Within the penny stocks space, some interesting stocks under $2 are worth holding for the next few years. Without a doubt, these are high-risk names. However, if certain catalysts play out, these stocks under $2 can deliver multibagger returns in the blink of an eye.
An important point to note is there are dozens of purely speculative names trading under $2. The business fundamentals are weak and I have avoided talking about these ideas in this column. The focus is on businesses with reasonably good fundamentals.
It would not be surprising if one or more of these stories delivered 10x or 20x returns in 5 years. For the next 24 months, these stocks look good for 5x returns from current levels. Even a small portfolio allocation is likely to have a meaningful impact on total returns.
Let’s discuss the reasons to be bullish on these ideas.
Tilray Brands (TLRY)
Tilray Brands (NASDAQ:TLRY) stock looks massively undervalued at $1.9. Assuming that cannabis is moved from Schedule I to Schedule III on the controlled substances list, TLRY stock will double or triple in weeks. Further, if the federal government legalizes cannabis, I expect 10x returns from the stock.
It’s worth noting that last year Tilray focused on acquisitions for diversification. The company is now the fifth-largest craft beer brewer in the United States. This year, TLRY will likely focus on global medicinal cannabis expansion. For Q2 2024, Tilray reported 55% growth in international cannabis net revenue. That was driven by the medicinal cannabis segment.
Further, Tilray reported a 117% growth in beverage alcohol net revenue for Q2 2024 to $47 million. This is another segment that will continue to support growth. At the same time, Tilray expects to generate positive adjusted free cash flow for the financial year 2024. That will translate into higher financial flexibility for investments.
Standard Lithium (SLI)
With depressed sentiments for lithium, it’s the best time to accumulate lithium stocks for the next five years. Among penny stocks, Standard Lithium (NYSE:SLI) is attractive and looks massively undervalued. It’s among the top stocks under $2 poised for 5-bagger returns by the end of 2025.
For this lithium mining company, asset valuation provides a good perspective on the upside potential. Currently, Standard Lithium has a market valuation of $253 million. In comparison, the prized asset of the company has an after-tax net present value of $4.5 billion.
Of course, this does not have significance if the assets are not monetized into cash flows. However, I see that happening in the next few years after the company secures financing for the project’s construction. At the same time, once the trend for lithium reverses, I expect a sharp upmove.
Solid Power (SLDP)
Chardan Research believes that Solid Power (NASDAQ:SLDP) is likely to triple from current levels. With positive business developments, I am in sync with this view and believe the rally can be potentially bigger. The key assumption is that SLDP continues to make positive progress toward the commercialization of solid-state EV batteries.
Among the positives, there are two developments worth discussing. First, Solid Power has made the “first A-1 EV cell deliveries to BMW (OTCMKTS:BMWYY) to formally enter automotive qualification.” Positive results on this front can be a major stock upside catalyst.
Further, Solid Power has deepened its partnership agreements with SK On in Korea. Under the agreement, SK On will use Solid Power’s cell technology for research and development and to produce batteries.
A key advantage is R&D collaboration for the production of solid-state batteries. It’s worth noting that Solid Power has recently licensed its cell design and technology to BMW for parallel R&D. With strong partners, I am optimistic about Solid Power achieving commercialization and strong growth.
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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.