Looking for hidden gems on the ASX that could deliver big upside? While blue-chip stocks offer safety, penny stocks under 50 cents often come with higher risk—but also much higher reward potential. These tiny-cap stocks can sometimes go from overlooked to overachieving in a matter of weeks, especially when driven by strong catalysts like resource discoveries, market trends, or insider buying.

This week, two ASX penny stocks—Heavy Minerals (ASX: HVY) and Otto Energy (ASX: OEL)—have caught the eye of savvy investors. Both are cheap ASX stocks with emerging momentum and solid fundamentals that could support explosive gains.

1. Heavy Minerals (ASX: HVY)

Current Price: Under 50 cents
Sector: Mining / Industrial Minerals

Why It’s on Our Radar:

Heavy Minerals is a small cap stock focused on unlocking the potential of its Port Gregory Garnet Project in Western Australia. Garnet is an industrial mineral used in abrasive blasting and water-jet cutting—essential applications in construction, shipbuilding, and manufacturing. As the global garnet market tightens, HVY is positioning itself to become a low-cost garnet producer with high-grade resources and fast-tracked development.

Recent Developments:

1. Maiden JORC resource at Port Gregory shows 91% total heavy minerals, placing it among the highest-grade garnet assets in the region.
2. Pre-feasibility study awarded to IHC Mining, a respected industry player—marking a major commercial milestone.
3. Signed a royalty funding agreement that brought in $2.1 million, allowing the company to progress feasibility and drilling activities without heavy dilution.

Financial Snapshot (H1 FY25):

Net loss reduced by 24.61% YoY to just $0.49 million, reflecting better cost discipline.

Operating cash flow was negative at $0.51 million, typical for pre-revenue exploration firms.

Institutional insider buying reported—an encouraging sign of internal confidence in project viability.

Why It Could Explode:

With a premium-grade garnet resource, a well-capitalized development strategy, and growing global demand for industrial garnet, HVY could be one of the best penny stocks ASX investors aren’t paying enough attention to yet. As feasibility work advances and more drill results come in, any production decision could spark a major re-rating.

Bottom Line:

Heavy Minerals is a quiet achiever. It offers a rare chance to enter the industrial minerals space early—while it’s still priced under 50 cents. For investors looking for growth penny stocks in materials, this one is worth watching.

2. Otto Energy (ASX: OEL)

Current Price: Under 50 cents
Sector: Energy / Oil & Gas

Why It’s on Our Radar:

Otto Energy is a junior oil and gas explorer and producer operating in the Gulf of Mexico and Alaska, with a unique mix of producing wells, growth exploration targets, and passive royalty income. For a stock under 50 cents, OEL is surprisingly well-capitalized and already generating revenue—giving it an edge among high risk stocks.

Recent Catalysts:

In late 2024, Otto began drilling the F5-ST bypass well at South Marsh Island 71, aiming to tap a target with an estimated 1,500 barrels per day potential and ~60% success probability.

Holds 2.8 million barrels of oil equivalent (MMboe) in 1P + 2P reserves—offering solid production visibility.

Maintains a royalty interest in the Talitha field through Pantheon Resources—creating optional upside exposure.

Financial Performance (H1 FY25):

1. Total revenue of $12.35 million, demonstrating ongoing output from producing wells.
2. Net loss reduced by 11.6% YoY to $7.56 million, signaling tighter operational control.
3. Cash and short-term investments total $52.94 million—a strong liquidity position that supports further drilling or asset expansion.

Strategic Moves:

1. Completed a strategic review, resulting in a 14% cut in admin and operating expenses, improving free cash flow potential.
2. Sustained oil prices in the $80–$90 range continue to boost revenue per barrel and support margin expansion.

Why It Could Break Out:

Otto Energy is not just another speculative penny share. It’s a cash-generating asset with upside catalysts. If the F5-ST well hits commercial quantities or a new exploration target delivers success, investor sentiment could shift rapidly. Combine that with rising oil prices and a solid balance sheet, and you’ve got a stock that could surprise the market in the weeks ahead.

Bottom Line:

Among tech penny stocks and speculative miners, OEL stands out for already producing revenue while offering speculative upside. It blends low valuation, high cash reserves, and active drilling catalysts—a rare trio in today’s penny stock world.

Final Thoughts

Both Heavy Minerals (HVY) and Otto Energy (OEL) are ASX penny stocks under 50 cents that offer something unique:

1. HVY is riding the industrial minerals boom with a garnet project that’s attracting serious attention.
2. OEL is delivering real revenue and drilling for more in a strong energy market.

Of course, these are high risk stocks—and investors should always do their own due diligence. Volatility, financing needs, and commodity price swings are real considerations. But for those looking for cheap ASX stocks with explosive upside potential, these two small cap stocks offer a compelling mix of narrative, numbers, and near-term catalysts.