Penny stocks are subject to extreme price fluctuations. This makes them appealing to investors looking for explosive returns. Look no further than Advanced Micro Devices (NASDAQ:AMD), for example. Potential rate cuts and steady corporate profits are perking up investor sentiment. This led to the S&P 500 returning around 10% in 2024 this year.
Due to their low price, even small increases in share value can result in significant percentage gains. Therefore, even if it has nothing to do with penny stocks specifically, Nvidia’s (NASDAQ:NVDA) year-to-date rally of 88%, an update to its GeForce RTX 40 series, or a decision by the Fed to cut rates three times in 2024 can all significantly impact penny stocks.
The three names we will explore are not new entities; all are established players within their own sector. Each of the three stocks holds upside potential per TipRanks data and is benefiting from secular tailwinds.
The first pick is profiting from the overall optimism in the cryptocurrency market due to the impending Bitcoin halving event. The second choice is a major participant in the cannabis industry in both the US and Canada. The last one is a company that lost a battle for supremacy in the smartphone space. But is now winning in the world of 5G.
Bitfarms (BITF)
If you want to play the upcoming Bitcoin halving, there are few better penny stocks to buy than crypto miner Bitfarms (NASDAQ:BITF).
The price of Bitcoin (BTC-USD) is up 65% this year, breaking beyond $70,000 to hit a nine-day high on March 25. Then, it continued, reaching $75,000 and beyond. After a steep drop from $75,000, it is once again targeting this benchmark.
The price of Bitcoin is intrinsically tied to the performance of crypto miner stocks such as Bitfarms.
As Bitcoin’s price moves northward, so do the prospects of miners, especially as we are inching closer to the next Bitcoin halving in mid-April.
Bitfarms, on its own end, is doing well in boosting capacity in the run-up to the halving. Its goal is to reach 21 EH/s by the end of 2024. The recent acquisition of efficient Bitmain T21 miners will help achieve this goal. The business has been growing in Paraguay as well; advancements in Yguazu and Paso Pe should greatly boost hashrate contribution.
By installing additional miners, the corporation already achieved a hashrate of 6.5 EH/s in Q4 2023.
Altogether, as we get closer to the fourth Bitcoin halving, Bitfarms looks like one of the best penny stocks to buy. By ramping up efficiency, it’s in a good position to navigate the post-halving scenario, where miner returns will be cut in half.
Ahead of the halving, Bitfarms stock holds around 101% upside potential per the latest analyst data.
Tilray (TLRY)
Tilray (NASDAQ:TLRY) is making smart acquisitions and vigorously extending the reach of its products throughout Canada and the US.
TLRY has purchased eight Anheuser-Busch beer and beverage companies, including well-known names like Breckenridge Brewery and Shock Top, helping make Tilray the fifth-largest player in the US craft beer market.
In addition, Tilray is actively expanding into the alcoholic beverage industry, with its portfolio diversifying thanks to craft beers and spirits, as well as THC-infused drinks.
TLRY, for example, started a sustainability campaign for Good Supply, its top-selling cannabis brand, and developed new THC, CBG, and CBD drink innovations under Canadian brands. The diversification will contribute to the company’s future profitability and sustainable image among ESG-minded investors, a growing investor segment.
Finally, on the financial end, Tilray has reaffirmed its adjusted EBITDA target for the fiscal year ending May 31. The cannabis company is aiming for $68 million to $78 million, representing an 11% to 27% rise over the previous fiscal year. In addition, the business anticipates producing positive adjusted free cash flow, highlighting its solid financial position and planned expansion plans.
Investing in the cannabis stock will give you access to a potential 8% in upside.
Nokia (NOK)
Nokia (NYSE:NOK) is in the news because of its legal issues with Amazon (NASDAQ:AMZN) over patent infringement in video streaming technologies, not exactly the kind of press needed in the penny stock realm.
The Finnish multinational argues that Amazon is hurting its investments by using this technology without the necessary license. The outcome of this multi-jurisdictional legal issue will significantly influence Nokia’s financials and stock performance.
On a separate note, Nokia announced the buyback of its own shares on March 28. Apart from the buyback program, the stock is notable for its dividend, which is paid four times a year.
With a 3% dividend yield, Nokia outperforms the technology index’s 1% average yield. In addition, Nokia’s 30% payout ratio means it has plenty of room to grow the dividend further. Plus, NOK’s stock has a significant upside potential of 69%, with a target price of $6.
The mix of income, upside potential, and 5G tailwinds gives Nokia a unique position among penny stocks to buy.
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Read More: Penny Stocks — How to Profit Without Getting Scammed
On the publication date, Faizan Farooque did not have (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.