is an attractive bet among penny stocks.

It’s interesting to note that Bitfarms has declined by 18% year-to-date. A key reason is the recent $375 million at-the-market equity offering. I, however, believe the negative impact of dilution will be more than offset by the impending growth.

From an expansion perspective, Bitfarms reported a hash rate capacity of 6.5EH/s as of February. The company is targeting capacity of 21EH/s in the second half of 2024. That will translate into healthy revenue growth and cash flow upside.

I must add that Bitfarms has a clean balance sheet. With the recent fundraising, the company is positioned to pursue aggressive expansion in 2025. I would bet on BITF stock delivering at least 5x returns in the next 12 months.

Blade Air Mobility (BLDE)

Blade Air Mobility (NASDAQ:BLDE) trades at an attractive market valuation of $298 million. BLDE stock has trended higher by nearly 30% in the last month. The stock, however, remains undervalued and seems poised for a bigger rally.

An important point to note is that Blade has a unique business model that’s likely to witness strong demand. The company provides air mobility alternatives to the congested ground routes in the United States. However, the business is asset-light, and with operating leverage, it’s likely cash flows will be robust.

Besides the attractive business model, the move toward profitability is another reason to be bullish on BLDE stock. For Q3 2023, Blade Air reported 56% year-on-year growth in revenue to $71.4 million. For the same period, the company achieved adjusted EBITDA profitability of $0.8 million.

It’s worth noting that the company’s organ transport business has been growing at a stellar pace. In Q3 2022, the trailing-12-month revenue from this business was $60 million. For TTM Q3 2023, revenue has surged to $116 million. Therefore, with an attractive business segment, asset-light model and EBITDA margin expansion, BLDE stock is positioned to skyrocket.

Tilray Brands (TLRY)

When Joe Biden began his presidency in 2021, Tilray Brands (NASDAQ:TLRY) stock skyrocketed from under $5 levels to $65. That was in anticipation of a federal-level legalization of cannabis. TLRY stock has, however, trended lower and looks significantly undervalued at $1.7.

I would bet on TLRY stock before the presidential election in November. If there is renewed hope of federal-level legalization, the stock is likely to go ballistic. However, in any scenario, Tilray is worth considering at current levels.

For Q2 2024, Tilray reported record revenue of $194 million, which was higher by 34% on a year-on-year basis. It’s worth noting that international cannabis revenue surged by 55% on the back of higher sales in the medicinal cannabis segment. With operating leverage, Tilray has also guided for positive adjusted free cash flow during the year.

Additionally, Tilray is the fifth largest craft beer brewer in the United States. Its presence in the U.S. also serves as a strategic infrastructure for cannabis business expansion.

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

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.