In this article we will take a look at the 10 Best Debt-Free Penny Stocks to Buy Right Now.
Small-cap companies are crushing it after years of underperformance. In 2025, the Russell 2000 index rose 13% even as focus remained on large-cap stocks amid the artificial intelligence boom. Royce Investment Partners co-chief investment officer Francis Gannon expects the upward momentum around small companies to continue in 2026 as valuation concerns around large caps take center stage.
According to Gannon, there is a significant rotation from large-cap stocks to small-cap companies with relatively low valuations. The rotation comes as investors increasingly take advantage of the considerable opportunities in small-cap stocks that boast a high risk-reward profile.
“I think the leadership shift change you have seen within the small cap market relative to other markets since the lows of the tariff debacle last year April 8, through the end of year small caps have outperformed the Russell 1000, the S&P 500 by 400 basis points. I think that leadership shift continues and it’s going to be driven by the fact that small cap earnings, which have been in their earnings recession for two years unchanged, are just at the beginning of taking off,” Gannon said.
Goldman Sachs’ portfolio strategy team also expects small-cap stocks to take off in 2026, supported by a solid macroeconomic outlook. The investment bank expects the stocks to benefit from improving US economic growth outlook, alongside below-consensus inflation and continued Federal Reserve easing.
“We do not believe markets are fully pricing the likely strength of the US economy next year, and small-caps typically outperform during cyclical rallies. Futures positions and short interest also suggest upside risk for small-caps,” Goldman Sachs said in a research note.
The Russell 2000 index surging to a new record high at the start of the year underscores a breakout in small-cap stocks as investors rotate capital out of overextended technology giants. With that in mind, let’s take a look at some of the Best Debt-Free Penny Stocks to Buy Right Now.
Photo by Sebastian Herrmann on Unsplash
Our Methodology
To screen for the best debt-free stocks, we first compiled a list of U.S. stocks with a market capitalization of at least $1 billion and trading at less than $5 a share. For the shortlisted stocks, we compared their enterprise value (EV) to their market capitalization (EV to Market cap ratio). A ratio of 1.0 or below indicates that the company has no debt or minimal debt. From this refined list, we identified the top stocks with a potential upside of at least 20% as of January 16, and the highest hedge fund ownership, by leveraging data from Insider Monkey’s Q3 2025 hedge fund database. Finally, we ranked these stocks in ascending order based on the number of hedge funds holding positions in them.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research shows 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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
Best Debt-Free Penny Stocks to Buy Right Now
10. Evotec SE (NASDAQ:EVO)
Stock upside potential: 65.29%
Number of Hedge Fund Holders: 2
Evotec SE (NASDAQ:EVO) is one of the best debt-free penny stocks to buy right now. On January 8, the company’s Seattle-based subsidiary Just-Evotec Biologics received a new grant from the Gates Foundation. The grant is to be used to enable global access to the company’s biotherapeutics utilizing Evotec Biologics’ molecular design suite.
The Gates Foundation grant is also part of an effort to improve the development and reduce the cost of monoclonal antibodies. The ultimate goal is to make them affordable and accessible to prevent infectious disease in low and middle-income countries.
The grant comes on the heels of reports that Evotec is poised to benefit from Amgen’s Dark Blue Acquisition. As one of the early collaborators and investors in Oxford-based Dark Blue, the company is entitled to some proceeds from the transaction. The transaction carries a potential value of up to $840 million. Evotec has been involved in the development and expansion of Dark Blue’s technology platform and holds an equity stake of about 20%.
“Evotec welcomes Amgen’s acquisition of Dark Blue Therapeutics – a company that originally emerged as a pre-seed project within LAB282, the first collaboration in Evotec’s Academic BRIDGE portfolio,” company spokesperson Dr Sarah Fakir told the editorial staff on request. “In line with our shareholding, we have received a portion of the fixed upfront payment and see potential additional upside linked to the achievement of defined development milestones.”
Evotec SE (NASDAQ:EVO) is a global life sciences company that pioneers drug discovery and development, leveraging cutting-edge science, technology, and AI to accelerate the development of new medicines for pharma, biotech, and academia.
9. Integra Resources Corp. (NYSE:ITRG)
Stock upside potential: 32.20%
Number of Hedge Fund Holders: 10
Integra Resources Corp (NYSE:ITRG) is one of the best debt-free penny stocks to buy right now. On December 22, the company announced the elimination of its corporate-level debt following the complete conversion and repayment of the convertible debenture facility with Beedie Capital.
The repayment follows the issuance of $12.29 million in shares at $1.22 each to retire $15 million in principal under the facility. The company also paid $2.896 million in accrued interest and standby fees. The repayment strengthens the company’s financial position as it moves forward into permitting and developing the DeLamar project.
“The full conversion of the convertible debenture into equity following the recently announced Feasibility Study results for DeLamar is a strong vote of confidence in the strength of the study and the long-term value of the Company,” said George Salamis, President, CEO, and Director of Integra.
Meanwhile, H.C. Wainwright reiterated its buy rating for Integra Resources on December 19 and raised the price target to $5 from $4.75. The price target hike follows confirmation that the company is poised to produce 910,000 ounces of gold and 17.4 million ounces of silver over a 10-year mine life at the DeLamar Project.
Integra Resources Corp. (NYSE:ITRG) is a precious metals exploration and development company focused on gold and silver projects in the Great Basin of the Western U.S. It is advancing the DeLamar Project in Idaho and the Nevada North Project, aiming to become a significant gold and silver producer through heap leaching and resource growth from past-producing mines.
