There are dozens of penny stocks that are famous among investors and are widely discussed on social media platforms. Being in the limelight, many of the penny stocks are already overvalued or trade at fir valuations. However, a careful screening of stocks under $5 can provide investors with attractive under-the-radar penny stocks.
These are typically names that have not generated significant interest or have been ignored by the markets. Further, these under-the-radar stocks trade at a valuation gap and there is a strong case for a significant rally once these stocks are in the limelight.
My focus in this column is on three under-the-radar penny stocks that are deeply undervalued. Also, these stocks represent companies that have good fundamentals. I would not lose sleep by holding these names for the medium term.
Let’s discuss the reasons to believe that these penny stocks can surge by 100% before the end of the year.
IAMGOLD (IAG)
IAMGOLD (NYSE:IAG) stock has been sideways in the last 12 months and I believe that this under-the-radar-penny stock is poised to surge higher. It’s worth noting that gold continues to trade above $2,000 an ounce and I remain positive on further upside. The key reasons being geopolitical tensions and possibility of expansionary monetary policies.
Specific to the Company, production upside is a key reason to be bullish. Cote Gold is one of the largest gold mines in Canada. IAMGOLD expects production from this asset this year. An important point to note is that the mine has an all-in-sustaining-cost of $851 an ounce. I expect healthy EBITDA margin and cash flows from the asset.
From a financial perspective, IAMGOLD reported a liquidity buffer of $1 billion as of Q3 2023. This provides high flexibility for aggressive exploration activity and potential acquisition driven asset growth. The Company has announced acquisitions in the recent past to expand its mineral reserve base.
Standard Lithium (SLI)
With the big plunge in lithium price, Standard Lithium (NYSE:SLI) stock has been sidelined. SLI stock has plunged by almost 70% in the last 12 months. I see this as a golden opportunity to accumulate for multibagger returns.
An important point to note is that Standard Lithium has quality lithium assets that will deliver robust cash flows. It’s a matter of holding the stock through the bear market for lithium. To put things into perspective, the Company’s South West Arkansas project has an after-tax base case net present value of $4.5 billion.
The asset can produce up to 35,000 tonnes per annum of battery-quality lithium hydroxide over a 20-year operating life. Clearly, it’s a cash flow machine once operational.
Of course, the asset construction requires an investment of $1.27 billion. However, financing is unlikely to be a concern once lithium starts trending higher. For now, Standard Lithium, at a market valuation of $260 million looks attractive in comparison to the asset valuation.
Blade Air Mobility (BLDE)
After trading at 52-week lows of $2.1 in November 2023, Blade Air Mobility (NASDAQ:BLDE) stock has trended higher by almost 50% to current levels of $3.1. I believe that the upside momentum is likely to sustain for this under-the-radar penny stock.
As an overview, Blade Air is a provider of air transportation alternatives to congested ground routes in the United States. The business model is unique and the Company is asset-light. This provides headroom for healthy margin expansion with operating leverage.
As a matter of fact, Blade Air reported positive EBITDA for the first time in Q3 2023. It’s likely that margin expansion will sustain in the coming quarters and is an important stock upside catalyst. Another point to note is that the Company reported year-on-year revenue growth of 56% for Q3 2023. I am bullish on the overall growth momentum, with the MediMobility Organ Transport segment growing at a healthy pace.
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.