Penny Stocks That Could Pay Off Big: 3 Overlooked Names Ready to Run

Stocks to buy

Latam Logistic Properties (NYSE:LPA) caught my attention, with the stock skyrocketing by 1,730% last month. A big season for meme names seems to be unfolding and there will be ample opportunities to make quick money in penny stocks.

A big reason to believe that speculation is likely to rise in equities is the possibility of rate cuts. The covid-19 pandemic driven rate cut induced the meme stock euphoria of 2021. While policymakers aim to drive GDP growth through lower interest rates, speculation is inevitable with easy money in the financial system.

Therefore, I am betting on rising penny stocks in the second half of the year. My focus is not on purely speculative ideas. Instead, the penny stocks discussed represent companies with potential catalysts to support a big rally.

Let’s therefore talk about these three ideas for some quick money in the coming quarters.

Standard Lithium (SLI)

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Lithium stocks have been overlooked with the plunge in lithium prices. However, several lithium stocks are trading at a deep valuation gap after a deep correction. Standard Lithium (NYSE:SLI) is among the undervalued penny stocks to buy for a big rally.

It’s worth noting that SLI stock was on a sustained correction. However, the stock has surged by 35% in the last month. The rally has been on the back of a partnership with Equinor (NYSE:EQNR) to develop U.S. lithium projects.

Regarding asset potential, the South West Arkansas project has an after-tax net present value of $4.5 billion. The asset, however, required a development capital investment of $1.3 billion. With the partnership with Equinor, the financing headwind has declined.

Additionally, the lithium player has an asset in Lanxess with an after-tax NPV of $722 million. Considering the total asset valuation, the current market valuation of $300 million looks miniscule. I therefore expect the current rally for SLI stock to sustain.

Wallbox (WBX)

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Some of the emerging players in the electric vehicle charging industry have plummeted. The reason being slower than expected adoption of EVs, macroeconomic headwinds and intense competition. However, Wallbox (NYSE:WBX) is among the companies positioned to survive and create value.

It’s worth mentioning here that WBX stock has trended marginally higher by 7% for year-to-date. This comes after an extended period of price correction. With positive business progress, the price-action clearly indicates the stock bottoming out. It’s, therefore, a good time to consider fresh exposure.

From the perspective of financials, the biggest positive is the steady improvement in margins. Wallbox has guided for “close to adjusted EBITDA breakeven in Q2.” With operating leverage, EBITDA margin expansion will likely sustain beyond 2024.

For Q1 2024, Wallbox reported revenue growth of 23% on a year-on-year basis to 43.1 million euros. In the foreseeable future, acquiring ABL, a leading German player in EV charging, will likely boost growth. Further, new products and a presence in a big addressable market in North America and Europe will likely ensure stellar growth.

Ring Energy (REI)

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Ring Energy (NYSE:REI) is an oil and gas exploration company that looks attractive from a valuation perspective. After remaining sideways for the last 12 months, REI stock seems poised for a breakout rally.

From a macroeconomic perspective, GDP growth has decelerated. This will likely translate into multiple rate cuts in the next 12 to 18 months. I, therefore, expect oil to trend higher, and that’s one reason to be bullish on REI stock.

It’s worth noting that Ring Energy has a healthy proven reserve base of 129.8mmboe. This provides clear production growth visibility as capital investments are accelerated. Further, a PV10 of $1.65 billion indicates significant undervaluation. The valuation gap will likely be closed when sentiments turn bullish for oil.

Ring Energy has a good track record of production growth through acquisitions. With increasing free cash flows, the emerging oil & gas company will likely pursue further inorganic growth. Considering these factors, I am bullish on a big rally for REI stock.

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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