As we look ahead to the coming year, penny stocks may become increasingly popular among investors. With the risk-free rate set to decrease due to lower interest rates, and many analysts predicting a rise in major indices like the S&P 500 and Nasdaq, the stage could be set for these small-cap investments to flourish. The rate decreases might come a little later than expected, but sooner or later the cracks in the robust U.S. economy will show.
Investors may choose to take positions in penny stock companies as short-term momentum plays or as long-term holds, capitalizing on the current growth-friendly environment. Allocating even a small position could lead to strong risk-adjusted returns, especially in a bull market.
In this article, I’ve highlighted three penny stocks that I believe have the potential to soar in the near future. Each of these companies is listed on a major U.S. exchange and has demonstrated growth in their core business fundamentals.
These are the three potential multi-bagger penny stocks for investors to consider.
Ring Energy (REI)
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Ring Energy (NYSE:REI), an independent oil and natural gas exploration and production company operating in Texas and New Mexico, is a penny stock that could be poised for significant growth.
Following an impressive fourth quarter, I believe REI has the potential to continue outperforming going forward. The company reported a record adjusted EBITDA of $65.4 million, representing a solid increase from the previous quarter, along with growth in sales volumes.
One of the most attractive aspects of REI is its low valuation on a price-to-sales basis. The stock currently trades at just 1.12 times sales, which drops even further to 1.08 times sales on a forward basis. Additionally, the company appears undervalued when considering its accounting profits.
Unlike many other penny stocks, REI stands out for its positive cash flow generation, having already produced $56.34 million in cash flow within the last 12 months.
At just around $2 per share. REI could be one of those penny stocks that soars in the future.
Future FinTech Group (FTFT)
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Future FinTech Group (NASDAQ:FTFT) operates in the blockchain and fintech sectors, primarily focusing on e-commerce solutions and financial services related to cryptocurrency data.
FTFT is actively expanding its footprint, revealing plans to open a new cryptocurrency trading and crypto asset management unit in Dubai this year.
Love it or hate it, I think digital currencies such as Bitcoin (BTC-USD) are here to stay. Companies like FTFT that create the “picks and shovels” the industry needs to survive will only grow in prominence as more investors buy into crypto.
However, like all companies, FTFT also faces some challenges. FTFT reported a loss of 9.7 cents per share in its most recent quarterly results. That marked a decline from the previous year’s loss of 7 cents per share in the same quarter.
However, FTFT is a great option for investors wanting a potentially undervalued fintech stock with strong exposure to crypto.
Transocean (RIG)
Transocean logo on a laptop screen. RIG stock.
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Transocean (NYSE:RIG) specializes in deep-water and ultra-deep-water drilling. It is known for its significant global presence and strong project backlog.
There are a lot of good reasons for investors to feel bullish on RIG. The company projects significant growth in its operations in Brazil. The driller plans to increase its rig count to 36 by the end of 2025 with stable demand in the Gulf of Mexico. Additionally, it expects to initiate 13 new drilling programs over the next 18 months.
Also, financially, RIG reported a narrowed net loss in Q4 2023 and forecasts a revenue increase for 2024. For 2023, the revenue reached approximately $2.837 billion, a 10% increase from the previous year. Sales are projected to rise to $3.591 billion in 2024, marking a 27% year-over-year growth.
Analysts also collectively agree that RIG’s performance in the short-term could be accretive. The price target averages at $8.22 for the next twelve months. That suggests a potential upside of 45% from the current price.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Matthew started writing coverage of the financial markets during the crypto boom of 2017 and was also a team member of several fintech startups. He then started writing about Australian and U.S. equities for various publications. His work has appeared in MarketBeat, FXStreet, Cryptoslate, Seeking Alpha, and the New Scientist magazine, among others.
