7 Multi-Bagger Penny Stocks to Buy for Long-Term Investment
Penny stocks are generally associated with short-term speculative investments. It is a myth that penny stocks are purely speculative, when in fact there are potential multi-baggers. Admittedly, penny stocks carry a significantly higher risk. This is why careful consideration is essential, which we have done here today. This column focuses on some of the best potential multi-bagger penny stocks for long-term investing. This includes strong business models and a decent track record.
Chronos (NASDAQ:CRON) is an undervalued penny stock that is likely to generate multiple returns down the road. This view of the cannabis company is supported by strong fundamentals and positive tailwinds for the industry. In fact, reports indicate that cannabis sales in the United States will reach $71 billion by 2030, even without federal reforms. Additionally, there is ample room for growth in Europe and with a large addressable market, which makes Cronos attractive.
Financially, Cronos sales in the first quarter of 2023 disappointed. However, it should be noted that the company has $836 million in cash and short-term investments. This provides great flexibility to pursue aggressive organic and inorganic growth. The company is also targeting positive cash flow in 2024.
Cronos is present in Canada in the medicinal and recreational cannabis segment. Additionally, the company sells high-end aid-derived products in the United States. Israel is also a key medical market for the company, which focuses on research-backed drugs. As the size of the market grows, the company is well positioned to take advantage of it.
Curaleaf Holdings (CURLF)
Curafeuille Holdings (OTCMKTS:CURVE) is another name among multi-bagger penny stocks for long-term investments. There are two main reasons for including the CURLF stock as another cannabis stock in the portfolio. First of all, Curaleaf is present in 21 states in the United States. The company is also expanding aggressively in Europe. The addressable market is therefore important.
Additionally, Curaleaf has invested heavily in research and development. Currently, the company has 15 new products in the active pipeline for launch. Moreover, more than 50 products are in the process of front-end innovation. The pipeline provides clear visibility into growth. It is also worth mentioning that Curaleaf has consistently generated positive Adjusted EBITDA. The company expects capital investment to decline in 2023 as the US expansion is largely complete. With $198 million in cash, there is enough flexibility to continue investing in product innovation.
Kinross Gold (KGC)
Kinross Gold (NYSE:KGC) is a dividend-paying penny stock that is poised for a big rally given the fundamentals. With a forward price/earnings ratio of 13.2, the stock looks attractive and offers a dividend yield of 2.57%. There are two main reasons to be bullish on Kinross. First, I expect gold to trade at new highs over the next few quarters with the catalysts of inflation, recession and financial sector turmoil. As a gold mining company, Kinross is well positioned to benefit from the improvement in the realized price of gold.
Additionally, Kinross ended the first quarter of 2023 with cash and cash equivalents of $1.7 billion. The company reported operating cash flow of $259 million for the first quarter. With strong cash flow and a strong cash reserve, Kinross is well positioned to make big investments. This may be to accelerate exploration activity or to acquire new assets. The company has already guided stable gold production through 2025. Worst-case scenario dividends will hold and the company’s credit metrics will improve further.
Hecla Mining (HL)
Hecla Mining (NYSE:HL), which is trading just above $5, is my second pick among precious metals penny stocks. The HL stock has been sideways for the past six months, which provides a good opportunity for accumulation. I should add that this is another dividend-paying penny stock and robust dividend growth is likely in the years to come.
In summary, Hecla Mining is the largest silver miner in the United States. As of December 2022, Hecla has declared over 240 million ounces of silver reserves. However, the company is diverse and interested in gold mining. Accelerating growth is one of the reasons for optimism for the company. Hecla has guided silver production growth of 18% in 2023 following 10% growth last year.
Additionally, the company plans to increase silver production growth to 35% by 2025. Hecla has also been active on the acquisition front. This is another potential catalyst for production growth. Assuming a scenario where gold and silver trend higher, Hecla Mining is positioned to generate strong cash flow.
Bit Farms (NASDAQ:BITF) stock is another name of interest among penny stocks to buy with the potential for multiple returns. THE Bitcoin (BTC-USD) miner is poised for 5x to 10x returns if the cryptocurrency trades near previous highs in the coming years. With the Bitcoin halving, the outlook is optimistic.
Bitfarms has been aggressive when it comes to mining capacity growth. In March 2022, the company’s hash rate capacity was 2.7EH/s. This increased to 4.8 EH/s in the first quarter of 2023. The company further expects a capacity increase to 6EH/s by September 2023. In March, the company declared $41 million in cash. Bitfarms also reduced its debt from $140 million over the past 10 months to $19 million in April. Given the financial flexibility, the expansion of mining capacity is expected to continue in 2024.
Bitfarms is a low cost miner and that is another plus point. For the first quarter of 2023, the direct cost to business of producing Bitcoin was $12,500. As Bitcoin tends to rise, the company will be positioned to deliver a strong EBITDA margin.
Binary Digital (BTBT)
Staying with crypto stocks, Digital bit (NASDAQ:BTBT) is another attractive penny stock. BTBT stock has soared nearly 290% since the start of 2023. However, the stock remains undervalued assuming a scenario where the outlook for cryptocurrencies remains bullish.
The company describes itself as a differentiated crypto-mining entity. I would agree since Bit Digital has forayed into Ethereum (ETH-USD) staking. Benefits include income diversification and an asset productive APR. Moreover, I am optimistic about the long-term prospects of this top cryptocurrency.
In April 2023, Bit Digital reported a hash rate capacity of 1.2EH/s. The company has a total owned fleet of 2.6 PE/s. It should be noted that in March, Bit Digital declared $70 million in total cash and no debt. With a market valuation of $206 million, BTBT stock looks significantly undervalued. Strong financial flexibility will ensure that mining capacity expansion remains sound.
Solid Power (SLDP)
Solid power (NASDAQ:SLDP) the stock has remained weak over the past 12 months. However, there are several reasons for optimism. I think the company is among the pioneers in solid-state battery research and development. In terms of progress, the company will deliver EV cells to automotive partners in 2023 for validation testing. This is an important catalyst as it paves the way for potential commercialization over the next few years.
In another major development, Solid Power has entered into an agreement with BMW (OTCMKTS:BMWYY). Under the agreement, the company will share its cell design and manufacturing process with BMW. This will allow parallel research and development activities.
With Ford (NYSE:F) and BMW as automotive partners, I don’t see any financial concern for the company. Solid Power reported a total liquidity buffer of $468 million in the first quarter of 2023. A strong liquidity buffer implies the business is fully funded for the next 24 months.
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Read more: Penny Stocks — How to make profit without getting scammed
As of the date of publication, Faisal Humayun does not hold (either directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.