Have you got $1,000 burning a hole in your pocket? You’re not alone. Most of us have a little extra cash from time to time, and of course, we want to see it grow. If you like risk and you want to turn $1,000 into $1 million, it is always better invest in actual businesses than gamble it away. Sure, there are no guarantees. But with disciplined research and a little luck, it just might be possible.
I believe now is a promising time for penny stocks, despite recent volatility. Growth stocks are rebounding, and speculative trading vehicles are heating up again. Does that mean there could be a few diamonds in the rough for our portfolios? I think so. But we have to be smart. Not all penny stocks have the fundamentals or momentum to deliver those 10,000% gains. So, we need to sift through this space carefully.
I’ll share some penny stock picks that I believe could help you transform $1,000 into $1 million someday. But I’ll also outline the risks and patience required, because penny stocks can provide quite the bumpy ride. That said, if you can stomach volatility, these companies could provide life-changing returns.
Let’s take a look!
High Tide (HITI)
High Tide (NASDAQ:HITI) grabs my attention as a lower-risk play in the cannabis industry. Dissimilar from money-losing cannabis peers that are bleeding cash, High Tide has accomplished tremendous growth and done so without many capital raises.
Thanks to the company’s creative discount club model and membership programs, providing sizable high-margin recurring revenue, High Tide is on a straightforward path to profitability by 2025. Starting from almost no sales in 2018, High Tide’s revenues have ballooned to $487.7 million (CAD) in FY2023, with revenue growing steadily each and every quarter. Over the past year, revenue grew an impressive 36.7%.
After declining for most of 2022 and staying flat since, HITI stock now trades around $1.75 per share. That’s not far above its $1.25 floor over the past year. However, shares trade at just 0.35-times forward sales, a massive discount to its peers.
The timing of U.S. cannabis legalization remains uncertain. However, High Tide has performed outstandingly well in Canada, with analysts predicting the company’s earnings per share to hit $0.64 by 2030. That suggests shares trading at only 2.8-times earnings a full seven years out.
Sometimes, the best deals come from unloved stocks rather than flashy headlines. High Tide fits that description well. Wall Street’s consensus price target implies 208% upside potential in one year. While risks exist, I believe that patient investors could be rewarded handsomely by holding this stock long-term.
FiscalNote (NOTE)
Although FiscalNote (NYSE:NOTE) has attracted lots of bearish sentiment recently, I spy substantial remaining upside in this AI-powered analytics provider. FiscalNote produces exclusive data and AI solutions to help clients track legislative and political intelligence.
Even though it missed earnings per share and revenue targets on its Q3 report, FiscalNote has still made real progress in reinstating profitable growth. Revenue increased 17% year-over-year to $34 million and losses declined by 87% to $14.5 million. The stock has retreated significantly as investors are taking profits, so NOTE stock’s entry point looks compelling right now. I believe profitability is possible in the next 24 months at this pace.
Plus, its growth trajectory and improving margin outlook are impressive given the slowdown among fintech peers. Revenue and adjusted EBITDA seem well-positioned to inflect positively in 2023.
Risks undoubtedly exist when investing in unprofitable hypergrowth stocks. However, I believe FiscalNote has levers to widen margins and generate cash flow. With shares trading at just 1.4-times forward sales and a fraction of book value, NOTE stock offers huge upside if execution continues.
Analysts have a one-year target of $3.90 on this name, implying 178% upside. FiscalNote’s flagship GRM system identifies new legislation and its effects in real-time, making it a useful compliance and goal-pursuit tool. FiscalNote has the potential to become the Bloomberg equivalent in legislative data and capture most Fortune 100 companies as clients.
Bitfarms (BITF)
Bitcoin (BTC-USD) has caught fire recently, breaking above $51,000 as I write this. Indeed, I believe we’re in a 2024 crypto bull market, with many mining companies set to benefit. Bitfarms (NASDAQ:BITF) is one such company.
Bitfarms mines Bitcoin at a much lower cost than its current price. We have potential catalysts like the upcoming halving event and expected Federal Reserve rate cuts that could provide tailwinds. Additionally, spot Bitcoin ETF approvals increase the likelihood of continued capital inflows into this sector, further improving the outlook for Bitcoin. So, I believe investing in crypto mining stocks makes sense.
Many crypto miners have been stockpiling Bitcoin (at very high margins) in anticipation of further price appreciation. With this scenario unfolding, Bitfarms finds itself well-positioned to reap massive profits. We’ll have the halving event in April, and hopefully, a constructive macro backdrop. Both should catalyze multi-bagger gains over the long-term.
However, as with the other stocks here, Bitfarms bets on a speculative asset, so predicting revenue or earnings is tricky since it all depends on where Bitcoin goes next. But for investors open to some risk, I view Bitfarms as an intriguing crypto mining play as we kick off what could be a massive multi-year Bitcoin bull run.
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, Omor Ibne Ehsan 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.
