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With monetary tightening nearing an end, the S&P 500 index has been trending higher. Citigroup (NYSE:C) expects the S&P 500 index to touch 4,600 levels by the end of the year. The firm also expects the index will touch 5,000 in 2024.
If bullish catalysts play out, growth and penny stocks can gain momentum. Investors can find many opportunities, but a few under-$10 stocks present great potential.
These investments represent fundamentally strong growth stocks and can triple within the next 36 months. The estimate is conservative and multi-bagger returns can come sooner than expected.
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Given these targets, I expect a broad-based rally and growth stocks can reward investors. Let’s discuss three under-$10 stocks that are poised to skyrocket.
Transocean (RIG)
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Transocean (NYSE:RIG) stock has more than doubled in the last 12 months. The stock remains attractive considering the backlog position and the industry outlook. I believe that RIG stock can triple in the next 36 months.
Transocean is an offshore drilling company with a fleet of floaters that’s 100% focused on ultra-deepwater and harsh environments. Transocean reported an order backlog of $9.2 billion that is front-end loaded and provides clear cash flow visibility.
Besides the flexibility to make new investments, Transocean is positioned to deleverage. The company is targeting debt reduction by $3 billion in the next few years. With oil trading around $80 per barrel, I expect offshore drilling activity to remain robust and Transocean’s credit metrics are likely to improve.
It’s also worth noting that in three months (April to July), the company added $1.2 billion in backlog. If the order intake remains robust, RIG stock will continue to trend higher.
Kinross Gold (KGC)
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Kinross Gold (NYSE:KGC) stock is another potential multi-bagger that’s trading at a significant valuation gap. The 2.35% dividend yield stock trades at an attractive forward price-earnings ratio of under 14.
It’s worth noting that Kinross ended Q2 2023 with $1.9 billion in liquidity. Further, the company reported an adjusted operating cash flow of $459.1 million for the quarter. With high financial flexibility, Kinross is likely to acquire assets to boost growth. A potential acquisition will also offset the impact of Russian asset sales in 2022 due to geopolitical reasons.
Even with rate hikes, gold has remained resilient at around $1,900 an ounce. I expect an upward breakout for the precious metal. This will translate into higher free cash flows and healthy dividend growth.