High-risk penny stocks are known for their volatility. They often feature low trading volumes, minimal prices and unstable financial and fundamental standings. This makes them more volatile than larger-cap stocks. However, for savvy investors, high-risk penny stocks can provide a pathway to substantial returns on a relatively small initial investment.
When building a high-risk penny stock portfolio, carefully assess a company’s operational prospects and long-term viability. While many high-risk penny stocks have inherently speculative value propositions, avoiding potential “pump and dump” schemes is tricky if you get caught up in investor enthusiasm. This requires thoroughly evaluating the practicality and market demand for a company’s products and its capacity for sustained growth.
Despite their speculative nature, the following three high-risk penny stocks have operational prospects that overshadow their lower liquidity and shakier standings. They are priced to buy and offer the potential to multiply your investment tenfold if market conditions align favorably.
Allbirds (BIRD)
I’m a big fan of my Allbirds (NASDAQ:BIRD) shoes, so seeing them trade well below $1 is not a surprise. That increases its standing among high-risk penny stocks in light of its potential to explode in the coming months.
First, Allbirds has strength in the U.S. sneaker market, holding 2% of the national market share, which seems slim but significant considering its small size and steep competition like Nike (NYSE:NKE). Shares suffer largely due to misaligned efforts between executives, poor product testing and similar operational struggles.
However, Allbirds has a unique value proposition—sustainable sneakers—and the name recognition that comes with widespread market penetration, which counts former President Obama as a fan. Priced well below $1, I think there’s little hope of an actual turnaround for Allbirds in its current state. Too much went wrong quickly, and the company couldn’t maintain initial momentum. Still, with its name recognition and quality product lines, Allbirds seems ripe for acquisition by a more prominent firm. This could send shares soaring.
Ginkgo Bioworks (DNA)
Ginkgo Bioworks (NYSE:DNA) may sound like something out of sci-fi, but this high-risk penny stock and biotech firm is at the forefront of healthcare innovation. Specializing in “synthetic biology,” Ginkgo Bioworks designs custom biological organisms for various applications. While this might evoke images of cloning labs or Jurassic Park, the reality is less dramatic yet equally groundbreaking.
Ginkgo Bioworks develops tailor-made biologic solutions, such as novel proteins for testing, enzymes to enhance biotech applications and advanced fermentation platforms for beer brewing. The company’s broad range of applications secures its place in the biotech industry. Other firms use its technology for their therapeutic development and testing processes.
Recently, this high-risk penny stock’s prospects are uncertain. Management attributes this to the expiration of COVID testing contracts and current economic pressures. Still, despite potential short-term challenges, Ginkgo Bioworks is a unique high-risk penny stock with potential upside.
Village Farms (VFF)
Village Farms (NASDAQ:VFF) presents a unique investment opportunity among high-risk penny stocks. It offers exposure to both the agriculture and cannabis markets. Through its primary subsidiary, Village Farms operates advanced agricultural greenhouses and cultivates tomatoes, cucumbers and other produce using state-of-the-art facilities.
Their commitment to clean energy and sustainable farming practices makes Village Farms appealing to investors seeking to capitalize on the global shift toward eco-friendly and sustainable agriculture.
In addition to its success in vegetable farming, Village Farms owns Pure Sunfarms, a subsidiary that produces various cannabis products, including edibles. This diversification in revenue streams, coupled with innovative farming techniques, positions Village Farms as a standout option among vertical farming stocks. Furthermore, the company is actively lobbying for Canadian cannabis tax reform. This aims to enhance production, increase cash flow and create jobs while combating illegal trade. Successful tax reform would significantly boost Village Farms’ profitability, making it an even more compelling investment.
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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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.