For the most extreme opportunities in the market this side of an options trade, your best bet may be to consider penny stocks to watch in Q2. And by bet, I’m meaning exactly that – this arena should be treated like a casino.

That’s no disrespect to the legitimate enterprises on this list. However, much like when the coach puts you into “special” teams, you have to protect yourself. Anybody who has played football knows that there’s nothing special about special teams. You offer your body as a battering ram and hopefully, you don’t get injured.

That’s the same thing with speculative market ideas. Their proponents will argue till they’re blue in the face that these are hidden-gem opportunities. Maybe they are. But you still must protect your portfolio. With that, there may be some enticing ideas here. Below are penny stocks to watch in Q2.

GrowGeneration (GRWG)

Falling under the consumer cyclical sector, GrowGeneration (NASDAQ:GRWG) owns and operates retail hydroponic and organic gardening stores in the U.S. It’s not really a cannabis player. However, because the company markets and distributes products such as nutrients, additives and environmental control systems, the association can’t be avoided. It is but it isn’t (but it is).

Thanks to rising calls for rescheduling marijuana down to a lesser enforcement category, GRWG stock has benefited handsomely. That’s because demand should accelerate with a more favorable federal backdrop. Even some clarity on the matter could do wonders for the cannabis industry.

Therefore, I’m not particularly worried about GrowGeneration’s less-than-favorable quarterly earnings performance last year. Yes, the average surprise came out to nearly 63% below breakeven. In addition, fiscal 2024 projections call for revenue of $225.88 million. That’s 7.5% down on a year-over-year basis.

But if the legal framework improves or receives more clarity? That could be the real catalyst. Therefore, investors should keep close tabs on GRWG as one of the penny stocks to watch in Q2.

US Energy (USEG)

Operating under the hydrocarbon energy space, US Energy (NASDAQ:USEG) operates in the exploration and production segment of the value chain. It’s an independent company, focused on core upstream activities including acquisitions. Per the company’s public profile, US Energy holds interests in various oil and gas properties located in the Rockies region.

To be fair, USEG stock is an incredibly risky idea among penny stocks to watch in Q2. A big part of the reason why is the financial volatility. It just can’t seem to catch a break in terms of bottom-line quarterly targets. That said, for the current fiscal year, experts believe that US Energy will post a loss of 31 cents. While not great, that’s much better than last year’s print of a loss of $1.28.

Now, projected sales of $30.86 million is down 4.5% YOY. However, given the geopolitical dynamic, crude oil and other critical hydrocarbon supplies will likely diminish. Combined with rising demand based on heightened consumption, USEG is a name to keep tabs on.

Arbe Robotics (ARBE)

Operating in the technology space, Arbe Robotics (NASDAQ:ARBE) focuses on infrastructure software. Per its corporate profile, Arbe is a semiconductor enterprise, providing 4D imaging radar solutions for Tier 1 automotive suppliers and manufacturers. Its business networks cover China, Sweden, Germany, Switzerland, the U.S., Italy and Israel. Mainly, Arbe seeks to address the core issues that have caused autonomous-vehicle and autopilot accidents.

For full disclosure, ARBE ranks among the riskier ideas in the market. One look at its 52-week chart tells you what you need to know. At the same time, it’s also one of the penny stocks to watch in Q2. While autonomous mobility has rapidly increased in scope and scale, lingering trust issues remain. Arbe could potentially fill a critical gap, thus imbuing a major catalyst for the underlying security.

Granted, the company’s fiscal 2023 performance wasn’t all that great. However, in fiscal 2024, analysts anticipate that Arbe will post revenue of $1.65 million, up 12.2% YOY. Not only that, covering experts rate shares a unanimous strong buy with a $3.50 price target.

LightPath Technologies (LPTH)

Conducting business in the broader technology sphere, LightPath Technologies (NASDAQ:LPTH) operates in the electronic components subcategory. Per its corporate profile, LightPath designs, develops, manufactures and distributes optical components and assemblies. Specifically, the company offers products such as precision molded glass aspheric optics, molded and diamond-turned infrared aspheric lenses, and other optical components.

Surprisingly, LPTH has performed reasonably well considering its speculative nature. Shares appear to be charting a series of higher lows since December last year. Therefore, it could be one of the penny stocks to watch in Q2. To be fair, LightPath could use consistently better performances on the financial side of the business. That’s where the risk comes in.

For fiscal 2024, analysts see LightPath losing 15 cents per share on revenue of $32.57 million. That’s disappointing compared to last year’s results of a loss of 13 cents on $32.93 million in sales. However, the top line could expand to $39.14 million in fiscal 2025.

Notably, analysts peg shares as a moderate buy with a $3 price target.

BlackSky Technology (BKSY)

Working in the technology realm, BlackSky Technology (NYSE:BKSY) focuses on the scientific and technical instruments subcategory. According to its public profile, BlackSky provides geospatial intelligence, imagery and related data analytic products and services. It also offers mission systems that include the development, integration and operation of satellite and ground systems for government and commercial customers in North America, the Middle East, Asia-Pacific and internationally.

Interestingly, BlackSky has been delivering some strong results. Don’t get me wrong – it’s not always consistent. For example, last year in the second quarter, the company posted a loss of 23 cents against an expected loss of 12 cents. That said, the overall quarterly surprise last year was 22.6%.

For fiscal 2024, experts believe BlackSky will post a loss of 28 cents per share on revenue of $111.62 million. Conspicuously, the projected top line represents an 18.1% YOY lift against 2023’s haul of $94.49 million.

Lastly, analysts rate shares a consensus strong buy with a $3.17 price target. It’s one of the penny stocks to watch in Q2.

Rigetti (RGTI)

Another tech player, Rigetti (NASDAQ:RGTI) operates under the computer hardware segment. Through its subsidiaries, Rigetti builds quantum computers and superconducting quantum processors. Further, the company offers cloud computing solutions as a quantum processing unit. It also sells access to its quantum computers via a subscription business model. Given the exponentially accelerated capacities of the quantum paradigm, RGTI is easily one of the penny stocks to watch in Q2.

Still, as with other speculative enterprises, prospective investors must balance the upside potential with the serious possibility of extreme downside. For example, last fiscal year, the company badly missed bottom-line targets in Q1 and Q3. However, it also beat by a wide margin expectations in Q2 and Q4.

For fiscal 2024, analysts believe Rigetti will post a loss of 38 cents on revenue of $16.1 million. Last year, it delivered a loss of 57 cents on sales of $12.01 million. Therefore, the top line could expand by a whopping 34.1%.

Experts peg RGTI a unanimous strong buy with a $3.17 price target.

Wag! Group (PET)

Doing business as an application software specialist, Wag! Group (NASDAQ:PET) may be one of the most intriguing ideas for penny stocks to watch in Q2. Per its corporate profile, Wag! develops and supports a proprietary marketplace technology platform available as a website and mobile app that enables independent pet caregivers to connect with pet parents.

Fundamentally, Americans love their pets so that should be a huge plus for PET stock. More importantly, it’s not just rhetoric. Recently, the American Pet Products Association revealed that in 2023, we collectively spent $147 billion on our furry friends. Armed with a nothing-but-the-best attitude, Wag! – which incredibly speculative – should be attractive, even in this tough economic environment.

Notably, experts anticipate the company’s loss per share to reach 22 cents. That would be a favorable print compared to last year’s loss of 35 cents. Moreover, they believe sales should hit $108.43 million, up 29.2% from last year’s haul of $83.92 million.

Finally, Craig-Hallum rates PET a “buy” with a $5.50 price target. That’s massive upside if it gets there.

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Read More: Penny Stocks — How to Profit Without Getting Scammed

On the date of publication, Josh Enomoto did not have (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.