7 Hot Penny Stocks To Buy In Q4 For 10-Bagger Potential
With possible catalysts on the horizon, these bargain names could deliver multifold returns
In the last two weeks, Shiba Inu (CCC:SHIB-USD) has delivered nearly threefold returns. Now, several other altcoins have the potential to see huge gains as the cryptocurrency space heats up again. However, the crypto market is not the only place to make a quick buck. Penny stocks have also been portfolio game-changers in the bull market after the pandemic-driven meltdown.
For example, Marathon Digital (NASDAQ:MARA) was a penny stock in 2020, but it has now gained more than 1,900% in the last 12 months. Likewise, vaccine play Novavax (NASDAQ:NVAX) traded around $4 at the start of 2020. Now the stock changes hands at over $160 per share.
There are dozens more examples of these kinds of stocks. But I believe there are also still ample opportunities out there. As such, this article will cover a handful of penny stocks with 10-bagger potential.
It’s also worth noting that many of these picks are on the radars of social media traders — retail investors operating on platforms like Reddit. Forums such as r/WallStreetBets have played a big role in the buzz and retail-trading frenzies. So, an increase in that buzz could definitely help send these seven penny stocks higher:
- Baytex Energy (OTCMKTS:BTEGF)
- Borr Drilling (NYSE:BORR)
- Hive Blockchain (NASDAQ:HIVE)
- Bitfarms (NASDAQ:BITF)
- Obseva (NASDAQ:OBSV)
- Sundial Growers (NASDAQ:SNDL)
- Electrameccanica Vehicles (NASDAQ:SOLO)
Penny Stocks to Buy: Baytex Energy (BTEGF)
With Brent Crude now trading above $80 per barrel, penny stocks from the energy sector are likely to be portfolio catalysts. To that end, Baytex Energy has been in an uptrend. And with strong free cash flow (FCF) visibility, that momentum can sustain.
For 2021, Baytex has guided for production of 80,000 barrels of oil equivalent per day (boepd) at the mid-range of its estimates. Further, the company’s production mix is significantly weighted towards oil, with 81% liquids. It’s also important to note that the firm has 462 million barrels of 2P reserves. This provides multi-year production and cash flow visibility.
For the current year, Baytex is predicting $350 million in FCF. Furthermore, at $55 West Texas Intermediate (WTI), the company has guided for FCF in excess of $1 billion between 2021 and 2025.
The key point here? WTI oil currently trades at $80 per barrel. Therefore, if prices sustain at these higher levels, the company is positioned for even higher FCF over the next five years. So, clearly this stock looks attractive at a current market capitalization of $1.7 billion.
Lastly, Baytex also plans to initiate dividends in 2022, along with the possibility of a share buyback. This is another catalyst for stock re-rating. Overall, with strong tailwinds for the energy sector, BTEGF stock looks like a solid buy right now.
Borr Drilling (BORR)
Staying with the energy sector, BORR stock also looks ready for a strong upside among the penny stocks. Borr Drilling is an owner of jack-up rigs and provides offshore drilling services. It goes without saying that, as oil trends higher, offshore drilling activity will increase along with higher day-rates for the rigs.
From August lows of around 56 cents, BORR is already trading over $1 now. However, considering the company’s rigs and earnings potential, a big part of the rally still seems impending. Currently, Borr Drilling has a fleet of 28 rigs with an average age of about four years.
For the second quarter of 2021, Borr Drilling reported revenue of $54.8 million and a positive adjusted EBITDA of $3.7 million. This was its first quarter of positive EBITDA since the pandemic-driven downturn. As more rigs become operational, EBITDA will also likely accelerate in the coming quarters.
Additionally, Borr Drilling expects “100% utilization of the delivered fleet” by the end of 2022. At the same time, contract renewals are likely to come a higher day-rate. This will boost the EBITDA margin as well as cash flow visibility. Plus, the company has five rigs set for delivery in 2023. That should provide more incremental EBITDA visibility in the medium-to-long term.
Overall, the worst seems to be over for this offshore drilling company. BORR stock looks poised for multifold returns.
Penny Stocks to Buy: Hive Blockchain (HIVE)
With Bitcoin (CCC:BTC-USD) surging above $50,000 again, crypto penny stocks will likely witness a strong rally. In particular, HIVE stock looks attractive. The company is positioned for robust top-line growth in the coming quarters.
For fiscal 2021, Hive reported revenue of $66.7 million, which was higher by 128% on a year-over-year (YOY) basis. Revenue growth should also remain strong, considering that the company is aggressively buying Bitcoin miners.
In July 2021, Hive also announced reaching a $200 million annual run-rate with the purchase of 4,000 next-generation miners. The company then subsequently purchased another 1,800 miners from Bitmain. Back in April, Hive mined 64 BTC; that number increased to 234 in August.
In addition, it’s worth noting that this company reported $40.3 million in cash and $57.5 million in digital currencies as of March. Therefore, with a strong liquidity buffer, Hive is still positioned to accelerate its growth.
But the success doesn’t stop at Bitcoin. Alongside mining BTC, Hive Blockchain is also involved in mining Ethereum (CCC:ETH-USD). What’s more, the company completed a share investment in Defi Technologies (OTCMKTS:DEFTF) back in April. Both of these points mean that Hive is becoming increasingly diversified.
All in all, with emerging use-cases in the field of cryptocurrency, the outlook seems bright for HIVE stock.
Bitfarms (BITF)
Next up on this list of penny stocks, BIFT stock also seems to be positioned for big upside from its current levels. This company is the owner and operator of one of the largest crypto mining operations in North America.
Currently, Bitfarms has 69 megawatts (MW) of built-out capacity. However, by the end of Q1 2022, the company expects to increase that capacity to 119 MW. Further, by the end of 2022, the capacity is expected to increase to 382 MW. Of course, these increases point to strong growth in the next few quarters.
For Q2 2021, Bitfarms reported revenue of $35.5 million, representing growth of 414% YOY. Furthermore, its adjusted EBITDA margin for the quarter was 67%. However, with Bitcoin trending higher, that EBITDA margin should also expand further. In the quarter, the company mined 759 BTC at an average cost of $9,000.
Bitfarms reported cash and equivalents of $36.2 million as of Q2. Additionally, the company has $45.3 million in digital assets. As the number of coins mined increases, the company will have even better financial flexibility to pursue expansion.
Overall, the current bull-run could take Bitcoin to new highs. BITF stock looks positioned to benefit from that as its mining activities accelerate significantly in the coming quarters.
Penny Stocks to Buy: Obseva (OBSV)
This next entry is not a crypto play, but a biopharmaceutical stock. In general, these kinds of picks have the potential to be multi-baggers if their clinical trials can deliver solid results. It can be a long shot, but Novavax and Moderna (NASDAQ:MRNA) are some recent examples of winners in the space.
Obseva seems like an attractive name among the penny stocks. The company deals primarily with women’s reproductive health therapeutics, offering a late-stage clinical pipeline “focused on treating uterine fibroids, endometriosis and preterm labor.”
Last month, the company submitted a new drug application (NDA) to the to the U.S. Food and Drug Administration (FDA) for linzagolix. If approved, the drug will be one of the only flexible treatments for uterine fibroids. Moreover, the company estimates that 9 million women are impacted by uterine fibroids in the U.S., so the potential approval of linzagolix could open up a large addressable market.
But that’s not all. Additionally, the company’s nolasiban candidate has also shown potential to increase live birth rates following IVF treatment. Plus, the company is conducting Phase Three trials for its endometriosis treatment. Both of these solutions have large addressable markets as well. That means their potential approvals could send the stock surging, too.
As such, OBSV stock looks quite attractive at the current market cap of $326 million. After an extended period of sideways movement, a breakout seems likely as the positive news flow continues.
Sundial Growers (SNDL)
The next pick on this list is not just one of the penny stocks, but also one of the marijuana stocks. True, SNDL stock has been depressed for an extended period of time. However, it seems like a strong rally is impending from its current levels of just under 70 cents.
Recently, the U.S. House of Representatives approved a bill to allow banks to conduct business with cannabis companies without fear of penalty. It’s also worth noting a number of states already allow medicinal or recreational marijuana. Still, the federal legalization of cannabis is a key catalyst that investors are waiting for here.
When it comes to Sundial Growers itself, though, the company has recently been focused on building an investment portfolio. Plus, with its strong cash position, the company is positioned to continue pursuing both aggressive organic and acquisition-driven growth.
Sundial has already increased its commitment to SunStream Bancorp to $538 million. This joint venture with SAF Group will continue to invest in debt, equity and hybrid opportunities globally.
Additionally, the company has its own portfolio of brands as well, focusing mostly on inhalables. By acquiring names like Spiritleaf, SNDL has expanded its retail network in Canada. Growth from its branded portfolio is also likely in the coming quarters.
Penny Stocks to Buy: Electrameccanica Vehicles (SOLO)
Last up on this list of penny stocks is one of the electric vehicle (EV) stocks. On Oct. 4, Electrameccanica announced that it had begun customer deliveries of its Solo EV. I believe that this will be a catalyst for SOLO stock and offer upside in the foreseeable future.
As an overview, the Solo is a single-seater vehicle. However, pricing is the key differentiation here. Electrameccanica claims to have a total cost of ownership of just over $20,000. That kind of price should be appealing for the mass market.
Right now, Electrameccanica is also pursuing an asset-light business model. It has outsourced production to Zongshen Industrial. Plus, the company is setting up an assembly center in Arizona as well. If sales are encouraging, Electrameccanica may also pursue its own manufacturing in the future.
Besides sales to consumers, the company is exploring business-to-business sales, too. The Solo vehicle is likely to find demand in segments like delivery services, from restaurant pick-up deliveries to small parcels and post, among others.
For now, though, the next quarterly report will provide more insights on initial customer deliveries. This should take SOLO stock higher from its depressed levels around the $3 mark.
This article originally appeared at InvestorPlace.
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 have (either directly or indirectly) any positions in any of 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 modelling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.
Category: Penny Stocks
