KGC

Speculative Plays Under $10: 3 High-Risk, High-Reward Stocks With 2X Potential

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Inflation has been stubborn, and the inflation rate can be higher for families based on their consumption basket. Therefore, money in the savings account is likely to erode in purchasing power. Investing in relatively risky asset classes is the only way to maintain or increase purchasing power.

Within equities, blue-chip stocks have a low beta and provide steady returns. However, it’s important to consider exposure to high-beta stocks to boost portfolio returns. This column focuses on high-risk high-reward stocks under $10 that can 2x in the next 12 to 18 months.

Of course, it’s important to limit exposure to the high-risk stocks. However, even with 10% to 15% portfolio exposure, the overall impact on portfolio returns can be significant. While talking about speculative plays, I have ensured that the ideas discussed represent companies with good fundamentals. These stocks are likely to surge higher with impending company or industry-specific catalysts.

Let’s discuss the reasons for being positive about these high-risk, high-reward stocks under $10.

Kinross Gold (KGC)

Cellphone with business logo of Canadian mining company Kinross Gold Corp. on screen in front of webpage.

Source: T. Schneider / Shutterstock.com

Kinross Gold (NYSE:KGC) has been in an uptrend for year-to-date. However, valuations remain attractive, with KGC stock trading at a forward price-earnings ratio of 17.4. The stock also offers a dividend yield of 1.69%.

It’s worth noting that gold trades above $2,300 an ounce. Further, gold is expected to hit $2,600 an ounce in the next 12 months. If this projection holds, KGC stock will likely go ballistic in the next few quarters.

I must mention that the bullish momentum is already underway, with Kinross reporting stellar Q1 2024 results. For the quarter, production growth was 13% on a year-on-year basis to 527,399 ounces. Further, adjusted operating cash flow was $425 million. With gold in an uptrend, the annual adjusted OCF will likely be close to $2 billion.

Kinross ended the quarter with a strong liquidity buffer of $2 billion. This provides ample flexibility for aggressive capital investments and potential acquisitions to boost production.

Archer Aviation (ACHR)

Person holding cellphone with logo of American eVTOL aircraft company Archer Aviation Inc. (ACHR) on screen in front of webpage. Focus on phone display. Unmodified photo.

Source: T. Schneider / Shutterstock.com

Archer Aviation (NYSE:ACHR) stock has declined sharply year to date. However, on a 12-month basis, the stock returns are stellar at 90%. I believe that the recent correction is a good buying opportunity. I will not be surprised if ACHR stock trades double-digits in the next few quarters.

As an overview, Archer is moving towards the commercialization of flying cars. Archer will likely commence operations in the United States in 2025. Additionally, the Company will likely commercialize eVTOL aircraft in the UAE next year.

Archer recently signed a framework agreement in Abu Dhabi to accelerate commercial air taxi operations across the UAE. With plans to commence operations in India by 2026, Archer seems to have aggressive growth plans. I expect stellar revenue growth in the next few years as the Company makes inroads into new markets.

It’s worth mentioning that Archer is focused on significantly scaling up operations. The manufacturing facility in Georgia is likely to support the production of 650 aircraft annually. This will support servicing an indicative order backlog of $3.5 billion.

Bitfarms (BITF)

Bitcoin and crypto mining farm. Big data center. High tech server computers at work. Bitfarms (BITF) mines crypto.

Source: PHOTOCREO Michal Bednarek / Shutterstock.com

After some corrections, Bitcoin (BTC-USD) witnessed a renewed rally. It was entirely likely after the halving event. I expect the digital asset to scale new highs in the coming months. A good proxy exposure to Bitcoin is investing in quality miners. Bitfarms (NASDAQ:BITF) look attractive at around $2 levels for multibagger returns within the next 12 months.

It’s worth noting that Bitfarms ended April with a mining capacity of 7EH/s. The Company is targeting to boost capacity to 21EH/s by the end of the year. This is likely to translate into stellar revenue and EBITDA growth. An important point is that Bitfarms reported an average cost per Bitcoin production of $16,200 as of Q4 2023. Being a low-cost miner, Bitfarms is positioned to deliver robust cash flows.

From a financial perspective, Bitfarms has a zero-debt balance sheet and ended 2023 with a liquidity buffer of $118 million. With the $375 million at-the-market equity offering program in March, Bitfarms is well positioned to finance its aggressive expansion plans.

On the date of publication, Faisal Humayun 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.

Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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