Stocks to buy

It’s been a wild ride for penny stock investors since 2020. The euphoria meme and penny stock rally of 2021 was followed by a big correction in 2022. The penny stock space seems almost as volatile as cryptocurrencies. This should not be a deterrent for investors. On the contrary, volatility in penny stocks can be used to make quick money. Especially when you find penny stocks with high growth catalysts.

One potential strategy for quick gains is to buy high return penny stocks. This would typically involve identifying company or industry specific catalysts that can trigger a massive rally. It’s also important to note that macroeconomic challenges will sustain. Investor expectation therefore needs to be realistic or toned down. I believe that with positive industry or company specific catalysts, these are the best penny stocks with upside potential.

Bit Digital (BTBT)

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Bitcoin (BTC-USD) has seen an increase of 60% year-to-date. During this period, Bit Digital (NASDAQ:BTBT) stock has skyrocketed by 420%. In my view, the rally from massively undervalued levels will sustain in the next 12 months.

The first impending catalyst is Bitcoin’s halving that is due in 2024. After the last halving event in 2020, Bitcoin had a big rally.  If Bitcoin trends higher by 30% to 50% in the next 12 months, BTBT stock will at least double from current levels.

The second big catalyst for Bit Digital is diversification. The company has expanded into validating transactions on the Ethereum (ETH-USD) blockchain. One benefit is staking and generating yield. Another is diversification of digital assets in the balance sheet. I am bullish on Ethereum trending higher and that will support upside for BTBT stock.

Overall, with $70 million in liquidity and a zero-debt balance sheet, the company is positioned to grow aggressively as the cryptocurrency bull market returns.

Kinross Gold (KGC)

Source: T. Schneider / Shutterstock.com

With U.S. House passing the debt ceiling bill, the market stress has declined. It’s also likely that with economic slowdown and further increase in government debt, the dollar will weaken. I am bullish on gold trending to $2,500 an ounce by the end of 2023.

Kinross Gold (NYSE:KGC) is a massively undervalued gold mining stock with impending catalysts. First, if gold trades above $2,000 an ounce, Kinross will be positioned to deliver annual operating cash flows in excess of $1 billion. The dividend paying penny stock is positioned to increase its yield further. This will translate into stock re-rating.

Another impending catalyst is acquisition driven growth. With a bullish outlook for gold, the company will be looking at improving on its stable production guidance. With Kinross having $1.7 billion in liquidity buffer and with strong operating cash flow, acquisition seems to be in the cards. Even without an acquisition scenario, I expect KGC stock to double if gold trades and sustains above $2,000 an ounce.

Solid Power (SLDP)

Source: T. Schneider / Shutterstock.com

Solid Power (NASDAQ:SLDP) stock is possibly the best bet when it comes to emerging names in the solid-state battery space. SLDP stock has been in a downtrend in the last 12 months. However, I believe that there is one important catalyst that can trigger strong price action.

As an overview, Solid Power has strong automotive partners, Ford (NYSE:F) and BMW (OTCMKTS:BMWYY). The company will be delivering EV cells to automotive partners in 2023 for validation testing. This is a big catalyst as it’s the first step towards battery commercialization. Assuming a positive review scenario from automotive partners, SLDP stock can surge by 100% at the blink of an eye.

Besides this, Solid Power has also licensed its cell design and manufacturing technology to BMW. This will allow for parallel research and development activity. There is a likelihood that this step will help in accelerating the progress towards battery commercialization.

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.

Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.

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