In this article, we will take a detailed look at the best American penny stocks to buy now.
American penny stocks comprise shares of US-based companies that trade under $5 on public exchanges. Besides their perceived appeal to retail investors due to cheap price and the possibility to affordably amass a large number of shares, American penny stocks are distinct for representing two important factors – the small-cap factor and the US country factor. Readers should know that these two factors are known for significantly outperforming their broad market counterparts in the last 15 years after the Great Financial Crisis. For reference, small-cap factor has outperformed its large-cap counterparts throughout the 2010s as the economy experienced a relatively peaceful period with relatively low interest rates, which is highly favorable for small, high-growth businesses. Likewise, the US stock market has consistently outperformed the World stock market, including major markets like Europe, China, and Japan, thanks to superior productivity growth and valuation expansion.
The situation drastically reversed in late 2024 and early 2025 with the election of a new US administration. The US stock market underperformed by more than 15% markets like Germany and China since the beginning of the year. The small-cap factor fell out of favor relative to the large-cap factor. The former event was driven by aggressive Trump 2.0 cuts and tariff threats, which put the US export/import base at risk, while the latter is driven by market uncertainty and investors flying to safe assets such as gold, bonds, or mature large-cap stocks. We believe that both these developments are temporary shocks and do not represent structural or definitive changes. In this context, a smart way to make money in the market would be to take a contrarian bet and buy American small-cap and penny stocks while they are relatively underpriced vs. their global and large-cap counterparts.
READ ALSO: 13 Best Canadian Penny Stocks to Invest in Now
First of all, we are firm believers that US investors should “stay at home” and continue to favor domestic stocks. The superior performance of the US stock market was not luck, but rather consistent productivity growth through deregulation, capital favoring risky but promising projects, and a more prominent hustle mentality. The European Central Bank confirms these findings and mentions that between Q4 2019 and Q2 2024, labor productivity per hour worked increased by 0.9% in the Euro area, whereas it increased by 6.7% in the US. This difference is significant and compounds over time, leading to drastic differences in stock price performance over 5-10 years or more. Odds are that the US will continue to outperform Europe and the rest of the world in productivity gains. According to analysts, Trump turmoil is a temporary thing; tariff uncertainty should naturally resolve at some point, through either a trade deal or a withdrawal by the President himself. Furthermore, the Trump 2.0 regime has some aces up its sleeve, such as tax cuts and further deregulation, which is a heaven for productivity growth. Europe, on the other hand, remains a slow bureaucratic machine that is fueling its economic growth through debt issuance and industrial-military projects that bring very little value added (for reference, the German €500 billion spending bill will mostly result in new missiles that will probably never be fired). Likewise, China has its own problems, such as stalled population growth and increasing threats of onshoring and outsourcing to India and other regions. India got itself stuck in a new war with Pakistan, which might negatively impact its investment climate and economic growth.
Second, small caps and penny stocks became cheaper due to recessionary threats and widespread signals that the US economy is slowing down. While many sectors, such as construction and industrial automation, are indeed in a slowdown, the stock market is a forward-looking animal that gauges developments that would impact the economy 6-12 months from now. In other words, the market is very likely to return to growth upon the slightest positive signal. We believe there are many indications that the US will be able to avoid a deep economic recession. Rumors, as well as thorough analysts from leading banks like JP Morgan, say that the tariff saga is approaching a possible end through a deal with China and other large trade partners. China is likely to sit at the negotiating table as its economic outlook has been deteriorating as well – it turns out that around 20 million jobs in the country are directly dependent on commerce with the US. Avoiding a trade deal with the US might be more catastrophic for China than it might be for the US. Also, the latest report shows that the US economy added 177,000 jobs in April, beating expectations by a wide margin, which indicates that CEOs are reluctant to downscale their business and rather anticipate a gradual rejuvenation in the business environment later in the year.
With that being said, contrary to the prevailing belief, our opinion is that the US economy is far from doomed. History shows that stock markets have always recovered and always scored new highs. In this context, the best American penny stocks could become favored again and outperform the broad market.
Our Methodology
To compile our list of the best American penny stocks, we used a screener to identify companies based in the US with a share price below $5.00. Then we compared the list with Insider Monkey’s proprietary database of hedge funds’ ownership, as of Q4 2024, and included in the article the top 10 stocks with the largest number of hedge funds that own the stock, ranked in ascending order.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10. CommScope Holding Company, Inc. (NASDAQ:COMM)
Stock price as of May 6th: $4.83
Number of Hedge Fund Holders: 32
CommScope Holding Company, Inc. (NASDAQ:COMM) provides infrastructure solutions for communication, data center, and entertainment networks. Its Connectivity and Cable Solutions (CCS) segment offers fiber optic and copper connectivity for telecommunications and data centers; its Networking, Intelligent Cellular and Security Solutions (NICS) segment provides wireless networks for enterprises; and its Access Network Solutions (ANS) segment includes broadband and video devices, as well as cloud solutions. COMM’s role is to enable service providers to deliver media, voice, IP data services, and Wi-Fi to their users.
CommScope Holding Company, Inc. (NASDAQ:COMM) delivered strong first-quarter results with core net sales increasing 23% YoY, and core adjusted EBITDA of $245 million, showing a whopping 159% YoY growth. The company achieved notable success in its CCS segment, with revenue growing by 20% YoY and adjusted EBITDA increasing 87%, while the enterprise fiber business showed remarkable growth with revenues of $213 million, representing an 88% increase compared to last year’s quarter. Core adjusted EBITDA as a percentage of revenues reached a record of 22%.
Looking forward, CommScope Holding Company, Inc. (NASDAQ:COMM) maintains its 2025 adjusted EBITDA guidance of $1 billion to $1.05 billion, despite potential tariff impacts. The data center market remains particularly strong, with customers indicating robust CapEx plans to support AI initiatives, and in some cases, even raising their capital expenditure plans. COMM is one of the best American stocks to buy as it has developed mitigation strategies for tariff effects through its flexible global manufacturing footprint, broad supplier base, and commercial strategies, with approximately 80% of US sales being country of origin in the United States or USMCA compliant.
9. Clear Channel Outdoor Holdings, Inc. (NYSE:CCO)
Stock price as of May 6th: $1.09
Number of Hedge Fund Holders: 33
Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) is a global player in out-of-home advertising, providing digital and static billboards, street furniture, transit displays, and airport advertising, complemented by its data-driven RADAR platform that enhances campaign planning, measurement, and targeting. CCO’s main role is to streamline the marketing process for clients and allow for easy access to various types of advertising.
Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) delivered consolidated revenue growth of 2.2% in Q1 2025, in line with guidance, and is confirming full-year 2025 guidance ranges for revenue and adjusted EBITDA. The company has successfully completed the sales of its international businesses in Mexico, Chile, Peru, and Europe-North, generating approximately $745 million in purchase consideration. This has allowed CCO to reduce its debt, including prepaying $375 million in term loans and repurchasing approximately $120 million in bonds. The company is now focused on its higher-margin US assets and expects to deliver mid-single-digit growth in consolidated revenue and adjusted EBITDA in 2025, making it one of the best American penny stocks on our list.
Looking ahead, Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) is optimistic about the future of out-of-home advertising in the US, citing several positive factors. These include the simplification of its business structure, reduced interest and corporate expenses, and strong visibility into 2025 revenue, with the majority already booked. The company is seeing increased interest from national advertisers, particularly in recovering markets like San Francisco, and is benefiting from emerging revenue verticals such as AI. CCO is also leveraging AI capabilities to improve sales productivity and targeting, which is expected to provide tailwinds to margins and productivity. Despite macroeconomic uncertainties, the company believes its risk is greatly reduced due to its US focus and is committed to delivering value for shareholders through positive funds from operations growth and targeted investments.
