In May 2022, it was reported that Warren Buffett went on a “shopping spree.” It’s not surprising that the legendary investor has been taking advantage of recent market conditions. Be it large-capitalization stocks or potential multibagger penny stocks, there seems to be ample value-buying opportunities.
Having said that, I must mention that it’s unrealistic to expect multi-fold returns in weeks or even few months in penny stocks like we saw during the rally since March 2020. Those were unique conditions.
However, there are some multibagger penny stocks that are worth considering with an investment horizon of 12-24 months. During this period, multi-fold returns from these stocks seems like a possibility.
My focus is on penny stocks that already have decent fundamentals. Investors will not lose their night sleep by holding these stocks.
Importantly, a small portion of an investor’s portfolio should be allocated to penny stocks. In an uncertain macro-economic environment, it makes sense to be overweight safer, large-cap stocks.
But for the riskier part of a well-diversified portfolio, let’s talk about seven potential multibagger penny stocks.
|UEC||Uranium Energy Corp.||$3.38|
Tilray Brands (
The Federal level legalization of cannabis seems to be taking longer than expected. However, after a deep correction, Tilray Brands (NASDAQ:TLRY) seems attractive.
Tilray has been strengthening its presence through acquisitions. The company has made inroads into key markets like the U.S. and several countries in Europe. Tilray has also reaffirmed the guidance for revenue of $4.0 billion by 2024.
This seems realistic if regulatory headwinds wane. The U.S. market could hit $57 billion by 2030, and more if cannabis is legalized.
It’s also worth noting that Tilray has strong presence in recreational as well as medicinal cannabis. Recently, the company expanded its medicinal cannabis offering in the U.K. With focus on evidence-backed medicines, the long-term outlook seems positive.
From current levels of $3.59, TLRY stock has the potential to deliver multi-fold returns over the next 18-24 months.
Oil has witnessed some correction from highs with recession fears. However, considering the geopolitical risk premium in oil prices, a big correction seems unlikely.
Among energy penny stocks, Transocean (NYSE:RIG) seems like a top pick. The stock has corrected in the recent past ,and this presents a good accumulation opportunity.
I am bullish on RIG stock for two reasons. First and foremost, with higher oil prices, day-rates for rigs have been trending higher. With new contracts, the company’s EBITDA margin and cash flow potential is likely to improve.
Furthermore, Transocean still has 12 cold-stacked rigs. If market conditions remain positive, these rigs are likely to be contracted in the next few quarters. This provides revenue upside visibility.
It’s also worth noting that Transocean has a robust order backlog of $6.1 billion. With a front-end-loaded backlog, there is a clear avenue to more revenue.
With expectations of strong cash flows, Transocean also targets debt reduction of $3 billion over the next few years. Overall, RIG stock looks undervalued and poised for value creation in the medium-term.
New Gold (
Even with aggressive rate hikes, I remain bullish on gold. One reason is that real interest rates remain negative. Further, the possibility of recession and high geopolitical tensions are positive catalysts for gold.
As an overview, the company is wholly Canada-focused with gold, silver and copper reserves, and has $326 million in cash and equivalents. The company also has $376 million in undrawn credit facility. Therefore, there is ample flexibility to pursue aggressive growth. As a matter of fact, the company’s expects sustained upside in gold production through 2027.
If gold trends higher in the next few years, there is the possibility for strong cash flow upside. For Q1 2022, the company reported $66 million in operating cash flows. This already implies an annualized OCF potential of over $260 million.
Overall, NGD stock is worth considering at current levels with a 18-24-month investment horizon.
Mullen Automotive (
Mullen Automotive (NASDAQ:MULN) stock has crashed by 90% over a 12-month period. However, it seems that there is a pipeline of good news, and MULN stock is worth buying at current levels.
Mullen has already reported positive results from the company’s solid-state polymer battery. The company has also received $275 million in additional funding. With an existing cash buffer of $61 million, the company is well positioned to invest in product development.
In March 2022, the company had also disclosed that an order has been received from a Fortune 500 company for vans. While there has been no further update, it’s a potential catalyst in the next few months.
It’s worth noting that Mullen has filed for 130 patents in 24 countries for its Mullen FIVE EV crossover. The focus of the company is on innovation. If the progress continues in the right direction, returns can be multi-folds.
Riot Blockchain (
When there is blood on the streets, it’s the best time to but a stock or investment theme. This holds true for Bitcoin (BTC-USD) and cryptocurrency stocks. Of course, I would avoid a big plunge. However, if sentiments reverse, several cryptocurrencies and crypto stocks can deliver multi-fold returns.
Riot Blockchain (NASDAQ:RIOT) is therefore in my list of multibagger penny stocks to buy (even if I’m fudging the definition a bit, with the stock slightly over $5). The Bitcoin miner has plunged by 75% in the last six months. Considering the company’s mining expansion plans, it’s a good time to buy.
To put things into perspective, Riot has a current hashing capacity of 4.6EH/s. However, with deployment of miners, the company expects to increase the hashing capacity to 12.6EH/s by January 2023. This would imply multi-fold growth in the number of Bitcoin mined in the next few quarters.
In the near-term, a significant compression in EBITDA margin is likely. However, this factor is discounted in the big correction. With over $100 million of cash in addition to digital assets, Riot seems positioned to navigate the challenging times.
Electric vehicle stocks, in general, have seen deep corrections recently. Chip shortages and inflation concerns have been some factors. But I believe that these temporary headwinds present a good buying opportunity among electric vehicle stocks.
Arrival (NASDAQ:ARVL) can be among the potential multibagger penny stocks to consider from the EV sector. After a correction of 78% in six months, there is likely to be some respite.
It’s true that Arrival has been behind schedule and that’s a key reason for the correction. However, it finally seems that the company is closer to production. This has the potential to boost the stock price.
Arrival expects to commence U.K. production of saleable buses in the second half of 2022. Additionally, Arrival expects van production to begin in Bicester in Q3 202 and in Charlotte in Q4 2022. Overall, 400 to 600 vans are expected to be produced in 2022.
With a unique micro-factory approach, production commencement and a order backlog of 143,000 vehicles, I am bullish on ARVL stock.
Uranium Energy (
As a leading holder of uranium resources in North America, Uranium Energy (NYSE:UEC) stock is worth buying. The stock has been trading sideways or lower in the last six months. However, it seems that a breakout on the upside is imminent.
Europe is looking for ways to reduce its dependence on Russia for energy. Nuclear power is one way to reduce this energy dependence. It’s likely that the demand for uranium will remain strong in the next decade, and Uranium Energy is positioned to benefit.
It’s worth noting that the company has $127 million in cash and liquid assets. With a zero-debt balance sheet, there is flexibility for aggressive growth. Recently, the company acquired Uranium One for a cash consideration of $112 million.
The company already has 5 million lbs in physical uranium reserves. Additionally, the mine is production ready with a potential of 6.8 million lbs on an annual basis.
With a positive industry outlook and a strong resource base, UEC stock is one of the likely multibagger penny stocks.
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.
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.