In the last one month, Carvana (NYSE:CVNA) stock has surged by 77%. Also, over a 12-month period, CVNA stock returns have been a whopping 700%. Speculative stock surges can surprise with multibagger returns at the blink of an eye. In my view, there are several speculative stocks that are positioned for a breakout rally in the coming quarters. This column focuses on three names that can deliver at least 100% returns relatively soon.
An important point to note is that when I am talking about speculative stocks, the rally is not completely detached from fundamentals. My idea is to look for beaten down low-price speculative stocks that have potential business catalysts for a big rally.
With the possibility of rate cuts in the second half of 2024, I expect significant price-action among speculative stocks. It’s therefore a good time to consider some names for robust returns. Let’s discuss the reasons that makes these stories worth considering.
Tilray Brands (TLRY)
Among cannabis stocks, Tilray Brands (NASDAQ:TLRY) stock looks attractive and poised for a massive rally. The Company’s fundamentals have improved and positive industry tailwinds will support the bull thesis.
Recently, Germany legalized the use of recreational cannabis. It’s likely legalization will happen on more European countries in the next few years. I must add that the medicinal cannabis market has promising potential in the region. In the United States, federal level legalization of cannabis is pending. However, the cannabis market is expected to swell to $71 billion by 2030 even without legalization. With a big addressable market, the outlook for Tilray looks positive.
Specific to Tilray, revenue for Q2 2024 was $194 million, which was higher by 34% on a year-on-year basis. With diversification, the company is currently the fifth largest craft beer brewer in the U.S. Furthermore, Tilray has reported robust growth in the international cannabis segment that’s driven by medicinal cannabis. Amidst positive developments, TLRY stock has remained depressed. A strong rally seems to be on the cards.
Bitfarms (BITF)
Bitfarms (NASDAQ:BITF) stock has trended higher by 8.5% for year-to-date. During the same period, Bitcoin (BTC-USD) has surged by 40%. A big rally seems likely for this Bitcoin miner in the next few months.
It’s important to note that the rally in Bitcoin is not the only reason to be bullish on Bitfarms. As of December 2023, the company had a liquidity buffer of $118 million. Further, Bitfarms has a zero-debt balance sheet. This provides ample flexibility for aggressive investment in expansion.
As of December 2023, Bitfarms reported hash rate capacity of 6.5EH/s. The company is targeting to increase capacity to 21EH/s by the end of the year.
This is likely to translate into strong growth in revenue. Furthermore, if Bitcoin remains in an uptrend, it’s likely that Bitfarms will witness significant EBITDA margin expansion and cash flow upside. Considering these factors, a 100% upside in quick time seems like a conservative estimate.
Lithium Americas (LAC)
Lithium Americas (NYSE:LAC) stock has witnessed a big correction from highs of October 2023. The reason is a plunge in lithium prices. However, it’s worth noting that LAC stock has stabilized and trended marginally higher by 7% in the last one month. I expect a big rally for this lithium miner from deeply oversold levels.
As an overview, Lithium Americas owns the Thacker Pass asset in the U.S. The asset has an after-tax net present value of $5.7 billion. Further, the asset has a mine life of 40 years and can potentially deliver an average annual EBITDA of $1.1 billion. If we compare these metrics with the current market valuation of $750 million, it’s clear that LAC stock is massively undervalued.
It’s important to note that the long-term outlook for lithium remains positive. The plunge in lithium prices has slowed down investments in mining and production. Analysts are expecting lithium shortage as early as 2025. It’s very likely that lithium has bottomed out and a reversal rally in the metal can trigger big upside for LAC stock.
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.