Today we will be looking at three penny stocks with the power to 10x your $1K investment. The three firms discussed below have outsized potential to turn a small capital allocation into a much larger return.
Two of the three firms discussed below have very strong catalysts on their side. The other operates in the biotech sector which is notoriously volatile. Regardless, all three have a lot of untapped potential. Penny stocks are no different than any others from the perspective that good businesses create good stocks. As always, exercise caution and stick to a more traditional investment style with the majority of your capital.
With that in mind let’s take a deeper look at each of those companies.
Lithium Americas (LAC)
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Lithium Americas (NYSE:LAC) is one of the two firms that I alluded to above with very strong tailwinds that should propel its stock forward.
If you didn’t already know based on its name, the company is a lithium mining firm. It won the rights to mine the Thacker Pass lithium deposit, which is among the largest on earth. The company recently commenced construction of its mining operations at the site.
It is expected that Lithium Americas will begin producing lithium sometime in 2026. While that may seem like a long time it may actually be an excellent time for the company to come online. Lithium prices remain muted and may remain so for some time.
Simply put, the size of the deposit makes lithium Americas a strategically important company for domestic EV production. It should be no surprise then that the government just lent the company a $2.26 billion loan. That’s also an excellent indication of the notion that the company may just be too big to fail.
Compass Therapeutics (CMPX)
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Compass Therapeutics (NASDAQ:CMPX) is a lot like many other biotech shares that penny stock investors will find. It’s full of potential and well regarded by analysts, remains in the pre-revenue stages, and could produce 10x returns.
Again, there is no shortage of penny stocks in the biotech sector that sport similar potential. Investing in this type of asset is essentially a gamble. Analysts view Compass Therapeutics similarly to other biotech penny stocks, expecting clinical programs to drive potential revenue streams.
What potentially sets Compass Therapeutics apart from rest is the fact that it has made more progress with its oncology therapeutics. Several of its therapeutic indications have advanced to phase 2 and 3 studies meaning it is that much closer to commercialization. Again, there is no guarantee that it will succeed. That’s why I mentioned it is a gamble which is reflected in its return potential.
SoundHound AI (SOUN)
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SoundHound AI (NASDAQ:SOUN) stock currently trades for more than $8. It will clearly be more difficult for its shares to multiply by a factor of 10 simply because of what that implies pricewise. Yet, it is the company’s association with Nvidia (NASDAQ:NVDA) that makes it a distinct possibility.
A recent 13F filing by Nvidia revealed that the company owns 1.73 million shares of SoundHound AI. The company also invested in a $75 million capital raise for SoundHound AI back in 2017.
That 13F filing was the first such revelation that Nvidia has taken a large position in SoundHound AI. So, why does Nvidia care about SoundHound AI? The answer is that SoundHound AI is particularly adept at conversational AI. Most of its offerings revolve around AI used in call centers and restaurants. Nvidia has exploded because of its generative AI utility. Conversational AI may be the next growth niche within AI. If so, SoundHound AI is the stock to be invested in.
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Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Alex Sirois 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.
