Penny stocks saw per-share pricing drop further than expected in 2023, with ETFs like the iShares Micro-Cap ETF (NYSEARCA:IWC) dropping 2% compared to the wider market’s respectable 7% return since Jan. 1. That may be changing, though, as rate cut prospects, combined with the “worst in class” penny stocks being squeezed, combine to make today’s remaining micro-cap top contenders in their category.
The best part about penny stock investing is that you can diversify holdings across a range of sectors, geographies, business types, and more €” creating a bespoke, customized portfolio best suited to your unique needs. Here are a few of the top penny stocks on the rise you may want to consider today.
Bit Digital (BTBT)
Starting from the cryptocurrency side of penny stocks on the rise, Bit Digital (NASDAQ:BTBT) is a Bitcoin (BTC-USD) mining stock priced far cheaper than well-known alternatives like Riot Platforms (NASDAQ:RIOT). The company’s mining units number in the tens of thousands, and to date, they’ve mined more than 6,600 Bitcoins (worth more than $430 million at today’s pricing). That’s a drop in the bucket compared to mega-miners like Riot, which has mined about the same amount in 2023 alone. To offset the disparity, Bit Digital is also diversifying sales streams by leaning into AI-centric infrastructure.
Bit Digital AI is Bit Digital’s new business line, which “provides[s] specialized infrastructure to support generative artificial intelligence workstreams.”
In other words, Bit Digital is deploying a suite of Nvidia (NASDAQ:NVDA) units in a high-end data center to help smaller companies access greater artificial intelligence utility by offering multiple computing power access points.
To me, this is the future of digital crypto mining: whether due to regulation or cost-prohibitiveness, as mining becomes pricier, these companies will increasingly use their vast computing power to solve peripheral problems. And Bit Digital is a penny stock leading the charge into the emerging paradigm.
Destination XL Group (DXLG)
Destination XL Group (NASDAQ:DXLG) stands out among penny stocks as a longstanding retailer with a proven business model and operational success. The company specializes in “big and tall” men’s clothing and has experienced a slight sales slump throughout 2023. However, it’s not enough to justify its current valuation.
Recently, Destination XL posted fourth-quarter and end-of-year results with adjusted earnings of 10 cents per share for the quarter and 50 cents for the year. Although these figures marked a 16% and 20% drop, respectively, from the previous year, the company’s 10.7% EBITDA margin remains impressive. Despite this, Wall Street reacted negatively, sending shares down about 10% post-earnings.
This dip has brought the stock to a very appealing 6x price-to-earnings ratio and a share price of just 0.42x sales. Moreover, the company’s effective cash management has allowed it to remain debt-free and maintain high buyback levels. With a total yield of 12.52%, Destination XL Group is a compelling penny stock on the rise.
Lithium Americas (LAAC)
Lithium Americas (NYSE:LAAC) ranks among the top penny stocks on the rise this year, despite a sluggish lithium market. However, trends could reverse in 2024, potentially catapulting this Argentinian-focused mining stock. Demand for lithium, driven largely by batteries and renewable energy transitions, is expected to surge more than 30% annually through 2030.
Like other lithium producers, Lithium Americas encountered slow demand and a significant oversupply in 2023, which depressed spot prices. But demand is accelerating, and some analysts predict an imminent undersupply, likely pushing spot prices upward and benefiting Lithium Americas.
More importantly, Argentinia’s new president, Javier Milei, is sparking bullish sentiment about the lithium-rich region’s mining potential, as he wants to reduce hurdles for mining operations and recently spoke to Elon Musk about the issue (lithium, of course, being a critical component in EV production).
With the stock trading below its book value and at a lower price-to-forward earnings ratio than in recent years, Lithium Americas is a unique commodity penny stock set to surge as markets realign.
Desktop Metal (DM)
Desktop Metal (NYSE:DM) is a surging penny stock. The 3D-printing stock climbed over 15% since Jan. 1. Despite trading below previous highs, the penny stock is poised to broaden its market reach by targeting new audience segments with substantial growth potential.
Desktop Metal’s healthcare-focused subsidiary, Desktop Health, has rolled out an expansive initiative called ScanUp aimed at dental professionals. This move capitalizes on the fact that “half of the dentists in the United States have not yet adopted intraoral scanning,” representing a significant untapped market, as noted in a company press release. The ScanUp platform requires a 36-month commitment and promises to generate more predictable, recurring revenue for the small-cap 3D-printing penny stock.
Closing out 2023, Desktop Metal notably reduced its net loss to $323.4 million from $740.3 million the previous year. Although it is still on the path to profitability, Desktop Metal presents a high-risk but potentially high-reward penny stock investment opportunity within the expanding 3D-printing sector.
The Metals Company (TMC)
A few weeks ago, I briefly examined The Metals Company (NASDAQ:TMC) from a legislation perspective, theorizing that GreenTech initiatives might benefit the deep-sea metals mining firm. However, renewed Federal interest in sourcing essential metals and minerals from the ocean is not the only factor buoying this penny stock.
The company recently added Steve Jurvetson as Vice Chairman and “special advisor” to the CEO. Jurvetson’s track record includes early investments and board roles at SpaceX, Tesla (NASDAQ:TSLA), and Planet Labs (NYSE:PL), among others. Although relying solely on one individual to turn a company around is risky, Jurvetson’s experience nurturing small, speculative companies could significantly impact this deep-sea mining penny stock.
A current concern for The Metals Company is its burn rate €”deep-sea mining exploration is expensive and slow to yield results. The company currently has enough cash and credit to sustain its operations for approximately another year. However, with Jurvetson’s appointment, expect strategic investment opportunities to surface soon, as he may begin leveraging his Silicon Valley connections for potential capital influx.
Enovix Corporation (ENVX)
Enovix Corporation (NASDAQ:ENVX), an energy-centric penny stock, is leading the charge in cutting-edge battery technology. Unlike prominent battery producers like Tesla, which shifted their lithium-ion batteries away from rare earth materials while maintaining the basic battery structure, Enovix is revolutionizing the entire concept.
The company produces 3D silicone lithium-ion batteries, which are inherently more scalable and suitable for high-capacity applications such as smartphones and tech wearables. Enovix demonstrated this capability with two significant achievements recently. First, the company obtained FDA approval to include its batteries in vital sign monitors, such as blood pressure and heart rate monitors. Soon after, Enovix secured a major contract with the US Army to supply batteries for next-generation military wearables, thus integrating 21st-century technology into soldiers’ toolkits.
Although still focused on R&D, Enovix’s recent victories suggest a rapid acceleration as the company begins marketing its innovative batteries.
Tilray Brands (TLRY)
Finally, on the cannabis stock side of the penny stocks spectrum, Tilray Brands (NASDAQ:TLRY) is a leading competitor thanks partly to German legalization efforts opening new global market opportunities for cannabis stocks. The stock surged 26% in just a few days, a spike that rapidly reverted to early 2024 per-share pricing after the hype slowed.
Looking at broader sector-specific trends, the outlook strengthens further. U.S. legislators continue to advocate for rescheduling cannabis from Schedule I to Schedule III, though full legalization remains off the table for now. Even a slight federal relaxation of cannabis regulations could trigger a broad increase in cannabis stock prices. In the meantime, Tilray has a unique advantage that buffers against potential setbacks.
Owning 5% of the national craft beer market provides Tilray with a critical lifeline while awaiting U.S. legalization and enhances profitability in regions where cannabis is legal despite thin profit margins. Additionally, Tilray’s acquisition of Anheuser-Busch’s (NYSE:BUD) craft beer division included valuable marketing, distribution, and compliance expertise €”assets that will distinctly benefit Tilray as legal environments evolve.
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On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Jeremy Flint, an MBA graduate and skilled finance writer, excels in content strategy for wealth managers and investment funds. Passionate about simplifying complex market concepts, he focuses on fixed-income investing, alternative investments, economic analysis, and the oil, gas, and utilities sectors. Jeremy’s work can also be found at www.jeremyflint.work.