Penny stocks on the dip are infamous for their high risk, often marked by low trading volumes, minimal pricing and shaky fundamental and financial conditions. These elements make their price movements far more volatile than their large-cap counterparts. However, for the savvy investor, penny stocks can present a pathway to substantial returns with a relatively modest initial investment.
When building a penny stock portfolio, carefully evaluating a company’s operational potential and long-term viability is key. While many penny stocks inherently carry speculative value, avoiding “pump and dump” schemes requires a thorough assessment of the practicality and market demand for a company’s products, as well as its ability to sustain growth.
Despite their speculative nature, here are three penny stocks to buy on the dip that stand out due to their promising operational prospects. Their pricing is nearly ideal, considering how quickly you can amass shares on the cheap and could ultimately 10X your investment.
Desktop Metal (DM)
A reverse split is rarely seen as a bullish indicator, but for 3D printing stock Desktop Metal (NYSE:DM), it could signal the start of a significant turnaround. The company implemented a 1-for-10 reverse split at the beginning of June, and since then, its prospects have markedly improved, with per-share pricing surging 32% this week alone. A series of positive developments may be driving this potential resurgence.
Notably, Desktop Metal has recently expanded its jewelry production offerings to include platinum 3D printing, in collaboration with metals science firm Legor Alloys. Platinum printing has historically been challenging due to the metal’s high hardness and melting point. However, recent technological advancements promise to enable “all-new, once-impossible designs.” Desktop Metal plans to showcase these innovations later this month at a 3D printing industry event, making it a stock worth watching closely.
The company also plans to soon unveil a range of improved industrial applications, including those targeting sectors like aerospace and healthcare.
The Metals Company (TMC)
In late April, I examined The Metals Company’s (NASDAQ:TMC) potential among penny stocks, noting the addition of Steve Jurvetson, renowned for his roles at SpaceX and Tesla (NASDAQ:TSLA), to their board. I also highlighted the company’s high burn rate as a potential obstacle, given the substantial upfront capital required for deep-sea metals mining and the lengthy exploratory and development phases before revenue generation.
However, recent developments suggest a promising turnaround. In late May, The Metals Company announced a significant breakthrough — the first successful extraction of battery-grade nickel from deep-sea sources. Independent third-party evaluations confirmed that the nickel extracted from the Pacific Ocean could be processed into nickel sulfate, a crucial component in battery manufacturing.
Company forecasts indicate that their undersea resources could potentially supply the material needs of up to 280 million electric vehicles, which is equivalent to the current number of vehicles on U.S. roads. Analysts predict a break-even point by next year or 2026, positioning The Metals Company as a compelling near-term investment among penny stocks. This mitigates much of the concern around cash flow that I previously highlighted.
Bridger Aerospace (BAER)
Bridger Aerospace (NASDAQ:BAER) is a relatively new player in the penny stock market, having listed in early 2023 and now trading nearly 50% below its post-SPAC merger price. Despite this drop, Bridger Aerospace appears to have a promising future.
Specializing in aerial firefighting, Bridger Aerospace operates a fleet of aircraft that assist in combating rural and wilderness fires—an industry that is both expansive and diverse. To understand Bridger’s market potential, consider California’s budget for the 2022-2023 fiscal year, which allocated $3.3 billion to firefighting efforts, including aerial suppression. Given the increasing frequency and severity of wildfires, funding for these efforts is likely to grow.
While Bridger’s profits remain modest, the company reported record revenue and income in its latest financial statement. Additionally, its fleet achieved record utilization levels as more government agencies, both domestic and international, sought its services. Despite its small size, Bridger Aerospace stands on solid financial ground with a compelling value proposition in an essential industry.
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, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
