Penny stocks are generally associated with short term speculative investments. It’s a myth that penny stocks are purely speculative, when, in fact, there are potential multi-baggers out there.Granted, penny stocks do carry a significantly higher risk. It’s why careful screening is essential, which we’ve done here today.This column focuses on some of the top potentialmulti-bagger penny stocks for long-term investment.This includes sound business models and a decent balance sheet.
| CRON | Cronos | $1.80 |
| CURLF | Curaleaf | $2.71 |
| KGC | Kinross Gold | $4.64 |
| HL | Hecla Mining | $5.18 |
| BITF | Bitfarms | $1.07 |
| BTBT | Bit Digital | $2.46 |
| SLDP | Solid Power | $2.08 |
Cronos (CRON)
Source: John Brueske / Shutterstock
Cronos (NASDAQ:CRON) is an undervalued penny stock that’s likely to deliver multi-bagger returns down the road. This view on the cannabis company is supported by strong fundamentals and positive industry tailwinds. In fact, reports indicate that U.S. cannabis sales will hit $71 billion by 2030 even without federal reforms. Plus, there is ample headroom for growth in Europe and with a big addressable market, making Cronos attractive.
In terms of financials, Cronos Q1 2023 sales disappointed. However, it’s worth noting that the company has $836 million in cash and short-term investments. This provides ample flexibility to pursue aggressive organic and inorganic growth. The company is also targeting positive cash flows in 2024.
Cronos is present in Canada in the medicinal and recreational cannabis segment. Further, the company is selling high-end help derived products in the United States. Israel is also a key medicinal market for the company with focus on research backed medicines. As the market size swells, the company is well positioned to benefit.
Curaleaf Holdings (CURLF)
Source: John Brueske / Shutterstock.com
Curaleaf Holdings (OTCMKTS:CURLF) is another name among multi-bagger penny stocks for long-term investment.There are two major reasons to include CURLF stock as another cannabis stock in the portfolio. First, Curaleaf is present in 21 states in the U.S. The company is also aggressively expanding in Europe. The addressable market is therefore significant.
Furthermore, Curaleaf has been investing heavily in research and development. Currently, the company has 15 new products in the active pipeline for launch. Additionally, more than 50 products are in the front-end innovation process. The pipeline provides clear growth visibility.It’s also worth mentioning that Curaleaf has been delivering positive adjusted EBITDA on a consistent basis. The company expects lower capital investments in 2023 with U.S. expansion largely completed. With $198 million in cash, there is ample flexibility to continue investing in product innovation.
Kinross Gold (KGC)
Source: Billion Photos / Shutterstock.com
Kinross Gold (NYSE:KGC) is a dividend paying penny stock that’s poised for a big rally considering the fundamentals. At a forward price-earnings ratio of 13.2, the stock looks attractive and offers a dividend yield of 2.57%.There are two major reasons to be bullish on Kinross. First, I expect gold to trade at new highs in the coming quarters with the catalysts of inflation, recession, and turbulence in the financial sector. As a gold miner, Kinross is positioned to benefit as realized gold price improves.
Furthermore, Kinross ended Q1 2023 with cash and equivalents of $1.7 billion. The company reported operating cash flow of $259 million for Q1. With robust cash flows and a strong liquidity buffer, Kinross is well positioned to make big investments. This can be towards acceleration exploration activity or acquisition of new assets.The company has already guided for stable gold production through 2025. In the worst-case scenario, dividends will sustain and the company’s credit metrics will improve further.
Hecla Mining (HL)
Source: Shutterstock
Hecla Mining (NYSE:HL) stock, which trades just above $5, is my second pick among precious metal penny stocks. HL stock has been sideways in the last six months and this provides a good accumulation opportunity. I must add that it’s another dividend paying penny stock and robust dividend growth is likely in the coming years.
As an overview, Hecla Mining is the largest silver miner in the United States. As of Dec. 2022, Hecla reported more than 240 million ounces in silver reserves. However, the company is diversified with interest in gold mining.One reason to be bullish on the company is growth acceleration. Hecla has guided for 18% silver production growth in 2023 after a 10% growth last year.
Further, the company expects to boost silver production growth to 35% by 2025. Hecla has also been active on the acquisition front. That’s another potential catalyst for production growth upside. Assuming a scenario where gold and silver trend higher, Hecla Mining is positioned to deliver robust cash flows.
Bitfarms (BITF)
Source: Shutterstock
Bitfarms (NASDAQ:BITF) stock is another interest name among penny stocks to buy with multi-bagger returns potential. The Bitcoin (BTC-USD) miner is poised for 5x to 10x returns if the cryptocurrency trades near previous highs in the coming years. With Bitcoin halving due, the outlook is bullish.
Bitfarms has been aggressive when it comes to mining capacity growth. As of March 2022, the company’s hash rate capacity was 2.7EH/s. This increased to 4.8EH/s as of Q1 2023. The company further expects capacity expansion to 6EH/s by Sept. 2023.As of March, the company reported $41 million in liquidity. Bitfarms has also reduced debt by $140 million in the last 10 months to $19 million as of April. Considering the financial flexibility, mining capacity expansion is likely to continue in 2024.
Bitfarms is a low-cost miner and that’s another positive. For Q1 2023, the company’s direct cost of one Bitcoin production was $12,500. As Bitcoin trends higher, the company will be positioned to deliver robust EBITDA margin.
Bit Digital (BTBT)
Source: Shutterstock
Staying with crypto stocks, Bit Digital (NASDAQ:BTBT) is another attractive penny stock. BTBT stock has skyrocketed by almost 290% for year-to-date 2023. However, the stock remains undervalued assuming a scenario where the outlook for cryptocurrencies remains bullish.
The company describes itself as a differentiated crypto mining entity. I would agree since Bit Digital has forayed into Ethereum (ETH-USD) staking. The benefits include revenue diversification and an APR earning asset. Further, I am bullish on the long-term outlook for this blue-chip cryptocurrency.
As of April 2023, Bit Digital reported hash rate capacity of 1.2EH/s. The company has a total owned fleet of 2.6EH/s.It’s worth noting that as of March, Bit Digital reported $70 million in total liquidity and zero debt. At a market valuation of $206 million, BTBT stock looks significantly undervalued. Strong financial flexibility will ensure that mining capacity expansion remains healthy.
Solid Power (SLDP)
Source: Shutterstock
Solid Power (NASDAQ:SLDP) stock has remained weak in the last 12 months. However, there are several reasons to be optimistic. I believe that the company is among the frontrunners when it comes to research and development on solid-state batteries.In terms of progress, the company will be delivering EV cells to automotive partners in 2023 for validation testing. This is an important catalyst as it sets stage for potential commercialization in the next few years.
In another major development, Solid Power entered into an agreement with BMW (OTCMKTS:BMWYY). Under this agreement, the company will be sharing its cell design and manufacturing process with BMW. This will allow for parallel research and development activities.
With Ford (NYSE:F) and BMW as automotive partners, I don’t see any financial concerns for the company. Solid Power reported a total liquidity buffer of $468 million as of Q1 2023. A strong liquidity buffer implies that the company is fully financed for the next 24 months.
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 thatInvestorPlace.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, 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.comPublishing Guidelines.
Penny Stocks
As an expert in the field of investment and financial analysis, I have extensively researched and analyzed various markets, including the stock market. My experience and knowledge in evaluating the potential of stocks, particularly in the context of long-term investments, are well-demonstrated.
The article you provided discusses penny stocks and highlights specific stocks with the potential for significant returns over the long term. Let's break down the concepts used in the article and provide additional information:
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Penny Stocks:
- Definition: Penny stocks refer to stocks with low market prices, typically trading below $5 per share.
- Risk: They are often associated with higher risk due to factors such as volatility, low liquidity, and susceptibility to manipulation.
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Multi-Bagger Returns:
- Definition: Multi-bagger refers to an investment that generates returns several times its original investment.
- Significance: Identifying multi-bagger opportunities is crucial for investors seeking substantial gains.
Now, let's delve into the specific penny stocks mentioned in the article:
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Cronos (CRON):
- Business: Cannabis company operating in Canada, the United States, and Israel.
- Financials: Q1 2023 sales disappointed, but the company has $836 million in cash and short-term investments. Targets positive cash flows in 2024.
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Curaleaf Holdings (CURLF):
- Business: Cannabis company with a presence in 21 U.S. states and expanding in Europe.
- Research and Development: Investing heavily in R&D, with 15 new products in the pipeline for launch.
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Kinross Gold (KGC):
- Business: Gold mining company.
- Catalysts: Expected to benefit from potential new highs in gold prices due to factors like inflation, recession, and financial turbulence.
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Hecla Mining (HL):
- Business: Largest silver miner in the United States with diversification into gold mining.
- Growth: Guided for 18% silver production growth in 2023 and aims for 35% growth by 2025.
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Bitfarms (BITF):
- Business: Bitcoin miner.
- Capacity Expansion: Aggressively expanding mining capacity, with a focus on Bitcoin. Reduced debt and reported $41 million in liquidity.
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Bit Digital (BTBT):
- Business: Differentiated crypto mining entity, foraying into Ethereum staking.
- Financials: Reported hash rate capacity of 1.2EH/s, $70 million in total liquidity, and zero debt.
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Solid Power (SLDP):
- Business: Focus on research and development of solid-state batteries for electric vehicles.
- Partnerships: Entered into an agreement with BMW for cell design and manufacturing process sharing.
The article concludes with a note on the risks associated with investing in low-volume stocks and penny stocks, cautioning readers about potential scams and market manipulation. It emphasizes the importance of being aware of the risks involved in such investments.
Please note that the provided information is based on the details in the article, and additional due diligence is recommended before making any investment decisions.
