Penny stocks often fly under the radar, but their low price points can offer outsized returns for bold investors. These stocks typically represent companies with innovative ideas and emerging market niches that are just waiting to break out. By getting in early, investors can capitalize on massive growth as these hidden gems catch the market’s attention and scale up rapidly.
Notoriously volatile in nature, penny stocks can experience sharp price swings due to their relatively lower liquidity. This volatility can be nerve-wracking for some investors, as minor news or changes in investor perception can significantly impact share prices. There’s also a high degree of risk involved, and not every penny stock will turn into a multi-bagger - so these investments are best suited for those with a healthy appetite for risk, and a long-term investment horizon.
However, this very volatility is also what creates opportunities for substantial gains. In light of this context, for investors on the hunt for high-growth opportunities, these three “Strong Buy”-rated penny stocks - Planet Labs (PL), Uranium Royalty (UROY), and D-Wave Quantum (QBTS) - could be ideal investment candidates now, each boasting potential upside of 70% or more to Wall Street’s mean price targets.
Penny Stock #1: Planet Labs
Founded in 2010 by three visionary NASA scientists, California-based Planet Labs (PL) is at the forefront of global satellite imagery and geospatial solutions. With a mission to image the world every day, Planet Labs operates the largest fleet of Earth observation satellites, delivering crucial data and advanced insights to over 1,000 customers across diverse sectors, including agriculture, forestry, intelligence, education, and finance. By making change visible, accessible, and actionable, Planet Labs empowers users to unlock unique value from satellite imagery and transform how they understand and respond to the world around them.
With a market cap of around $698 million, shares of Planet Labs are up 11.6% over the past year, but are in negative territory on a YTD basis, down 4.6%. The stock has bounced back sharply from its April lows, though, delivering gains of roughly 39% over the past six months, compared to the broader S&P 500 Index’s ($SPX) return of 15.5% during the same time frame.
Planet Labs revealed its fiscal 2025 Q2 earnings results in early September. During the quarter, the company achieved remarkable revenue growth, increasing 14% year-over-year to a record $61.1 million. Its customer base expanded by 7%, reaching a total of 1,012. Plus, gross margin improved to 53%, up from 49% in the same quarter last year. PL demonstrated robust growth in Q2 among government customers in the Defense & Intelligence sector, where revenue surged over 30% year-over-year.
On an adjusted basis, the company’s loss of $0.06 per share was slightly better than the year-ago quarter’s adjusted loss per share of $0.07, highlighting a positive trajectory. CEO Will Marshall noted the successful restructuring of the business towards an industry-aligned operating model, leading to improved operational efficiency and gross margin expansion.
CFO Ashley Johnson emphasized that the second quarter results reflect their progress toward achieving adjusted EBITDA profitability by Q4, marking a key milestone in building a high-margin, sustainable business. With a solid balance sheet boasting approximately $249 million in cash and no debt, Planet Labs is well-positioned for continued success and growth.
Looking forward to Q3, management anticipates revenue to range between $61 million and $64 million, with non-GAAP gross margin expected to range from 59% to 61%. The company also projects an adjusted EBITDA loss of approximately $5 million to $2 million for the quarter, while capital expenditures are estimated to land between $13 million and $16 million.
PL stock has a consensus “Strong Buy” rating overall. Out of the 10 analysts offering recommendations for the stock, seven suggest a “Strong Buy,” one advocates a “Moderate Buy,” and the remaining two have a “Hold” rating.
The average analyst price target of $4.00 indicates a notable potential upside of around 70.2% from the current price levels.
Penny Stock #2: Uranium Royalty
Canada-based Uranium Royalty Corp. (UROY) is the world's sole uranium-focused royalty and streaming company. Through strategic acquisitions of royalties, streams, debt, and equity in uranium companies, Uranium Royalty provides investors with essential exposure to uranium commodity prices (UXZ24) while also trading physical uranium.
Amid escalating demand for carbon-free nuclear energy, the company is a vital capital provider for an industry that requires substantial investments in production capacity. With a management team and board boasting decades of experience in uranium and nuclear energy, Uranium Royalty leverages deep industry knowledge to identify and capitalize on lucrative investment opportunities.
Valued at a market cap of around $350 million, shares of Uranium Royalty have gained 7.5% on a YTD basis. Plus, the stock has outpaced the broader market over the past six months, with healthy gains of 26.7%.
Uranium Royalty reported its fiscal Q1 earnings results on Sept. 12. During the quarter, the Vancouver-based company reported a net loss of C$0.02 per share, up from a net loss of C$0.01 per share in the year-ago quarter. The wider net loss is largely attributed to higher office and administration expenses, alongside a shift in deferred income tax recovery.
Currently, the company boasts strong working capital of C$222 million ($159.8 million), and, as of July 31, holds a substantial 2,711,271 pounds of tri-uranium oxide.
In a strategic move to enhance its portfolio, UROY made two notable acquisitions in Q1. On July 3, it acquired a 0.375% net smelter returns royalty on products from the Salamanca project, encompassing the Retortillo, Zona 7, and Alameda mining projects in Spain, for C$0.7 million ($0.5 million) in cash.
Shortly thereafter, on July 31, Uranium Royalty secured a gross overriding royalty of 6% “Mine Price” for the Churchrock uranium project for C$4.9 million ($3.5 million) in cash. These acquisitions position the company to capitalize on the growing demand for uranium.
While analyst coverage is light, UROY stock has a consensus “Strong Buy” rating on Wall Street. Of the three analysts offering recommendations, two suggest a “Strong Buy,” and one has a “Moderate Buy” rating.
The average analyst price target of $5.34 indicates expected upside of almost 83% from current levels.
Penny Stock #3: D-Wave Quantum
Valued at a market cap of $239.7 million, Palo Alto-based D-Wave Quantum Inc. (QBTS) is a pioneer in quantum computing and is recognized as the world's first commercial supplier of quantum computers. Committed to unlocking the potential of quantum technology for both business and society, D-Wave delivers practical quantum applications that tackle a wide range of challenges, from logistics and artificial intelligence (AI) to drug discovery and financial modeling.
The company’s cutting-edge technology has been adopted by leading organizations, including Mastercard (MA), Deloitte, Siemens Healthineers, and Lockheed Martin (LMT), showcasing D-Wave's ability to provide significant value across various industries.
Shares of D-Wave are up almost 76% over the past year, and more than 28% on a YTD basis.
Following the company’s impressive Q2 earnings results on Aug. 8, shares of D-Wave took off more than 5% in the next trading session. The company’s revenue hit $2.2 million, marking a solid 28% increase from the year-ago quarter. Bookings for the quarter also shot up to $2.7 million, reflecting a 6% year-over-year rise and representing the company's ninth consecutive quarter of growth in this area.
Additionally, GAAP gross profit soared to $1.4 million, up 97% from the previous year. In Q2, the company recorded an adjusted EBITDA loss of $13.9 million, representing a nearly 7% improvement from the $14.9 million adjusted EBITDA loss in the same quarter of fiscal 2023. This positive shift was primarily driven by increased gross profit and reduced operating expenses, highlighting the company's focus on operational efficiency.
Plus, the company also trimmed its loss to just $0.10 per share, marking a solid improvement from the year-ago quarter’s loss of $0.21 per share. As of June 30, D-Wave boasted a consolidated cash balance of $40.9 million, compared to $7.5 million in Q2 of 2023.
“Our second quarter results show continued traction on all fronts - revenue, bookings, customer acquisition, liquidity and technical advancements,” said CEO Dr. Alan Baratz. Furthermore, the CEO emphasized D-Wave's product innovations, such as the Advantage2 prototype, new nonlinear hybrid solver, fast anneal feature, and advances in quantum artificial intelligence, as key drivers of this momentum.
For fiscal 2024, management reaffirmed its guidance for an EBITDA loss that’s narrower than its adjusted EBITDA loss of $54.3 million in fiscal 2023.
Overall, Wall Street is highly optimistic, with a consensus “Strong Buy” rating for QBTS stock. Of the seven analysts covering the stock, six advise a “Strong Buy,” and one recommends a “Moderate Buy.”
The average analyst price target of $2.54 indicates a whopping 124.8% potential upside from the current price levels.
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