Stocks to buy

While some of the top penny stocks to buy carry risk, there are still plenty of opportunities to be found. In fact, today, my focus is on some thrilling penny stocks that investors may want to consider at current levels. I believe that if business developments move in the right direction, these penny stocks could deliver 10x or 20x returns in the next few years.

Investors will clearly remember the euphoric rally in growth and penny stocks after the pandemic driven crash. Without a doubt, sentiments will turn positive in the foreseeable future. The idea is to accumulate quality stocks when valuations are depressed with fear being the dominant market sentiment.

SLDP Solid Power $2.75
TLRY Tilray $2.60
BITF Bitfarms $0.92
PSNY Polestar Automotive $3.39
WDH Waterdrop $2.95
HMY Harmony Gold $4.45
CURLF Curaleaf $2.44

Solid Power (SLDP)

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Solid Power (NASDAQ:SLDP) is one of the most exciting penny stocks to buy considering its solid-state EV battery story. If the company is successful, the potential for that market could be substantial. For now, the stock looks significantly undervalued after a correction of 70% in the last 12 months.

In addition, the company’s electrolyte production facility is on track to be commissioned in Q1 2023. During the year, the company will also be delivering EV cells to automotive partners. Also, towards the end of 2022, Solid Power signed an expanded agreement with BMW (OTCMKTS:BMWYY). The company will be licensing its cell design and manufacturing process to BMW Group. With parallel R&D, there is a strong case for accelerated development of solid-state batteries.

Tilray (TLRY)

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Tilray (NASDAQ:TLRY) is another one of the top penny stocks to buy. However, this is assuming a scenario that cannabis is legalized at the federal level in the U.S. along with legalization across Europe. To give investors a sense of the possible rally, TLRY stock skyrocketed above $60 when President Biden was elected, with hopes of federal legalization.

I would also point out that Tilray has made positive business progress. For Q2 2023, the company reported positive operating and free cash flow. With operating leverage, I expect cash flows to swell in the coming years.

Another reason to like Tilray is a strong presence across the medicinal and recreational cannabis segment. In the recreational cannabis business, Tilray has leadership position in Canada. The company has been expanding presence in Europe in the medicinal cannabis business.

In the United States, Tilray has acquired two brewing companies in the last 12 months. This provides the company with a strong strategic infrastructure. Once cannabis is legalized, healthy growth can be expected.

Bitfarms (BITF)

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Bitcoin (BTC-USD) has been trending higher and it seems that the crypto winter is finally over. Assuming a scenario that Bitcoin trends to new highs in the next 12 to 24 months, there are multibagger stories in the making.

Among penny stocks to buy for aggressive investors, Bitfarms (NASDAQ:BITF) looks attractive. The Bitcoin miner is deeply undervalued and I would not be surprised if the stock delivers 5x or 10x returns.

As of March 2023, Bitfarms reported mining capacity of 4.7EH/s. The company has guided for capacity of 6EH/s by the end of the year. As capacity expands, the company’s digital assets will swell. Another important point to note is that the company’s direct cost of production was $10,000 per Bitcoin in 2022. With Bitcoin trending higher, robust EBITDA margin is likely in 2023 and beyond.

Bitfarms is also a deleveraging story. The company has reduced debt to $23 million in Feb. from highs of $118 million in June 2022. With these positives, the best part of the rally is due for BITF stock.

Polestar Automotive (PSNY)

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Among electric vehicle penny stocks to buy, Polestar Automotive (NASDAQ:PSNY) looks attractive. After a big correction, I expect the stock to bottom out around $3. Let’s first talk about the reasons for the deep correction. First, broader industry sentiments impacted the stock. Furthermore, Polestar Automotive reported significant widening of operating level losses in 2022 as compared to 2021.

However, the widening of losses is due to investment in product development, sales, and marketing. Margins are likely to improve and I would focus on deliveries growth momentum.

For 2022, Polestar reported 80% deliveries growth on a year-on-year basis to 51,491 cars. For the current year, the company has guided for 60% deliveries growth. Therefore, investment in sales and marketing is translating into healthy growth.

It’s also worth noting that Polestar has an attractive line-up of new models. Three new models will be launched through 2026. This is another factor that will ensure healthy deliveries growth. With operating leverage, EBITDA margin is likely to improve.

Waterdrop (WDH)

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As a provider of online insurance and healthcare services in China, Waterdrop (NYSE:WDH) is another exciting penny stock. WDH stock has skyrocketed by 152% in the last six months. However, the stock remains undervalued with significant upside potential.

In terms of growth potential, there is a significant addressable market in China. The pandemic has triggered higher demand for insurance and healthcare services. The company seems well positioned to benefit. As of Dec. 2022, Waterdrop reported 775 insurance products offering in its platform as compared to 536 in Sept. 2022. Diversified product offering is one reason to be bullish on growth.

From a financial perspective, there are two points to note. First, Waterdrop has been reporting positive operating cash flows. Furthermore, the company ended Dec. 2022 with cash and equivalents of $537.1 million, which is 50% of the company’s current market valuation.

Harmony Gold (HMY)

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Gold prices surged over $2,000 an ounce with multiple catalysts. These include turbulence in the financial sector, inflation, and a possible recession. It’s a good time to consider exposure to gold mining stocks.

Among penny stocks to buy, Harmony Gold (NYSE:HMY) looks interesting. HMY stock has surged by 60% in the last six months. Considering the recent rally in gold, I expect the uptrend to sustain. I would be looking at HMY stock tripling in the next 24 months.

As an overview, Harmony Gold has 39.8 million ounces of gold and gold equivalent mineral reserves. The company’s asset base ensures stable production in the coming years. With gold trending higher, free cash flows will swell significantly in 2023.

Upside in cash flows will imply healthy dividend growth and that’s likely to result in stock re-rating. I must also mention that Harmony Gold has strong fundamentals. For the first half of 2023, the company reported net-debt-to-adjusted-EBITDA of 0.6. This provides ample flexibility for aggressive exploration and potential acquisitions to drive growth.

Curaleaf Holdings (CURLF)

Source: Shutterstock

Curaleaf Holdings (OTCMKTS:CURLF) stock is another name among cannabis stocks that can deliver multibagger returns. CURLF stock looks massively undervalued at current levels of $2.50. Assuming a federal level legalization scenario, 10x returns looks realistic from current levels.

It’s worth noting that Curaleaf has presence in 21 states in the U.S. This makes the company well positioned to capitalize in a legalization scenario. Recently, the company acquired Deseret Wellness, the largest cannabis retail operator in Utah for $20 million. Furthermore, Curaleaf has also been expanding presence in Europe, which has a potential addressable market of $229 billion.

Curaleaf has also been investing heavily in research and development. The company generated 18% of Q3 2022 revenue from new products launched in the last 12 months. Additionally, 15 new products are in the active pipeline for launch. As the SKUs increase, revenue growth is likely to accelerate.

Curaleaf has been reporting positive adjusted EBITDA on a consistent basis. With operating leverage, EBITDA margin expansion seems likely in the coming quarters.

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, 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.

Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.

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