Within the penny stock space, the level of risk on exposure to different stocks varies significantly. Purely speculative penny stocks are the riskiest bet. On the other hand, there are some high-reward penny stocks for investment that represent companies with good fundamentals and the risk is relatively low.
In between these two categories are penny stocks that have decent fundamentals. However, they await specific catalysts to play-out for multibagger returns. Without these catalysts, these stocks can remain sideways or trend lower.
It goes without saying that the risk is meaningful. I would classify these names as high return penny stocks for bold investors. It makes sense to consider some exposure to these stocks. If the catalysts play-out, 10x returns would not be surprising. It’s a good idea to invest what you can afford to lose in these top penny stocks with potential.
Cronos (NASDAQ:CRON) is a massively undervalued penny stock to buy for bold investors. When it comes to CRON stock I believe that 10x returns are likely. Especially once there is federal level legalization of cannabis in the United States. A clear regulatory framework in the European Union would be an additional catalyst.
Coming back to the valuations, Cronos currently commands a market value of $660 million. As of Q1 2023, the company reported $836 million in cash and short-term investments. I must also add that Cronos has been pursuing aggressive cost cutting. The company has exited its hemp-derived CBD business in the U.S.
The reason to be optimistic is that Cronos is targeting positive cash flows in 2024. With a strong cash buffer, Cronos is positioned for aggressive growth in a legalization scenario. I must add that Altria (NYSE:MO) continues to hold 45% stake in Cronos. This provides the company with a strong financial backing.
Solid Power (SLDP)
Solid Power (NASDAQ:SLDP) is another high reward penny stock for investment if the company can successfully commercialize solid-state batteries. If you have been waiting then I believe that now is the time to pull the trigger on buying SLDP after a correction of 74% in the last 12 months.
It’s worth noting that solid-state batteries are being touted as the future and there is a big addressable market. For Solid Power, one big positive is the backing of Ford (NYSE:F) and BMW (OTCMKTS:BMWYY). As a matter of fact, Solid Power has licensed its cell design and manufacturing process to BMW for parallel research and development activity.
Solid Power has also made decent progress in the last few quarters. The company’s SP2 electrolyte production facility has been commissioned. Solid Power is also on track to deliver A-sample EV cells to automotive partners in 2023 for validation testing. With a healthy cash buffer, the company is financed for the next 12-18 months.
Bitfarms (NASDAQ:BITF) is among the best high-reward penny stocks to buy. For year-to-date 2023, Bitcoin (BTC-USD) has surged by 60%. However, BITF stock is higher by 180%. The low-cost Bitcoin miner has the potential to deliver 10x returns if Bitcoin trades at new highs after the halving event in 2024.
Besides the Bitcoin rally factor, there are several other reasons to be bullish on Bitfarms. The company has aggressively deleveraged in the last few quarters. With $41 million in liquidity and just $17 million in debt, the company is poised for robust expansion.
It’s also worth noting that Bitfarms reported mining capacity of 5EH/s in May. On a year-over-year basis, capacity expanded by 47%. With Bitcoin trending higher, the company will be targeting accelerated capacity expansion in the next 12 months. Being a low-cost miner, Bitfarms can deliver healthy free cash flows in 2024 and beyond.
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.