The Federal Reserve just threw a wet blanket on small-cap stocks in general and penny stocks in particular in announcing that interest rates are not likely to come down soon. It’s a time when “buy the best forget the rest” is sound advice. But if you have a long-term view, it’s a good time to watch for some penny stocks with upside potential.
First, the negative. Many of these companies rely on debt to fuel their operations. That debt becomes more expensive when interest rates rise. And if a company is still in the pre-revenue stage, there’s even more risk.
However, when you’re looking for penny stocks with upside potential, the key word is potential. If you have capital set aside for one or more speculative investments, and the time to see them come to fruition, there could be some names worth watching. Let’s examine seven penny stocks that carry bullish analyst sentiment.
Centamin (CELTF)
Gold has been one of the best-performing assets in 2024. But the same can’t be said of mining stocks. That could be changing, and analysts are bullish on Centamin (OTCMKTS:CELTF) as one of the penny stocks with upside potential.
Centamin is a London-listed miner of precious metals and gold. The company’s portfolio includes assets in Egypt, Burkina Faso, Cote d’Ivoire, Jersey, the United Kingdom, and Australia. The company’s flagship asset is the Sukari Gold Mine project.
In its most recent earnings report, Centamin reported slightly lower gold production. However, it affirmed its full-year forecast for between 470,000 and 500,000 ounces.
The company has a solid balance sheet with no debt and a Return on Equity (ROE) of 14% that is nearly double the sector average of 8.2%. Also, Centamin pays a dividend that, per the company’s policy, is equivalent to a minimum of 30% of the company’s free cash flow.
The one-year price target for CELTF stock only shows a gain of about 20%. However, nine out of 11 analysts give CELTF a strong buy rating. With heightened demand for gold being a multi-year story, this could be a good time to open a position.
Lloyds Banking Group (LYG)
The bullish case for Lloyds Banking Group (NYSE:LYG) centers, in part, on the company’s dividend that currently pays a juicy yield of over 6%. The British financial institution is one of the United Kingdom’s “big four” banking institutions and the top digital bank in the U.K. It’s also the U.K.’s third largest bank in terms of total assets.
The bank is focusing on being a digital, customer-focused leader with a stated purpose to “Help Britain Prosper by creating a more sustainable and inclusive future for people and businesses.”
However, investing in LYG stock won’t turn into a 1,000% gain overnight. But, some evidence shows that U.S. investors are starting to look at Europe’s economy as having a stronger growth trajectory in the short term. If capital starts to fly in that direction, Lloyds Banking Group is likely to be a beneficiary.
Nine out of 19 analysts who have issued a rating give LYG stock a strong buy rating.
Cresco Labs (CRLBF)
Cresco Labs (OTCMKTS:CRLBF) and its affiliated companies cultivates, manufactures and sells retail and medical cannabis products in the U.S. Cannabis stocks were all the rage in 2018 and 2019. But the bubble quickly burst. It became apparent the U.S. wasn’t going to reclassify marijuana as a Schedule 1 drug.
That’s about to change. The U.S. Drug Enforcement Administration (DEA) is expected to approve the opinion from the Department of Health and Human Services (HHS) made earlier this year to reclassify marijuana as a less stringent Schedule III drug. This would be the first time the government is acknowledging marijuana’s potential medical benefits.
CRLBF stock jumped 4.8% on the news and is already up 58% in 2024. That brings the stock’s 12-month gain to 37.8%. And analysts have a consensus price target of $3.85 for the stock which is a gain of 72%. Plus, this is another strong buy stock with 10 out of 12 analysts sharing that bullish sentiment.
Globalstar (GSAT)
Globalstar (NYSEAMERICAN:GSAT) is a leading provider of low Earth orbit (LEO) satellites. The company’s global satellite network enables a broad range of communications services, particularly in remote or underserved regions. It can also support Internet of Things (IoT) applications for areas such as supply chain management and environmental marketing.
The company experienced strong revenue growth in 2023 due in part to its role in the space economy. Globalstar’s satellites can help enable communications, positioning, navigation and Earth observation. And in 2024, the company expects that growth to continue with total revenue between $225 million and $250 million and an adjusted EBITDA margin of approximately 50%.
Analysts are forecasting 201% growth in the GSAT stock price. Additionally, four out of the five analysts issuing ratings give the stock a strong buy rating.
Lithium Americas (LAC)
Lithium Americas (NYSE:LAC) continues to be one of the best lithium stocks that speculative investors will want to consider. The lithium story illustrates the need for investor patience. The price of lithium has dropped from a high of over $60,000 to their price as of this writing around $13,000.
Many impatient or anxious investors bailed on lithium stocks like LAC. But the long-term story is still in place. Three of the primary growth drivers for lithium are electric vehicles (EVs), energy storage for an updated electric grid and mobile devices. Even if only two out of those three catalysts pan out, it will be bullish for lithium prices.
Hence, analysts continue to view Lithium Americas as one of the penny stocks with upside potential. At this time, the consensus price target for LAC stock is $8.76 which is a 101% gain. That’s not the same as a 1,000% gain. But, the story of lithium is one that will play out over many decades. And it aligns with the 40-year life span of Lithium America’s flagship Thacker Pass asset.
Archer Aviation (ACHR)
The price action in Archer Aviation (NYSE:ACHR) illustrates the hope and the hype of the flying car market. ACHR stock is up more than 104% in the last 12 months, despite being down 35% in 2024. Does that mean the bubble has burst in flying car stocks?
It’s more likely that flying car stocks are experiencing the price discovery phase. That’s a point made by InvestorPlace writer Muslim Farooque. He said that the recent sideways price action in ACHR stock may be an indication of a new move to the upside.
The company is projecting that its initial electric vehicle take-off and landing (eVTOL), Midnight, will be ready for commercial flight in 2025. And with financial backing from Stellantis (NYSE:STLA), investors don’t have to worry about the company making it across the finish line.
The interest in ACHR is fascinating since the company is still in the pre-revenue stage. The $9.33 consensus price target is 145% higher than the stock’s closing price on May 2, 2024. And once the company begins to generate revenue and earnings, it’s not hard to see this stock being a 1,000% gainer.
Byron Energy (BYROF)
Byron Energy (OCTMKTS:BYROF) is an energy stock that’s trading as a penny stock, but maybe not for much longer. The Australian company specializes in shallow water oil and gas exploration with operations in the Gulf of Mexico.
The company’s revenue is expected to grow by approximately 50% by 2025 and net margins of 24% make that revenue growth even more attractive. But what makes Byron Energy one of the penny stocks with upside potential is a renewed appetite for oil and gas exploration in the U.S.
It’s true that a GOP win in the 2024 election would be bullish, but BYROF stock may not be a binary election trade. Energy independence is becoming a national security issue. And the U.S. has the resources to make that happen.
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, Chris Markoch did not have (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.
Automotive, Bank, Battery, Cannabis, Consumer Discretionary, Energy, Financial, Flying Cars, Healthcare, Industrial, Lithium, Natural Gas, Oil, Precious Metals, Renewable Energy, Space
