In the modern market, investors who cannot afford high-priced shares are no longer required to shell out hundreds of dollars to access the best quality stocks. Instead, they can still gain exposure to popular companies through exchange-traded funds (ETFs) or by purchasing fractional shares of the stocks themselves. But the giants of the S&P 500 did not get to their vast market capitalizations and elevated share prices the second they were publicly listed on exchanges.   

Rather, they all started in a similar place, usually staving off insolvency and struggling to see their shares appreciate enough to attract a broader audience in the investment world. 

And while an argument can be made for any number of the high-growth Magnificent Seven tech stocks or value-oriented Big Oil mainstays to be the focal point of a portfolio, investors should not overlook the prospect of lower-cost equities one day getting their moment in the sun. 

Why You Shouldn’t Ignore Speculative Investments

Yes, speculative investments carry higher risk profiles. However, they also carry the potential for outsized gains. Ten years ago, shares of NVIDIA Corp. (NASDAQ: NVDA) were trading for 47 cents. Bitcoin was trading for $551. And Meta Platforms Inc. (NASDAQ: META) was trading for $66.29 per share before the company — formerly known as Facebook — really took off. 

Today, NVIDIA’s stock is trading at a post-stock split adjusted price of $122.74, a single Bitcoin is worth more than $60,000, and shares of Meta Platforms are going for $509 each.  

Importantly, by no means are we postulating that the three stocks profiled below are going to be the next NVIDIA, Bitcoin, or Meta. But if you are able to allocate even a small portion of your portfolio to carefully vetted speculative investments, the long-term upside potential could be enormous for investors who do their due diligence and practice patience. 

No. 3: SoFi

On Sept. 9, 2022, CNBC personality and lackluster clairvoyant Jim Cramer announced live on television that “We’re short NVIDIA. It’s a loser.” NVIDIA, of course, has been one of the best performing stocks in the S&P 500 over the past 18 months and is up a mind-blowing 756% since Cramer announced he was short the chipmaker. 

So what does Cramer’s swing-and-miss on the hottest AI stock have to do with SoFi Technologies Inc. (NASDAQ: SOFI)? There is no shortage of examples of the pundit making blunders in prognosticating stock performances. And just this month, on July 1, 2024, he recommended that investors “should wait” on buying shares of SoFi. To many, that can be interpreted as a green light to buy given his impressively poor track record of forecasting stock performances. 

But Cramer’s mishaps aside, SoFi’s worthiness as an investment really speaks for itself. The company provides investors with access to two booming sectors: (1) financial services and (2) tech. The online bank and personal finance company was founded in 2011 by two Stanford University school of business students. One year later, it became the first company to refinance federal and private student loans.

In 2014, the company launched its mortgage division, and in 2015, SoFi became the first U.S.-based fintech company to receive a $1 billion funding round. By 2020, SoFi celebrated its one millionth member, and today it has funded more than $73 billion in loans and boasts over eight million members.    

So besides its impressive start and exponential membership growth, what makes SoFi an attractive option for investors seeking low-cost, potentially high-return stocks? The company just recently turned a profit, and given its financial statements, it appears that more sustainable growth is coming down the pike. In the last quarter of 2023, SoFi reported earnings per share (EPS) of 2 cents on reported revenue of $871 million. Estimates called for just $572 million in revenue, proving the financial services company is now well-equipped to exceed consensus forecasts. In the first quarter of 2024, SoFi soundly beat revenues again, posting $908 million against an estimated $557 million, which in turn was good for an EPS of 2 cents.

Here is the most impressive part: In March 2023, the company posted a quarterly loss of -$8.41 million, but one year later, total revenue amounted to $645 million, or an enormous 7,769.44% increase.  

The Wall Street Journal’s analysts give SoFi a median one-year price target of $9 with a high-end price target of $12. At the time of writing, shares of the financial services company are trading for $6.44.

No. 2: Lithium Americas

According to the International Energy Agency’s “Global EV Outlook 2024” report, last year saw a 35% year-over-year increaser in the number of electric vehicle (EV) sales, with the vast majority of those sales occurring in China (60%), Europe (25%) and the United States (10%). And by 2035, the IEA forecasts that one in every two cars sold will be an EV. In other words, over the next 11 years, EVs are forecast to grow to 50% of total automobile sales.  

With an increased policy focus on combatting climate change and embracing clean energy, EVs’ share of the automobile marketplace is poised for explosive growth, and with it, the demand for lithium — the most critical ingredient in EV batteries — is very likely to skyrocket in tandem. Between President Biden’s administration recently implementing high tariffs on Chinese EVs and the U.S. Environmental Protection Agency’s new rules on emission standards for light-duty and medium-duty vehicles, the writing is on the wall.

As a result, the global lithium market, which was estimated at $31.75 billion in 2023, is expected to grow at a compound annual growth rate (CAGR) of 17.7%. between 2024 and 203, according to Grand View Research.

Enter Lithium Americas Corp. (NYSE: LAC), and its modest $504 million market cap. Founded in 2007, the Vancouver-based pure-play lithium mining company is focused on advancing lithium projects at Thacker Pass in Humboldt County, Nevada. Why solely at that location, though? Thacker Pass Lithium Mine is the largest known lithium deposit in the U.S. and one of the largest in the world, with an estimated lifespan of at least 40 years based on Phase 1 capacity of 40,000 tons per year and Phase 2 capacity of 80,000 tons per year. 

And Lithium Americas is the only company with rights to mine at Thacker Pass. The operations at that site are being overseen by Lithium Nevada, LLC, a wholly-owned subsidiary of Lithium Americas whose largest shareholder is General Motors Company (NYSE: GM), the legacy U.S. automaker who is in the process of transitioning its vehicle manufacturing to an electrified fleet. According to Lithium Americas’ website, Thacker Pass has an after-tax net present value of $5.7 billion, and General Motors has exclusive rights to 100% of the Phase 1 lithium production at the mining site for up to 15 years and the right of first offer for all of Phase 2’s production.  

Despite the company not yet producing any revenue, Lithium Americas could reach profitability shortly after its refined lithium begins to trickle into General Motors’ EV battery supply chain. In the interim, Lithium Americas has done an admirable job of keeping its books in check.

Looking at the company’s financial statements suggests the miner has been able to dramatically lower its operating expenses. In December 2022, that line item came in at $156.72 million annually, and one year later in December 2023, Lithium Americas reported that operating expenses were just $50.18 million, representing a significant decrease of 67.98%. At the same time, the company saw its liabilities decrease from $232.55 million in December 2022 to $226.09 million in December 2023, while its assets grew over the same year-over-year period from $1.02 billion to $1.06 billion.

The Wall Street Journal’s analysts give the stock a median one-year price target of $8 and a high-end price target of $12. At the time of writing, shares of Lithium Americas are trading for $2.56.

No. 1: Antero Midstream

The final company on today’s list of three high-upside stocks trading for under $15 is Antero Midstream Corp. (NYSE: AM), a Denver-based firm that operates and develops midstream gathering, compression, processing and fractionation assets in the Appalachian Basin. 

Antero Midstream just barely made the cut as shares are currently trading at $14.76 after rising 17% so far this year (and 28% over the past five years). Much of that year-to-date gain is because of its role in the global export market for liquified natural gas (LNG) and liquified petroleum gas (LPG). The company owns gathering pipelines, compression facilities, processing plants, and water handling systems in the Marcellus and Utica Shales, two of the premier North American shale deposits. 

According to the company’s May 6, 2024, presentation, Antero Midstream enjoyed an average 18% CAGR each year from 2014 to 2024 and now boasts $10 billion in enterprise value. And through its dividend distributions, the company has returned a staggering $3.8 billion to shareholders since 2014. That dividend, by the way, is the icing on the cake and is currently yielding 6.10% annually, which equates to 23 cents per share per quarter.  

Additionally, as a cash flow-rich organization, not only does the midstream energy firm pay a substantial dividend yield but it also has a $500 million share repurchase program in place, which demonstrates to shareholders how in tact the company’s financial statements are. Speaking of that cash flow, in the first quarter of 2024, Antero Midstream posted free cash flow of $182 million, or $74 million after dividend distributions were made, which marks a record high for the company. 

Revenue growth was solid as well. Between March 2023 and March 2024, Antero Midstream was able to increase its total revenue from $199.58 million to $296.72 million, representing a 48.67% increase in one year. This has translated to an sizable jump in EPS, which in 2019 was -80 cents, but by the end of last year had reached 77 cents, which was good for a 196.25% increase.

The Wall Street Journal’s analysts give the stock a median one-year price target of $14.60 and a high-end price target of $16. But for income-focused investors, the company’s 6.10% dividend yield may be the determining factor more so than any potential appreciation in Antero Midstream’s share price. 

Bottom Line

For investors looking to add some exposure to higher risk-reward investments in their portfolios, speculative stocks offer a wealth of options with many companies well-positioned for long-term success. That is not to say that most of the stocks trading under $15 are all going to be winners; it is very likely that the opposite is true.

But the companies that can evidence sound financials, and are being run by strong executive management teams, and that are operating in thriving or burgeoning industries that have strong mid- to long-term outlooks make for good considerations for viable buy-and-hold investments. In that vein, stocks stocks like SoFi, Lithium Americas and Antero Midstream offer investors strong upside potential while minimizing the downside risk typically associated with speculative investments.

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