Even with a small allocation, penny stocks can be game-changers for the portfolio. If the business grows and the markets like the overall narrative, 20x or 30x returns from penny stock ideas are not a big mountain to climb. Of course, investors need to have the patience to hold for at least three to five years. This is challenging when the investment horizon has declined and penny stock ideas are considered for speculative gains.
I agree that penny stocks represent fundamentally weak companies. Further, the business might not be attractive. However, in a meme frenzy, even these stocks can surge by 100% or 200%.
However, if big wealth must be created, it is important to look at some high-quality ideas within the penny stocks space. I am talking about good fundamentals and a business with a big addressable market. This column focuses on three high-risk penny stocks that have millionaire-making potential.
stocks to buy: two roller suitcases in an airport to represent travel stocks
Source: Shutterstock
Yatra Online (NASDAQ:YTRA) is a micro-cap stock, and the risk is high. However, some exposure can be considered, and if the business progress is positive, returns can be 20x or 30x from current levels. It’s worth mentioning that YTRA stock trades at an attractive forward P/E of 9.2 times.
Yatra is one of the leading online travel booking companies in India. The country is growing at a healthy pace, and the addressable market for travel and tourism is significant. It’s expected that by 2030, Indians will be the fourth-largest global travel spenders. By the decade’s end, travel expenditures are pegged to touch $410 billion. There is a massive opportunity for growth.
An important point to note is that Yatra has a differentiating factor in an increasingly competitive online travel booking market. The company is India’s largest corporate travel player. Currently, Yatra has a customer base of 849 large corporates with an addressable employee base of more than seven million.
At the same time, the online travel booking company is expanding its reach in the business-to-consumer market. Overall, I expect significant growth acceleration due to a tourism boom in India.
Solid Power (SLDP)
Smartphone with logo of American battery company Solid Power Inc. on screen in front of business website. Focus on center-left of phone display.
Source: T. Schneider / Shutterstock.com
Solid Power (NASDAQ:SLDP) is developing solid-state battery technology. If the battery company can successfully commercialize them, the sky is the limit for SLDP stock.
It’s worth noting that the stock has increased by 25% in the last six months after an extended period of correction. This has been due to steady progress on the R&D front, and I am bullish on further upside.
An important point to note is that Solid Power has the backing of strong automotive partners. These include Ford (NYSE:F) and BMW (OTCMKTS:BMWYY). In December 2022, the company licensed its cell technology and design to BMW for parallel R&D. Further, Solid Power has also licensed its cell design technology to SK On (Korea) for R&D. Collaborative research is likely to help accelerate the commercialization of solid-state batteries.
Last year, Solid Power delivered A-1 cells to automotive customers for validation testing. The battery maker is currently focused on A-2 cells, which address the concerns and challenges of the A-1 design. The A-2 cells will likely be delivered to automotive customers before the end of the year.
Tilray Brands (TLRY)
In this photo illustration Tilray (TLRY) logo of a Canadian pharmaceutical and cannabis company is seen on a mobile phone and a computer screen.
Source: viewimage / Shutterstock.com
In the last 12 months, Tilray Brands (NASDAQ:TLRY) stock has remained largely sideways. However, with positive news on the regulatory front, I expect the stock to skyrocket.
First, Germany recently legalized cannabis, and other European countries are likely to follow suit. Further, cannabis is likely to be reclassified as a Schedule III drug in the U.S. Tilray has already filed for a potential stock offering of $250 million. Once the rescheduling is effective, the proceeds will be used for potential acquisitions in the U.S.
It’s also worth noting that international expansion has yielded positive results for Tilray. For Q3 2024, the cannabis company reported 44% year-on-year growth in the international cannabis business. There is a big addressable market in Europe to help the company sustain its growth.
At the same time, Tilray is likely to benefit from diversification. The company is now the fifth largest craft beer brewer in the U.S. Entry into the alcoholic beverage business also provides the company with a strong strategic infrastructure for expansion in the U.S.
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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.
