Amidst significant volatility, the S&P 500 index has declined by 11% in the last 12 months. It’s not a time for easy money-making. However, there is no doubt that current market conditions are best for accumulating stocks. Be it blue-chip, growth, or penny stocks.

Penny stocks have always garnered market attention as there is potential to make quick money. Investors, however, need to tone down expectations in current market conditions. A careful selection of non-speculative penny stocks can deliver multibagger returns in the next three years.

When I say non-speculative penny stocks, it implies stocks of companies that have a sound business model. Further, these companies have a decent balance sheet to navigate challenging times. If the business delivers, these stocks can be among the mid-cap or large-cap names in the coming years.

Let’s discuss five penny stocks to buy for 5x returns with an investment horizon of three years.

Solid Power (SLDP)

Solid Power (NASDAQ:SLDP) stock has corrected by almost 70% in the last 12 months. However, it’s among the non-speculative penny stocks to buy for multibagger returns.

It’s worth noting that even with the stock decline, business developments have remained positive. With impending catalysts, I expect a strong reversal rally from current levels.

Solid Power expects to commission the electrolyte production facility in the current year. The company will also deliver EV cells to automotive partners for validation testing.

Solid Power has also been trying to accelerate research and development activity. In December 2022, the company licensed its cell design and manufacturing process to BMW (OTCMKTS:BMWYY). Parallel research can accelerate the commercialization of solid-state batteries.

Solid Power closed 2022 with cash and equivalents of $496 million. Besides BMW, the company’s automotive partner includes Ford (NYSE:F). I don’t see financing as a concern at any stage of the product development and commercialization cycle.

Kinross Gold (KGC)

Kinross Gold (NYSE:KGC) stock has trended higher by 21% in the last six months. The rally is primarily driven by the recent upside in gold prices.

The world faces challenges related to the banking sector besides inflation and an impending recession. With these concerns, gold will likely trend higher, and gold mining stocks look attractive. Among penny stocks, Kinross seems poised for multibagger returns from oversold levels.

A key point to note is that Kinross reported a free cash flow of $157 million for Q4 2022. This implies an annualized FCF potential of $630 million. However, with gold trending higher, the company will likely deliver FCF over $750 million. The company has already guided for stable production through 2025.

With a strong balance sheet and robust cash flows, KGC stock is an attractive dividend growth stock. At the same time, acquisition-driven growth seems likely considering the financial flexibility. It’s worth mentioning that Kinross was forced to sell Russian assets in 2022 due to geopolitical factors.

Tilray Brands (TLRY)

Cannabis stocks have continued to suffer due to regulatory headwinds coupled with cash burn. The timeline for federal-level legalization of cannabis remains uncertain, and that’s a negative. However, Tilray Brands (NASDAQ:TLRY) has seen positive business developments.

Assuming a legalization scenario in the next 24 months, I expect TLRY stock to be a ten-bagger. Coming to business developments, there are two important points to note. First and foremost, Tilray has been reporting positive adjusted EBITDA on a sustained basis. In the last quarter, the company also reported positive free cash flows from key business units.

Furthermore, Tilray has a strong presence in the medicinal and recreational cannabis sector. The company has a wide addressable market in the U.S. and Europe. It’s worth noting that the company acquired two brewing companies, which enables Tilray to set up a robust strategic infrastructure in the U.S. Overall, Tilray is at an inflection point of growth. If the legalization story plays out, the stock will be a massive wealth creator.

Bitfarms (BITF)

Bitcoin (BTC-USD) surged by 65% for year-to-date 2023. It seems that the upside will sustain signaling an end to the extended crypto winter. It’s, therefore, a good time to accumulate Bitcoin mining stocks. Global financial uncertainty and Bitcoin halving due in 2024 are catalysts for a sustained rally in cryptocurrencies.

Among the penny stocks, Bitfarms (NASDAQ:BITF) looks attractive. For year-to-date, the stock has surged by 113%. I expect the rally from deeply oversold levels to sustain as mining margins improve in the coming quarters.

It’s worth noting that even for Q3 2022, the company reported an adjusted EBITDA margin of 31%. The business can generate healthy cash flows if Bitcoin trades around $35,000 to $40,000.

As of February, Bitfarms reported a mining capacity of 4.7EH/s. On a year-on-year basis, the company increased capacity by 104%. As capacity continues to increase, the company’s digital assets will swell.

Polestar Automotive (PSNY)

Polestar Automotive (NASDAQ:PSNY) is an attractive penny stock from the EV space. In the last six months, PSNY stock has witnessed a deep correction of 50%. I believe the worst is over, and potential catalysts for a sharp reversal rally exist.

The outlook is positive for Polestar in terms of vehicle deliveries. Last year, delivery growth on a year-on-year basis was 80%. For the current year, the guidance is for 60% growth.

However, the stock has been depressed due to the widening of EBITDA level losses in 2022. With operating leverage, margins are likely to improve in 2023 and beyond. Further, with the impending launch of Polestar 4 and 5 in 2023 and 2024, respectively, the growth outlook is positive.

It’s worth noting that the company closed 2022 with a cash buffer of $974 million. The company is exploring equity or debt fundraising. Any announcement on this front will be positive for the 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.