It’s not just crypto winter that has many investors down. The year has also been gloomy for most penny stocks. While selected stocks have outperformed, broad sentiment towards penny stock investing has been bearish. This is in sharp contrast to the euphoria seen in 2021 among higher-risk areas of the market. Thus, as we move closer to the end of the year, it might be a good time to screen for the top penny stocks for 2023.

The reasons for this broad-based lack of interest in penny stocks throughout the year can be traced back to economic uncertainty coupled with monetary tightening. In all probability, inflation has peaked in the United States. Thus, any potential shift towards renewed expansionary policies can spark a rally in penny stocks.

Another important point to make note of is that penny stocks do not always represent a business with weak fundamentals. I would take several penny stocks seriously considering their long-term potential to create value. These are my top penny stocks I think are worth considering for 2023 and beyond.

Tilray Brands (TLRY)

It’s worth noting that nearly 40 states in the U.S. have legalized the use of cannabis in some form. However, it remains to be legalized at the federal level. That’s despite a recent survey which indicates that an overwhelming majority of Americans support the legalization of marijuana.

With a massive potential impending catalyst in the form of legalization, I think Tilray Brands (NASDAQ:TLRY) is among the top penny stocks to consider for 2023. I am bullish on TLRY stock not just for the boost it might receive, should legalization materialize. Rather, it’s the fact that the company’s business development continues to be in the right direction that has me excited.

Tilray has a market leadership position in Canada, specifically in recreational cannabis. In Germany, the company has a 20% market share in medicinal cannabis. Tilray has also been expanding presence in the U.S., acquiring two brewing companies. With a strong balance sheet, the company is positioned for aggressive expansion in a fully legalized market.

Generally-speaking, most cannabis companies have suffered from sustained cash burn. That said, Tilray expects to be free cash flow positive in all key business units in financial year 2023. With these positives, TLRY stock seems like a potential multibagger.

Transocean (RIG)

A company with a market capitalization of $2.9 billion and an order backlog of $8.2 billion should certainly attract attention. Transocean (NYSE:RIG) seems undervalued, with the offshore rig services company positioned to benefit from positive industry tailwinds.

Talking more about the order backlog, there are two important points to be made. First, in less than two quarters, the company’s order intake has been more than $2 billion. With favorable market conditions, intake is likely to remain robust. Furthermore, the new orders that came in did so at a higher day rate. This will translate into EBITDA margin expansion in 2023 and beyond.

Transocean still has 12 cold-stacked rigs. As market conditions continue to improve, these rigs will provide incremental revenue visibility. As cash flows swell, Transocean is also positioned to deleverage. Accordingly, over the next few years, the company is targeting significant debt reduction of $3 billion. I think this is a top penny stock to buy, given the company’s upcoming improvement in credit metrics, which should boost its valuation.

Kinross Gold (KGC)

Kinross Gold (NYSE:KGC) is a seriously undervalued penny stock that offers a generous dividend yield of 3%. That said, a decline in the price of gold and the company’s sale of assets in Russia and Ghana have translated into a correction for KGC stock.

However, the correction seems overdone with the company posting strong financial results. Notably, Kinross has stable production visibility through 2025. With an attractive all-in-sustaining-cost, the company is positioned to generate positive cash flows for the foreseeable future.

Even with depressed gold prices in Q3 2022, Kinross reported operating cash flow of $173.2 million. In a conservative scenario, the company will be positioned to report $500 to $600 million in operating cash flows in 2023.

Furthermore, Kinross closed Q3 2022 with a total liquidity buffer of $2 billion. This will ensure dividend safety, and secure the company’s share repurchase plan, while also adding the potential for additional asset acquisitions in 2023.

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.