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.
8. New Found Gold Corp. (NYSE:NFGC)
Stock upside potential: 54.32%
Number of Hedge Fund Holders: 12
New Found Gold Corp (NYSE: NFGC) is one of the best debt-free penny stocks to buy right now. On January 7, the company’s CEO, Keith Boyle, confirmed its successful transformation into an emerging Canadian gold producer. The transformation from an early-stage exploration company continued in 2025, when the company delivered MR and PEA at Queensway and strengthened its balance sheet.
The Canadian gold miner completed a C$63 million bought-deal financing and a C$20 million private placement, thereby strengthening its financial position. It also completed the acquisition of Maritime Resources, adding highly prospective claims around Queensway, thereby boosting its prospects as an emerging Canadian gold producer.
“As we enter 2026, our focus is clear: ramp up Hammerdown safely and efficiently, advance Queensway through engineering, permitting, and project finance toward a targeted 2027 start-up, and continue disciplined, high-impact exploration across the district – building on our success at targets like Dropkick – to unlock the full camp-scale potential of this emerging Canadian gold camp,” said CEO Boyle.
New Found Gold Corp. (NYSE:NFGC) is a Canadian precious metals company focused on gold exploration, development, and production, primarily in Newfoundland and Labrador, Canada, and is transitioning from an explorer to an emerging producer with assets such as the high-grade Queensway project.
7. Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX)
Stock upside potential: 59.47%
Number of Hedge Fund Holders: 19
Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) is one of the best debt-free penny stocks to buy right now. On December 17, JPMorgan upgraded Recursion Pharmaceuticals (NASDAQ:RXRX) to an Overweight from Neutral and raised the price target to $11 from $10.
The upgrade follows promising clinical trials evaluating the MEK 1/2 inhibitor REC-4881 for the treatment of Familial Adenomatous Polyposis (FAP). The TUPELO trial showed that 75% of evaluable patients showed a significant reduction in total polyp burden.
“The durable polyp burden reduction demonstrated by REC-4881—especially the sustained effect seen at Week 25, 12 weeks after completing therapy—is highly encouraging for the FAP community,” said Jessica Stout, D.O., Assistant Clinical Professor, University of Utah School of Medicine, and Principal Investigator of the TUPELO study.
According to JPMorgan, the company is staring at a tremendous opportunity with REC-4881 with estimated peak sales of more than $1 billion. Additionally, the investment company has touted the company’s other candidate drug, REC-617, a CDK7 inhibitor showing early anti-tumor activity in platinum-resistant ovarian cancer.
The positive clinical trials support Recursion’s long-term prospects, as the company has generated over $400 million in milestone payments from pharmaceutical partnerships.
Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) is a clinical-stage company that uses a combination of artificial intelligence (AI), automation, and experimental biology to accelerate the discovery and development of new drugs.
6. BlackBerry Limited (NYSE:BB)
Stock Upside Potential: 30.40%
Number of Hedge Fund Holders: 21
BlackBerry Limited (NYSE:BB) is one of the best debt-free penny stocks to buy right now. On November 8, RBC Capital reiterated a Sector Perform rating on BlackBerry Limited (NYSE:BB) and set a $4.50 price target. According to the research firm, the company faces near-term headwinds on the QNX business due to project deferrals and platform launch delays.
It is one of the reasons QNX revenue grew only 7% in the third quarter, falling short of its long-term 14% compound annual growth rate. Likewise, QNX growth has trended toward the lower end of the company’s long-term target. Amid the slow growth, the company delivered its third consecutive quarter of GAAP profitability in Q3 FY26.
Non-GAAP earnings per share rose to $0.05, beating consensus estimates by 25% as revenue totaled $141.8 million. GAAP net income totaled $13.7 million, a significant $24 million improvement from the same quarter last year. The better-than-expected results came as BlackBerry made substantial strides in its strategic focus on automotive embedded systems and secure communications.
BlackBerry Limited (NYSE:BB) is a software and services company that shifted from making phones to providing intelligent security software and solutions for enterprises and governments, with a focus on the Internet of Things (IoT), cybersecurity, and embedded systems, especially in the automotive sector.
5. Atai Beckley N.V. (NASDAQ:ATAI)
Stock upside potential: 228.25%
Number of Hedge Fund Holders: 21
Atai Beckley N.V. (NASDAQ:ATAI) is one of the best debt-free penny stocks to buy right now. On December 23, chief executive officer Srinivas Rao reiterated significant progress in pipeline development and corporate foundation. The remarks followed the company’s addition to the NASDAQ Biotechnology Index.
The addition followed the strengthening of the company’s balance sheet with the raising of $300 million in capital expected to support the advancement of multiple clinical programs into late-stage development. In addition, the company has deepened its leadership in the development of next-generation mental health therapeutics through a strategic partnership with Beckley Psytech.
“As we look ahead, AtaiBeckley is entering a pivotal phase and is well positioned to translate scientific leadership into long-term value for both patients and shareholders, as our recent addition to the NBI further validates, said Srinivas Rao, Chief Executive Officer of AtaiBeckley.
ATAI Beckley has also completed the redomiciliation of its parent company, AtaiBeckley Group, from a Netherlands company to a U.S. entity. The redomiciliation is expected to save costs, simplify corporate structure, and streamline reporting requirements.
Atai Beckley N.V. (NASDAQ:ATAI) is a clinical-stage biopharmaceutical company that develops treatments for mental health disorders. Its pipeline includes psychedelic and non-psychedelic compounds targeting depression, anxiety, and other unmet needs in psychiatry.
4. Bitfarms Ltd. (NASDAQ:BITF)
Stock upside potential: 115.06%
Number of Hedge Fund Holders: 25
Bitfarms Ltd (NASDAQ: BITF) is one of the best debt-free penny stocks to buy right now. On January 2, CEO Ben Gagnon announced plans to rebalance the company’s energy portfolio to 100% North American following the exit from Latin America.
The announcement follows the sale of the company’s 70 MW site in Paso Pe, Paraguay, to the Sympatheia Power Fund (SPF). The operating site is valued at $30 million, and Bitfarms is poised to receive $9 million in cash upon closing the transaction in the first quarter. Additionally, it is entitled to $21 million over 10 months, subject to certain payment milestones.
The sale is poised to bring forward an estimated 2 to 3 years of free cash flow from operations. It also paves the way for the company to reinvest in its North American HPC/AI energy infrastructure in 2026, where it expects to generate much more substantial returns.
“The sale of Paso Pe is the culmination of a series of transactions to completely exit Latam, and refocus the company, its management team and capital on 100% North American power and infrastructure for HPC/AI,” CEO Gagnon said.
Bitfarms Ltd. (NASDAQ:BITF) is a North American energy and digital infrastructure company that develops, owns, and operates large-scale, vertically integrated data centers primarily for Bitcoin mining, using sustainable, often hydropower, to power its operations.
3. Blend Labs, Inc. (NYSE:BLND)
Stock upside potential: 34.29%
Number of Hedge Fund Holders: 35
Blend Labs Inc. (NYSE:BLND) is one of the best debt-free penny stocks to buy right now. On January 6, Matt Thomson joined Blend Labs Inc. (NYSE:BLND) as head of revenue. He joins the company with over 25 years of experience in fintech sales leadership.
Thomson is tasked with blending the company’s sales organization and revenue strategy. He will also position the company to expand its presence across financial institutions, having added new customers and expanded existing client relationships in the third quarter. The Blend Labs pipeline is also up by 60%
“Financial institutions are looking for partners who can help them compete digitally while maintaining the relationships that define their brands. That’s exactly what Blend delivers, and I’m looking forward to helping more institutions discover what’s possible with the right technology partner,” Thomson said
At the Wells Fargo 9th Annual TMT Summit, the company reiterated its plans to integrate AI into its platform to speed up and improve mortgage processing. The renewed focus comes on moving from non-core businesses, such as income verification, to offering software solutions.
Blend Labs, Inc. (NYSE:BLND) is a cloud-based digital platform for financial institutions that streamlines the entire consumer lending and account-opening process, from mortgages and home equity to personal loans and deposit accounts.
2. Geron Corporation (NASDAQ:GERN)
Stock upside potential: 191.97%
Number of Hedge Fund Holders: 37
Geron Corporation (NASDAQ:GERN) is one of the best debt-free penny stocks to buy right now. On January 12, Geron Corporation (NASDAQ:GERN) announced its 2026 outlook, forecasting $220–240 million in RYTELO (imetelstat) revenue and $230–240 million in operating expenses following a recent restructuring. The blood-cancer-focused company expects stronger growth in the second half of the year as it increases outreach to physicians and patients.
Geron is prioritizing U.S. commercialization, international expansion, and progress in its Phase 3 IMpactMF trial. RYTELO, a first-in-class telomerase inhibitor approved in the U.S. and EU for lower-risk MDS-related anemia, continues to build clinical support, with new IMerge data presented at the 2025 ASH meeting. The company also amended its loan agreement with Pharmakon Advisors, securing access to up to $125 million through July 2026.
On December 16, the company embarked on a restructuring drive to achieve profitability in the second half of 2026. The company is in the process of trimming its workforce by nearly a third, a move expected to reduce operating expenses. However, it is also likely to result in an $18 million in restructuring charges associated with severance payments and healthcare benefits.
In addition to cost cuts, the company plans to focus on expanding its US commercial sales while pursuing international opportunities in Europe for its key products.
“Our key objectives remain unchanged. We are focused on driving RYTELO commercial growth in the U.S., exploring opportunities for making RYTELO available outside the U.S., and continuing to advance our Phase 3 IMpactMF trial. We expect this restructuring will have a meaningful impact on our 2026 operating expenses and position Geron to meet the needs of patients,” said Harout Semerjian, President and Chief Executive Officer of Geron.
Geron Corporation (NASDAQ:GERN) is a commercial-stage biopharmaceutical company focused on developing and selling treatments for blood cancers, primarily using its first-in-class telomerase inhibitor, RYTELO (imetelstat). RYTELO is approved in the U.S. and EU for certain patients with lower-risk myelodysplastic syndromes (MDS).
1. Aurora Innovation, Inc. (NASDAQ:AUR)
Stock upside potential: 125.36%
Number of Hedge Fund Holders: 39
Aurora Innovation Inc. (NASDAQ:AUR) is one of the best debt-free penny stocks to buy right now. On January 6, Aurora Innovation Inc. (NASDAQ:AUR) jumped by more than 8% after Amazon expanded its strategic partnership with Aumovio. The partnership paves the way for the integration of artificial intelligence capabilities at scale on Aurora’s driverless trucks.
The integration opens the door for mass production of Aurora driverless trucks in the race to accelerate the development of safer, smart self-driving cars. It marks a significant milestone barely a year after Aurora became the first company to operate driverless heavy-duty trucks on US public roads.
The company has already launched its service in Texas as part of its freight-focused autonomous vehicle strategy. Amazon and Aumovio have also joined forces to create scalable solutions that help autonomous vehicle developers make sense of the massive amounts of driving data.
Meanwhile, on December 9, Cannaccord Genuity analyst George Gianarikas reiterated a Buy rating on Aurora Innovation and set a $15 price target. TD Cowen, on the other hand, reiterated a Hold rating and a $5.50 price target.
Aurora Innovation, Inc. (NASDAQ:AUR) develops the Aurora Driver, a self-driving technology platform (hardware, software, data) for various vehicles, focusing on autonomous trucks for logistics and ride-hailing passenger vehicles, aiming to make transportation safer, more accessible, and efficient.
While we acknowledge the potential of AUR to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than AUR and that has 100x upside potential, check out our report about this cheapest AI stock.
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