Like the tempting Google search engine option, if you’re feeling lucky, you may want to try your hand at some penny stocks which possibly feature strong upside catalysts. Just to get everyone on the same page, this speculative investment category involves betting on companies whose share prices are significantly deflated. As a result, should they swing higher, they often do so robustly — leading to incredible gains.
At the same time, I do need to provide serious disclaimers: penny stocks necessarily have low probabilities of success. Essentially, there are too many of them and their share prices are deflated for a reason. Additionally, embattled securities almost always have wide bid-ask spreads, meaning that you’re going to need to be significantly profitable to win out on a net basis.
Still, what keeps people interested in penny stocks is that at some point, many of the current blue chips were once struggling enterprises. There’s always a chance that you can strike it rich on the next Amazon (NASDAQ:AMZN) or Microsoft (NASDAQ:MSFT).
So, as long as you have the right mindset — as in, only wager loose pocket change — these intriguing penny stocks might be worth your time.
Penny Stocks to Watch: Gevo (GEVO)
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A renewable chemicals company, Gevo (NASDAQ:GEVO) commanded a very relevant narrative as it specializes in biofuels — essentially liquid fuels produced from renewable sources such as vegetable oils and animal fats. Because of its natural origination point, biofuels may help navigate the U.S. toward a net-zero emissions economy.
However, the fundamental framework for GEVO stock really got a shot in the arm because of Russia’s invasion of Ukraine. In turn, the military aggression effectively shelved a significant portion of global energy supplies. And suddenly, western powers were desperately fast-tracking their clean energy infrastructure initiatives.
Nevertheless, penny stocks are never an easy category to participate in. With Gevo, you must be aware that biofuels are not a panacea, mainly because they are crop-intensive to generate enough biofuel volume.
Over the long run, though, biofuels could play a complementary role in a holistic energy portfolio. So if you have some coins under the sofa, GEVO might be one of the more interesting penny stocks to consider.
Better Therapeutics (BTTX)
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As one of the most innovative penny stocks available, Better Therapeutics (NASDAQ:BTTX) features a novel platform to address cardiometabolic diseases (CMDs); conditions under this category include cardiovascular disease (CVD), diabetes mellitus and chronic renal failure. CMDs represent the number-one cause of death in the world and are mainly caused by an unhealthy diet. But this is also where Better Therapeutics can shine.
The biotechnology firm specializes in cognitive behavioral therapy. Rather than merely threat the effects of CMDs, Better Therapeutics aims to target the causes. Through its unique platform, the company can pinpoint cognitive patterns that drive eating and lifestyle behaviors. From there, medical practitioners can formulate — through artificial intelligence — a custom regimen for each patient that maximizes efficacy.
Even more promising, Better recently announced the issuance of a U.S. patent covering key features of its therapeutics platform. Combined with the massive total addressable market, BTTX appears to be one of the most viable penny stocks available.
Still, it’s very important to note that shares have plummeted 62% on a year-to-date (YTD) basis. To be fair, though, over the trailing five days, it’s up around 16%. But with anything biotech related, you should gird yourself for wild trading.
Penny Stocks to Watch: Ocean Power Technologies (OPTT)
Few other companies characterize the agonizing ebb and flow of penny stocks than Ocean Power Technologies (NYSEAMERICAN:OPTT). Back in late October of 2020 — which seems like an eon ago — I mentioned that the fundamentals for the company are starting to make sense. Like its name suggests, Ocean Power leverages the mostly untapped kinetic energy of the planet’s deep waters to ultimately produce usable power.
For a while, OPTT stock did very well, jumping from a little over $2 per share at time of publication to a high of $7.30 per share in January of the following year. But then, it’s been an ugly ride, eventually dipping down to the current price of 61 cents.
As one of the caveats, I mentioned that the economics of wave energy is not favorable, particularly with wind and solar energy proving to be viable and effective. Furthermore, spotty government investments in wave energy infrastructure don’t help matters.
But what if this narrative were to change? Certainly, one of the biggest factors that have changed since I last wrote about Ocean Power is the oil shortage. In turn, European countries and the U.S. absolutely need to diversify their energy profile, which might benefit OPTT stock in the long run.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
On the date of publication, Josh Enomoto 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.