Penny stocks get a bad rap, but for investors with high risk tolerance, they can provide outsized returns. Many quality businesses start out trading at penny stock levels before surging higher once Wall Street takes notice. Penny stocks present an opportunity to get in early on hypergrowth companies before their core strengths become widely known. That’s if you combine it with the right research and selective investing. This has led to this list of penny stocks to turn $5 into $500.
Certain penny stocks trading at depressed levels with strong underlying businesses have asymmetric upside versus downside risk. Moreover, focusing on penny stocks with profitable operations reduces the risk of shareholder dilution eroding returns. With the market dominated by high-flying big tech names, they present a chance to uncover hidden gems before they join the ranks of hot momentum stocks.
I believe penny stocks are an untapped source of potential multibagger returns in today’s environment. By investing small amounts into a basket of carefully researched penny stocks exhibiting hypergrowth potential, investors stand to reap huge rewards. For example, turning $5 into $500 would represent a 10,000% return – the type of home run swing penny stock investing offers compared to conventional assets. Here are seven penny stocks to turn $5 into $500.
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AXT (NASDAQ:AXTI) makes single-element semiconductor substrates with its gradient freeze technology. This enables AXTI to produce high-performance semiconductor substrates and epitaxial wafers used in EVs, wireless devices, LEDs, lasers, optical sensing, and more.
I believe AXTI could be one of the next semiconductor stocks to surge, given the growth in semiconductors and investors searching for the next big name in the space before the hype around AI really takes hold.
In fact, AXTI has already climbed 75% in the past month but remains down 73% from its peak and has been essentially flat over the past year. This means there is still substantial upside potential, especially as the company continues to innovate and expand into new markets. For example, AXTI is making advancements with 8-inch gallium arsenide technology to support emerging micro-LED applications, with customer visits planned for next quarter.
The company also sees new demand related to AI, with orders already coming in and expected to drive growth. I believe AXTI offers excellent value right now.
Intermap Technologies (ITMSF)
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Intermap Technologies (OTCMKTS:ITMSF) is a geospatial intelligence company providing various geospatial solutions and analytics to commercial and government clients. Its offerings include Data-as-a-Service solutions like InsitePro. There is also NEXTMap One, which provides high-precision 3D geospatial data.
Mapping and geospatial data were viewed as a niche mainly for military applications in the past. But they’re used across various industries today. For instance, ITMSF recently secured a $20 million contract to map Indonesia’s Sulawesi island, with follow-on awards expected. Its Q3 results showed a 46% increase in commercial revenue.
The stock is already up 44% year-to-date but essentially flat over the past year. This means ITMSF is starting its recovery with substantial additional upside potential. As the company continues gaining traction with its subscription-based SaaS offerings and lands more government contracts, I believe ITMSF is poised for significant returns. This makes it one of those penny stocks to turn $5 into $500.
SurgePays (SURG)
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SurgePays (NASDAQ:SURG) is a financial technology company focused on serving the underbanked community in the United States. It provides prepaid wireless service, prepaid debit cards, check cashing, and other financial services through a network of independently owned convenience stores and “bodegas.” Though not a penny stock by the $5/share definition, SURG definitely qualifies with its small $112 million market cap.
However, I believe SURG has tremendous upside potential that makes it an attractive investment despite its relatively higher share price compared to traditional penny stocks. The company has managed to grow and expand its offerings even in the current turbulent market environment, while many other fintech players have floundered.
SURG achieved a record Q3 net income of $7.1 million and EBITDA of $7.5 million, with over $17 million in net income year-to-date. Profitability margins have also expanded substantially. The company ended Q3 with $12.6 million in cash against only $5.5 million in debt.
It also recently acquired ClearLine Mobile and signed a partnership with SIN PIN targeting the U.S. immigrant population. I believe SURG is significantly undervalued trading at just 4 times 2023 expected earnings. The current discount seems unwarranted, and I expect SURG to surge ahead over the coming year.
Priority Technology Holdings (PRTH)
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Fintech is one of my favorite sectors right now, and Priority Technology Holdings (NASDAQ:PRTH) is an ideal way to play the space. PRTH stands to benefit as digital transactions continue growing. Admittedly, e-commerce and online spending have moderated recently amidst the current environment. However, I believe significant pent-up demand remains. Once rates decline and the economy reopens, banks should become much more willing to partner with fintechs.
PRTH has fallen to penny stock levels around $3, after peaking at $8 in 2021. But with the company nearing profitability and expected to deliver double-digit revenue growth, I see this as a prime turnaround setup. Consensus estimates call for PRTH’s first full year of profitability in 2025, along with EPS recovering from -$0.57 to 22 cents over the next two years.
Trading at just 0.3x forward sales and only 14x 2025 EPS estimates, PRTH looks like a bargain in my view. If the company even comes close to hitting estimates, the stock price has plenty of room to run. With fintech still in the early innings and ongoing digital transformation tailwinds.
Tetra Technologies (TTI)
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Tetra Technologies (NYSE:TTI) operates in the energy industry, providing completion fluids and water management services to oil and gas producers. After a turbulent few years, TTI appears to be back on solid ground financially. Although it has cooled off from September’s peak of $6.5, TTI remains well above 2021 levels.
Drilling down into the numbers, TTI looks attractively priced for a penny stock. It currently trades at 12x expected 2024 EPS of 32 cents. But looking ahead, analysts forecast EPS to climb to $1.34 in 2026. That puts the forward P/E ratio at just 3x! TTI also boasts an intriguing lithium development project with Exxon (NYSE:XOM) in Arkansas, adding some diversification to its oil/water recycling business. It’s one of those penny stocks to turn $5 into $500.
If TTI can execute and deliver on its long-term profit growth, I believe the stock remains significantly undervalued. While energy stocks carry risk, TTI’s upside potential outweighs the downside from current levels in my view. I wouldn’t be surprised to see TTI become a multibagger over time if management delivers.
Latham Group (SWIM)
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Latham Group (NASDAQ:SWIM) is the largest designer and manufacturer of in-ground pools in North America. With housing demand skewing towards more luxury, pools are becoming increasingly popular. An average pool adds about 7% to a home’s resale value. With U.S. housing growing and only 8% of households currently owning a pool, tailwinds exist for the broader swimming pool industry.
SWIM has struggled in 2023 and is expected to see revenue decline slightly again in 2024. But by 2025, analysts forecast EPS rebounding from 8 cents to 30 cents, putting the forward P/E at 10x. Margins and bottom-line growth matter most here. And if SWIM can benefit from the strong industry backdrop, I believe its growth trajectory will inflect higher over the next few years. That makes the current valuation highly attractive for long-term investors in my view.
While it may take some patience, SWIM has visible drivers to boost revenue as housing demand normalizes. With the pool market projected to grow with a 6%+ CAGR through 2028, I see SWIM’s depressed valuation as an opportunity for big returns down the road.
Hive Blockchain Technologies (HIVE)
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Bitcoin (BTC-USD) recently hit an all-time high, yet Bitcoin mining stocks remain unloved. With the upcoming halving, many investors fear miner profitability could suffer. However, these miners have been aggressively expanding equipment and stockpiling Bitcoin to maintain hash rates. Once they report these larger Bitcoin holdings, it should drive renewed interest in miners.
As Hive (NASDAQ:HIVE) stated in a recent update: the company has increased its Bitcoin holdings by 10% and its HODL position at month end was 2,131 Bitcoin on its balance sheet. For February, they mined 200 Bitcoin, reflecting a 9% monthly increase in mining capacity to 4.2 EH/s.
These metrics showcase Hive’s operational efficiency even with the halving on the horizon. And the 10% increase in Bitcoin holdings indicates they are prepared. With Bitcoin in an uptrend, I expect Hive’s next quarterly report to showcase substantial asset growth. That should serve as a positive catalyst for the stock.
Mining stocks like Hive remain out of favor and undervalued in my view. But with Bitcoin appearing bullish and Hive’s production metrics headed in the right direction, I see big upside from current levels over the long term. All in all, it’s one of those penny stocks to turn $5 into $500.
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On the date of publication, Omor Ibne Ehsan 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.
Omor Ibne Ehsan is a writer at InvestorPlace. He is a self-taught investor with a focus on growth and cyclical stocks that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as cryptocurrencies and penny stocks. You can follow him on LinkedIn.
