We’re still early on in 2023, but there continues to be attractive investment opportunities in this market. Given the uncertainties on the macroeconomic front, I would prefer to remain overweight in dividend-paying blue-chip stocks. However, for the riskier part of the portfolio, there are some non-speculative penny stocks to consider.
With markets clearly not in a euphoria phase, several penny stocks trade at attractive valuations. I am particularly focused on companies that have decent business fundamentals. If it was 2021, I would not rule out some penny stocks delivering 5x or 10x returns in 12 months or less.
Having said that, there are penny stocks that can deliver 100% returns by December. Even a small allocation of 10% to 15% of a portfolio to these stocks can boost overall returns.
Let’s discuss the reasons why these penny stocks are worth considering.
Solid Power (SLDP)
Solid Power (NASDAQ:SLDP) has seen its stock price surge by 29% in the last month alone. I expect the positive momentum for the penny stock to continue. That’s because of the various positive business developments seen with this battery company.
As an overview, Solid Power is focused on the development of solid-state batteries. The company is interesting for several reasons. First, it’s backed by automotive majors Ford (NYSE:F) and BMW (OTCMKTS:BMWYY). And on this front, the company notably signed an expanded research and development deal with BMW. This will allow the latter to license the cell design and manufacturing process from Solid Power. The advantage is acceleration in R&D activity, which can push for the early commercialization of solid-state batteries.
Secondly, Solid Power has also initiated its EV cell pilot line in 2022. It’s likely that EV cells will be delivered to automotive partners in 2023 for validation testing. The outcome of test results will be a major price action catalyst, potentially driving some impressive near-term results for this stock.
Kinross Gold (KGC)
The probability of a recession in the U.S. remains high. In a deep slowdown or recession scenario, the dollar is likely to weaken, which will be positive for gold. As a matter of fact, the precious metal has already rallied significantly from its 2022 lows.
I am therefore inclined to bet on a gold mining stock. Kinross Gold (NYSE:KGC) stock looks deeply undervalued at a forward price-earnings ratio of 13.7-times. Additionally, considering the fact that KGC stock also offers investors a dividend yield of 3.1%, this is a stock with some serious total return potential over the medium-term. I will not be surprised if the stock surges in the coming quarters on the back of strong quarterly numbers.
For Q4 2022, Kinross reported free cash flow of $157 million. In a scenario where the company’s realized gold price remains steady through 2023, Kinross is positioned for free cash flow in excess of $600 million. It’s also worth mentioning that the company has already guided for steady production through 2025.
Kinross closed 2022 with a total liquidity buffer of $1.8 billion. Considering the company’s financial flexibility, there remains the possibility of acquisition-driven growth as well.
Tilray Brands (TLRY)
Tilray Brands (NASDAQ:TLRY) is a deeply undervalued name among penny stocks. From current levels around $3 per share, I see TLRY stock doubling in short order. I must add that if federal cannabis legalization happens in 2023, multi-bagger returns are likely in the cards.
In terms of the company’s financials, there are several positives to talk about. Tilray has continued to report positive adjusted EBITDA. Further, the company also reported positive free cash flow for Q2 2023. Finally, with $433.5 million in cash and equivalents, Tilray is well-positioned for aggressive organic and inorganic growth.
It’s worth noting that Tilray has acquired two brewing companies in the United States. Thus, this is a company that’s building out a strong strategic footprint to support accelerated growth following legalization. I also like the fact that Tilray has a solid presence in the medicinal cannabis market. This segment will help Tilray boost its presence in Europe. Overall, TLRY stock is among the best cannabis plays, and I think the stock is worth holding for the long-term.
Hive Blockchain (HIVE)
Bitcoin (BTC-USD) has surged roughly 60% from its 2022 lows of $15,400. The rally might indicate the end of crypto winter. Thus, for those looking to play the crypto sector, Hive Blockchain (NASDAQ:HIVE) stock is an interesting name to consider in the Bitcoin mining space.
Backed by the rally in Bitcoin, HIVE stock has already surged 120% higher year-to-date in 2023. However, this rally from oversold levels is likely to continue, and and I expect the stock to double again from current levels.
Hive reported revenue of $14.3 million for Q3 2023, as the company mined 787 Bitcoin during the quarter. An important point to note is that the company’s cost of production per Bitcoin was $13,599. With Bitcoin trending higher, I expect strong gross margin expansion in the coming quarters.
Another reason to like Hive is sustained hash rate capacity expansion. The company reported a hash rate of 2.45EH/s in September 2022. Currently, the company’s mining capacity stands at 3.33EH/s.
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.