For investors looking to move up the risk spectrum, here are three stocks to consider
Investors often seek high-growth penny stocks as a means of providing market-beating gains during bull market periods. Many of the stocks in the smaller-capitalization world certainly have such impressive upside. However, this upside potential comes alongside higher risk, which must be taken into account.
Of course, a number of penny stocks with viable long-term business models and underlying assets remain undervalued. Finding these hidden gems is easier said than done. Thousands of such companies out there may provide false positives.
The thing is, for investors looking to spread their high-risk bets across 20 or 30 penny stocks, a few winners can more than make up for the majority of losers seen over a period of time. The idea is to pick companies with a solid prospective 10-year outlook. And then be prepared to hold for that period (doesn’t have to be a decade, that’s just for illustration).
Here are three such penny stocks I think could be worth buying today and holding for a decade. Again, they’re high-risk bets, so don’t gamble what you can’t afford to lose. But I do think there’s some asymmetric upside with these names worth considering.
The Metals Company (TMC)
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On April 23, The Metals Company (NASDAQ:TMC) announced the recovery of the world’s first nickel sulfate exclusively from seafloor polymetallic nodules through bench-scale testing with SGS Canada. This innovative process directly converts high-grade nickel matte into nickel sulphate, avoiding waste and producing fertilizer by-products.
After successfully producing nickel sulphate, SGS is now working on producing cobalt sulphate from polymetallic nodules, which is expected to be a global first.
“The production of nickel sulphate marks a significant milestone in processing these rocks for battery use,” stated TMC’s Jeffrey Donald. The data collected will guide future engineering decisions, with initial production leveraging existing partner facilities.
Three American metals and mining analysts foresee TMC Metals nearing breakeven in short order. That’s impressive, considering the company’s early-stage status in the relatively speculative deep sea mining sector. These analysts project losses to terminate in 2025, with a $16 million profit in 2026. Thus, breakeven for this company could be less than two years away, with the company posting an annual growth rate of around 68%.
If such fundamentals materialize, I think investors will kick themselves for not investing early. This is a stock with a speculative business model. But if The Metals Company can get it right, this is also a company with massive upside potential.
Finally, The Metals Company is one of the unique mining operators that’s currently working without debt. This is a stark rarity among cash-burning mining firms. This reliance on shareholder funding has mitigated repayment (and interest rate) risks, making it a less risky investment.
Surge Battery Metals (NILIF)
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Recently announcing its flagship lithium project in Nevada, Surge Battery Metals (OCTMKTS:NILIF) is not one penny stock to miss. The project is expected to have approximately 4.7 million tons of lithium carbonate reserves, equivalent to 2,839 parts lithium PPM. Notably, this estimate marks the first such projection for the company’s Nevada North Lithium Project.
In 2024, Surge Battery Metals planned a more extensive drill program to expand resources at this site, covering only a part of the known mineralization area. Also, NILIF scheduled detailed surface mapping and soil sampling. The company is awaiting Bureau of Land Management approval before drilling and anticipated metallurgical test results.
As of this writing. NILIF stock is trading at 29 cents per share. For investors looking for a true penny stock with big-time upside in what could be a very hot sector long-term, this lithium mining stock is one worth considering.
Fundamental Global (FGF)
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Last month, FG Financial Group completed its merger with FG Holdings to form FG Group LLC. After the merging, FG Financial rebranded to Fundamental Global (NASDAQ:FGF).
For stakeholders and investors who are looking for solid penny stock bets that also provide dividend income, this is a stock to consider. Notably, the company declared a quarterly cash dividend of 8% cumulative Preferred Stock, Series A. Additionally, the company said it will be focusing more on asset management and reinsurance through a partnership with Fundamental Global.
The Preferred stock will continue to trade on NASDAQ as FGF and FGPP. Former Chairman of FG Financial and FG Group Holdings Kyle Cerminara is now the Chief Executive Officer (CEO) for both entities.
I think Fundamental Global’s business model which includes reinsurance, asset management and merchant banking is where investors may want to focus in the small-cap financials sector. This is a company with no exposure to commercial real estate, and could see massive upside should a takeover bid materialize at some point.
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Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Chris MacDonald 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.
