A deeper study of the penny stock universe reveals some quality names that are under the radar and undervalued. By quality, I mean good fundamentals and a business that holds potential for growth in the long term. I must add that the investment horizon for penny stocks is limited to a few months or a few quarters. However, there are some that I’d even hold for three to five years. If the business grows, these penny stocks can deliver 10x to 20x returns within this investment horizon.
Let’s discuss seven under-the-radar penny stocks to buy for multibagger returns.
Aker Carbon Capture (AKCCF)
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With a focus on global decarbonization, I am bullish on Aker Carbon Capture (OTCMKTS:AKCCF). As an overview, the company provides products, technology, and solutions within the field of carbon capture.
With the company having a presence in Europe and the United States, the addressable market has been significant through the decade. The U.S. market alone is likely to reach 200 million tons of carbon capture by 2030. An important point to note is that the company has a proven technology with seven carbon capture units being delivered and 60,000 operating hours. The focus for the next few years is therefore on building the order book and accelerating growth.
In addition, as of Q4 2023, Aker Carbon reported a backlog of 2.6 billion Norwegian krone. With the Company targeting to capture 10 million tons of carbon per annum by 2025, I expect to see significant upside in the order book.
Transocean (RIG)
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With global macroeconomic challenges, crude oil has been trading sideways. This has translated into a correction in some of the best energy stocks. I however see this decline as a buying opportunity with potential expansionary monetary policies on the cards. Among the under-the-radar penny stocks from the energy sector, Transocean (NYSE:RIG) looks attractive for multi-bagger returns.
It’s worth noting that RIG stock has declined from 52-week highs of $8.90 to current levels of $4.90. This is a golden opportunity with the company having a quality fleet of ultra-deep water and harsh environment rigs.
An important point to note is that as of December 2023, Transocean reported a healthy order backlog of $9 billion. During last year, the Company added $3.2 billion to the backlog. The current backlog provides clear revenue and cash flow visibility for the next 12 to 18 months.
Further, with expectations of rate cuts in the second half of the year, I expect order intake to accelerate. I must add that with visibility for healthy cash flows, Transocean is looking to deleverage. As credit metrics improve, I expect RIG stock to trend higher.
Curaleaf Holdings (CURLF)
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Among under-the-radar cannabis penny stocks, Curaleaf Holdings (OTCMKTS:CURLF) looks attractive. The stock has surged by 74% in the last six months and trades at $5. I however believe that this is just the beginning of an extended uptrend.
Earlier this month, Curaleaf acquired Can4Med, a pharmaceutical wholesaler specializing in cannabinoid medications in Poland. It’s worth noting that Curaleaf is aggressively expanding in Europe, which is likely to be a key growth catalyst. For Q3 2023, the Company’s international cannabis revenue surged by 120% on a year-on-year basis to $16 million. I expect stellar growth to sustain with a promising outlook for medicinal cannabis in Europe.
Further, Curaleaf has presence in 17 states in the U.S. In a scenario of federal level legalization, I expect CURLF stock to go ballistic. However, even without legalization, the U.S. cannabis market is expected to be worth $71 billion by 2030.
Besides presence in key markets, Curaleaf has been investing significantly in research and development. In 2022, the Company had launched 171 new products. This is another factor that’s likely to create value.
IAMGOLD (GOLD)
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IAMGOLD (NYSE:IAG) stock currently trades at $2.5. Considering the asset potential and the prospects of gold trending higher, I believe that the stock is poised for 10x returns in the next few years.
One reason to like IAMGOLD is its strong fundamentals. As of Q4 2023, the Company reported a liquidity buffer of $754.1 million. Further, operating cash flow for 2023 was $144 million. With high financial flexibility, IAMGOLD is positioned to make aggressive investments toward exploration and potential acquisitions.
The second reason to like IAMGOLD is gold production ramp-up. The Cote gold asset will commence production this year and the incremental impact is likely to be in the range of 220,000 ounces to 290,000 ounces.
I believe that higher gold price realization coupled with production bum-up will translate into robust cash flows. I am bullish on gold trending higher in the second half of the year on expansionary monetary policies.
Cipher Mining (CIFR)
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Considering the bullish outlook for Bitcoin (BTC-USD), there is a strong case for investing in crypto stocks. Cipher Mining (NASDAQ:CIFR) stock looks undervalued at a forward price-earnings ratio of 21.4 considering the growth potential.
To put things into perspective, Cipher reported hash rate capacity of 7.2EH/s as of January. The Company is targeting to boost capacity to 23.5EH/s by 2023. This is likely to translate into robust revenue and cash flow growth.
An important point to note is that Bitcoin is likely to trade at new all-time highs relatively soon. With halving event round the corner, the bullish trend for cryptocurrencies is likely to sustain.
Cipher mining has an attractive all-in cost for Bitcoin mining. I expect strong cash flows in the next 12 to 24 months to be a source for the next leg of expansion. If Bitcoin trades above $100,000 by the end of 2025, CIFR stock is likely to deliver 10-bagger returns.
Standard Lithium (SLI)
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With the big plunge in lithium, it seems that investors are staying away even from deeply undervalued names. Contrary to avoiding lithium stocks, I believe that it’s a good time to accumulate and hold for five years. Standard Lithium (NYSE:SLI) is among the penny lithium stocks that deserves attention and a place in the portfolio.
An important point to note is that the Company trades at a market valuation of just $213 million. This is miniscule as compared to the after-tax net present value of key assets. If the market value was in-sync with the NPV, the stock would have delivered 20x returns from current levels.
Besides the decline in lithium price, I believe that financing construction is a key challenge. Once Standard Lithium secures financing, I expect the stock to go ballistic. Standard Lithium has already selected Ausenco Engineering to complete the definitive feasibility study and front-end engineering and design services for its game-changing South West Arkansas project. With steady progress on the asset, there is a major rally impending.
Solid Power (SLDP)
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Solid Power (NASDAQ:SLDP) stock is another name that seems to have been ignored after a big correction. I am however bullish on this Company working towards the commercialization of solid-state batteries. With several positive news in the recent past, I expect SLDP stock to skyrocket.
The first point to note is that the Company has some quality partners. This includes BMW (OTCMKTS:BMWYY), Ford (NYSE:F), and SK On. In Q3 2023, Solid Power announced that it has delivered the first A-1 EV cell to BMW for automotive qualification. It’s worth noting that back in December 2022, Solid Power had licensed its cell design technology to BMW for parallel research and development.
In January, Solid Power announced that the Company has deepened its partnership agreement with SK On. As a part of this agreement, SK On will use Solid Power’s cell technology for research and development and to produce batteries. Therefore, with strong partners and high financial flexibility, SLDP stock looks attractive for multibagger returns.
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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.
