Penny stocks can be likened to the crazy world of cryptocurrencies where multibagger returns come at the blink of an eye. As an example, Tilray (NASDAQ:TLRY) stock was trading at $2.5 in March 2020. In a euphoric rally that followed, TLRY stock peaked out at $63.9 in February 2021. More recently, Riot Platforms (NASDAQ:RIOT) stock traded at $3.4 at the beginning of the year. With the rally in Bitcoin (BTC-USD), RIOT stock made highs of $20.7 in July.
These are just two examples of penny stocks going through the roof. Even in relatively challenging market conditions, there can be multibagger penny stocks. With focus on 2024, this column discusses three penny stocks that can deliver 2x to 10x returns.
It’s important to mention here that my focus is purely on non-speculative penny stocks. I believe that the stocks discussed represent quality businesses that can make it big. These penny stocks of today can therefore be the most sought-after growth stocks in the coming years.
Let’s discuss the reasons to be bullish on the potential multibagger penny stocks.
Bitfarms (BITF)
Bitcoin has surged above $34,000 and I believe that it’s a good time to consider exposure to mining stocks. Bitfarms (NASDAQ:BITF) looks undervalued and seems poised to deliver multibagger returns in quick time.
It’s worth noting that Bitcoin ETF might be round the corner. Further, with Bitcoin halving due in 2024, there is a strong bull case for the cryptocurrency. Standard Chartered believes that Bitcoin can touch $120,000 by the end of 2024. If this holds true, BITF stock will be poised for 10x returns by the end of next year.
Specific to Bitfarms, I am bullish because of two reasons. First, the company has strong fundamentals. As of Q2 2023, Bitfarms reported a liquidity buffer of $65 million. The company is also targeting to be debt free by February 2024.
Further, Bitfarms has been aggressively expanding its mining capacity. As of September, hash rate capacity was 6.1EH/s, which was higher by 45% on a year-on-year basis. With high financial flexibility, it’s likely that capacity expansion will continue through 2024.
Cronos (CRON)
I believe that Cronos (NASDAQ:CRON) is among the deeply undervalued penny stocks that’s poised for a big rally. In my view, CRON stock can potentially double from current levels of $1.75.
To put things into perspective, Cronos currently commands a market valuation of $650 million. Further, as of Q2 2023, the company reported cash and equivalents of $841 million. Clearly, valuations are attractive at a time when Cronos expects significant improvement in cash flows.
Besides the valuation factor, Cronos might also be a potential takeover candidate. Curaleaf Holdings (OTCMKTS:CURLF) is among the companies that have expressed interest in acquiring assets of Cronos. Any potential news of acquisition can send CRON stock ballistic considering the valuation gap.
I must add that the stock is attractive even if we leave aside the acquisition story. With $841 million in cash, Cronos can pursue aggressive expansion in a federal level cannabis legalization scenario.
Polestar Automotive (PSNY)
Polestar Automotive (NASDAQ:PSNY) is an attractive name among EV stocks that’s trading at oversold levels. A big reversal rally might be on the cards for PSNY stock.
For Q3 2023, Polestar reported healthy deliveries growth of 50% on a year-on-year basis to 13,900 vehicles. I believe that vehicle deliveries will accelerate in 2024 and that’s a potential catalyst for stock upside. The first delivery of Polestar 4 in China will commence towards the end of the year. Further, Polestar 5 is due for launch next year. New models will back acceleration in deliveries growth.
Another reason to be positive is the possibility of EBITDA losses narrowing as compared to 2023. The company has already initiated cost cutting measures that will yield results in the coming quarters. Additionally, operating leverage will support improvement in EBITDA margin.
Polestar has also improved its liquidity buffer and with cash and equivalents of $1.1 billion, the company is fully financed for 2024.
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.