Some companies become penny stocks and list on the over-the-counter exchange for various reasons. Often, the market beats down such companies due to market forces, and that’s certainly the case for these three penny stocks to buy.
But for those who think certain sectors have been beaten down too far and a recovery may be in order in the coming years, assessing which companies could survive the fallout from whatever is ahead is important. Due to their higher risk nature, penny stocks in such sectors stand to gain the most from a reversal of market sentiment and a shift toward growth.
These three penny stocks are certainly speculative bets. But these three penny stocks to buy are worth considering for those looking to build out a more speculative portion of their portfolio.
Surge Battery Metals (NILIF)
In February, Surge Battery Metals (OTCMKTS:NILIF) announced its recognition as one of the 2024 Top 50 mining companies on the TSX Venture Exchange. This ranking considers share price appreciation, trading volume and market capitalization growth. Greg Reimer, CEO and Director, expressed pride in this honor, attributing it to the team’s dedication and highlighting the advancement of the Northern Nevada Lithium Project (NNLP) as a key achievement.
The lithium mining company also recently announced the completion of four drill holes on private land for the 2024 Nevada North Lithium Project (NNLP). Visual and site testing confirmed the mineralized clay horizons found in previous years. Four additional holes are underway. The 2024 program aims to test soil geochemical anomalies and expand the mineralized clay footprint. This potentially increases the existing inferred resource of 4.67 million tonnes of lithium carbonate equivalent.
These drilling results suggest that future mining activity on the company’s land may be fruitful. The presence of high-grade lithium in areas that are attainable is bullish for those who believe lithium demand will take off. Lithium prices and the miners supporting this sector may not be getting the love they deserve in this world focused on electrification (with utilities seeing so much of the benefit recently). Companies like Surge are worth considering for a longer-term investment.
Nikola (NKLA)
This week, Nikola (NASDAQ:NKLA) announced a 1-for-30 reverse stock split. Unsurprisingly, the stock reacted badly and declined significantly. The stock split will reduce NKLA’s authorized share count to 1 billion. This change occurs after markets close on June 24, with split-adjusted trading beginning the following Tuesday.
Although the stock declined this week, the company continues to see growth in its core hydrogen fuel cell truck business, securing orders for 140 trucks from 12 customers in Q1 2023. Nikola also commissioned four HYLA hydrogen mobile fuelers for its refueling infrastructure. Exceeding guidance, NKLA delivered 40 fuel cell electric vehicles in the latest quarter.
In 2024, the company plans to expand its hydrogen and battery-electric offerings, aiming for 14 hydrogen fueling solutions. This will position hydrogen vehicles as a viable alternative to electric vehicles, highlighting NKLA’s potential.
Lithium Americas (LAC)
Lithium Americas’ (NYSE:LAC) $610 million market capitalization contrasts sharply with the Thacker Pass asset’s estimated $5.7 billion after-tax net present worth. Upon production starting in 2027, this asset is expected to generate strong EBITDA and cash flows. In 2024, the U.S. Department of Energy provisionally agreed to a $2.26 billion loan for the company. The government wouldn’t do this if it didn’t think the assets could cover the loan in case of a default. This provides some floor under the stock. At least, that’s what many experts seem to think.
Legacy automakers are ramping up electric vehicle plans, boosting demand forecasts for lithium. This trend has boosted speculative stocks like Lithium Americas, which continues to operate without revenue.
Lithium Americas recently partnered with Ganfeng Lithium in Argentina and received $650 million from General Motors (NYSE:GM) for its Nevada project. Caution is advised with such speculative investments. Additionally, Lithium Americas raised $275 million through equity dilution, aiming to complete the project on schedule in 2024 and beyond.
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Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Chris MacDonald 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.