Penny stocks generated plenty of publicity of late. Several meme stock surges and various catalysts can take companies with very low valuations much higher quickly. Accordingly, it should be no surprise to many that plenty of short-term traders and those looking for big wins in a short time target such penny stocks for big gains.

Such a strategy is often sought because such gains are possible. However, as with any high-risk, high-upside bet, the downside risk with such plays can be enormous. Investors looking at penny stocks across the board will likely find that most trend toward zero over time. However, a few big winners can, in theory, make up for the losses one will see in most positions that lose value.

Instead of throwing darts at a board, I’ve tried to find three penny stocks with key catalysts that I think have the potential to surge and provide the kind of returns some speculators are looking for. These stocks are on my watch list now, but I will be interested in following them in the future.

Curaleaf (CURLF)

Curaleaf Holdings (OTCMKTS:CURLF) has been on a gradual uptrend amid an increasingly positive industry outlook. A key multi-state cannabis operator, many traders believe the potential exists for a sharp rally higher tied to cannabis legalization over time. As regulatory hurdles ease and U.S. election uncertainty eases, it’s certainly possible we could be heading into a period of big-time volatility for Curaleaf and its peers.

The recent reclassification of cannabis as a Schedule III drug and expansion in 17 U.S. states and 15 countries globally position Curaleaf well for accelerated growth if these trends continue on a federal level.

Curaleaf recently launched new hemp-derived THC products and an e-commerce site, aiming to lead in safety and quality standards in the hemp market. Products include edibles and beverages under Select and Zero Proof brands, available on TheHempCompany.com. Boris Jordan, executive chairman, sees this as a strategic move to enhance Curaleaf’s retail footprint.

Jordan emphasized expanding brands into widespread distribution and supporting unified cannabinoid regulations. CEO Matt Darin highlighted the company’s commitment to quality and plans for third-party brand offerings on its new e-commerce platform.

Surge Battery Metals (NILIF)

Surge Battery Metals (OTCMKTS:NILIF) is listed among the top 50 mining companies on the TSX Venture Exchange for 2024. CEO Reimer thanked the exchange and highlighted the company’s progress with the Northern Nevada Lithium Project.

Surge Battery Metals advanced its 2024 drilling at Nevada North Lithium Project, completing four of eight planned holes. The company extended mineralized clay 1 kilometer east-west and 1.2 kilometer south. Initial results revealed thicker clay zones, with samples from NNL-021 and NNL-022 undergoing analysis by ALS Global.

CEO Greg Reimer reported that 2022 and 2023 drilling revealed clay units extending west and thickening south and east. Initial observations suggest lower clays share characteristics with previously observed high-grade upper clays, indicating potential high-grade mineralization. He anticipates results to enhance the company’s geologic model.

Red Cat Holdings (RCAT)

In a world of increasing geopolitical uncertainty, picking stocks that can thrive in uncertain times can provide investors with a big upside. One such stock in the penny stock realm is Red Cat Holdings (NASDAQ:RCAT).

This company is a key drone maker, focusing on providing unmanned aircraft and associated systems to key governments and private buyers. Notably, the company’s Teal 2 drone is widely used by the U.S. Department of Defense and remains among the best in class in terms of its capabilities in various weather environments.

We’re all hoping that less geopolitical unrest will occur in the future rather than more. However, preparing for uncertainties and having some positions in companies that can benefit from an increasingly turbulent time makes sense. In today’s environment, Red Cat is performing well, with staggering 88% revenue growth over the past year.

These fundamentals could continue to improve as the company’s high-margin software sales grow. For those seeking a small-cap stock (valued at around $85 million at the time of writing) with a big upside, this would be among my top picks.

On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.

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

On the date of publication, Chris MacDonald 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.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.