On December 30, TipRanks reported that the Goldman Sachs portfolio strategy research team is optimistic about small-cap stocks heading into early 2026. The research firm said that its “baseline macro outlook is supportive for small-cap upside in early 2026.”

Goldman Sachs expects US economic growth to accelerate and come in above market expectations. The firm also forecasts “continued Fed easing” and inflation to remain below market expectations.

According to the research team, markets are not fully pricing in the likely strength of the US economy in 2026. Goldman Sachs also noted that small-cap stocks usually “outperform during cyclical rallies.”

The team added that futures positions and short interest also point to potential upside for small-caps. Looking ahead to 2026, Goldman Sachs portfolio strategy research team believes that factors like “changes in fiscal policy, rising corporate AI adoption, and increased M&A activity will create the potential for large idiosyncratic returns and generate opportunities for small-cap stock pickers in 2026.”

In other news, on January 1, Reuters reported that Dennis Follmer, chief investment officer at Montis Financial, sees strong opportunities beyond AI and technology stocks in 2026. Follmer said:

“There’s a high quality (small cap) index called the SP 600, which has a profitability screen, and they’ve underperformed this year. But those much higher quality companies are really going to benefit from lower rates, less regulation, the pro-business aspects of the new tax bill. So I think they could do well.”

With this background in mind, let’s take a look at the 10 best new penny stocks to invest in.

Our Methodology

To compile our list of the 10 best new penny stocks to invest in, we used the Finviz stock screener to look for companies that went public in the last 3 years. We sorted our results based on market capitalization and picked the top 50 stocks with a share price of under $5 as of December 31, 2025. Next, we focused on the top 10 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q3 2025 database of 978 elite hedge funds. Finally, the 10 best new penny stocks to invest in were ranked in ascending order based on the number of hedge funds holding stakes in them as of Q3 2025.

Why do we care about what hedge funds do? 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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).

10 Best New Penny Stocks to Invest In

10. Brazil Potash Corp. (NYSEAMERICAN:GRO)

Share Price: $1.89

Number of Hedge Fund Holders: 4

Brazil Potash Corp. (NYSEAMERICAN:GRO) is one of the best new penny stocks to invest in. On December 16, Cantor Fitzgerald initiated coverage of Brazil Potash Corp. (NYSEAMERICAN:GRO), assigning the stock a Speculative Buy rating and setting the price target at $2.75.

Cantor Fitzgerald’s analyst told investors in a research note that the company is making progress on its 100%-owned Autazes potash mining project. The firm noted that Brazil Potash Corp. (NYSEAMERICAN:GRO) is targeting initial production in 2030 or later. Cantor Fitzgerald pointed out that this project will supply potash to Brazil, which is the biggest importer of the nutrient in the world. Potash is essential for improving agricultural productivity.

Also on December 16, Brazil Potash Corp. (NYSEAMERICAN:GRO) reported that Potássio do Brasil Ltda., its wholly owned Brazilian subsidiary, has received official registration from SUFRAMA, the federal authority that is responsible for managing tax incentive programs under the Manaus Free Trade Zone (ZFM) framework in the Western Amazonas Region. With this registration, Brazil Potash Corp. (NYSEAMERICAN:GRO) becomes eligible to operate under SUFRAMA-administered tax incentive procedures, subject to rules, approvals and project-specific authorizations that apply.

The company believes that access to these federal tax incentive regimes could lead to approximately $94 million in estimated tax savings during the construction phase, assuming all requirements and approvals that apply are met. Brazil Potash Corp. (NYSEAMERICAN:GRO) noted that this milestone supports key financial assumptions in the project’s economic model and reflects continued support from Brazilian federal authorities.

Brazil Potash Corp. (NYSEAMERICAN:GRO) is a fertilizer company focused on developing the Autazes Project to supply sustainable fertilizers to Brazil, one of the world’s largest agricultural exporters.

9. Auna SA (NYSE:AUNA)

Share Price: $4.92

Number of Hedge Fund Holders: 5

Auna SA (NYSE:AUNA) is one of the best new penny stocks to invest in. On December 9, Morgan Stanley lowered its price target on Auna SA (NYSE:AUNA) from $11.50 to $10 while keeping an Overweight rating on the stock.

Morgan Stanley noted that the company has strong growth potential from occupancy of its existing beds, especially in Mexico. The opportunity in Mexico also requires only minimal capital expenditure.

By the end of the third quarter of 2025, Auna SA’s (NYSE:AUNA) network included 31 healthcare network facilities, including hospitals, outpatient, prevention, and wellness facilities. The company had a total of 2,333 beds and around 1.4 million healthcare plans.

The research firm pointed out that Auna SA (NYSE:AUNA) generates strong operating cash flow, which gives the company the capacity to reduce its debt levels over time. In addition, Morgan Stanley highlighted the company’s strategy of expanding into markets with low-priced healthcare policies. This includes countries where private healthcare access is limited, particularly Peru and Mexico.

According to Morgan Stanley, this strategy continues to support a sustainable growth avenue for Auna SA (NYSE:AUNA) in the healthcare industry.

Auna SA (NYSE:AUNA) is a leading healthcare provider in Latin America with operations in Mexico, Peru, and Colombia. It operates hospitals and clinics and also offers health plans with a focus on prioritizing prevention and high-complexity care.

8. Surf Air Mobility Inc. (NYSE:SRFM)

Share Price: $1.94

Number of Hedge Fund Holders: 6

Surf Air Mobility Inc. (NYSE:SRFM) is one of the best new penny stocks to invest in. On December 30, Surf Air Mobility Inc. (NYSE:SRFM) announced that it has allocated $26 million from its recent $100 million strategic transaction to support the development and commercialization of SurfOS’s flagship products, including BrokerOS, OperatorOS, and OwnerOS.

The funding will be used to strengthen engineering and go-to-market capabilities, develop enterprise-grade solutions, and introduce new modules. Surf Air Mobility Inc. (NYSE:SRFM) expects these efforts will help it increase its share in the growing air mobility software market.

According to the report by Surf Air Mobility Inc. (NYSE:SRFM), SurfOS’s core operating system is powered by Palantir Technologies Inc.’s (NASDAQ:PLTR) Foundry and AIP Platforms for the Part 135 regional aviation segment. The company has also expanded its partnership with Palantir Technologies Inc. (NASDAQ:PLTR) to offer enterprise implementation services. Additional go-to-market resources from Palantir Technologies Inc. (NASDAQ:PLTR) will also speed up the commercial rollout of SurfOS.

Surf Air Mobility Inc. (NYSE:SRFM) reported clear operational improvements after internally adopting SurfOS tools. The company achieved a reduction in On Demand team expenses, which allowed it to generate higher revenues at lower costs. It also recorded a significant increase in bookings per broker. In addition, the crew scheduling tool in Surf Air Mobility Inc.’s (NYSE:SRFM) Northeast and Hawaii regions is helping prevent scheduling errors, reduce compliance risk, and operational complexity.

Surf Air Mobility Inc. (NYSE:SRFM) is an electric aviation, software, and air travel company. It provides technology to support the modernization of air operations and the adoption of next-generation aircraft. The company also operates one of the latest commuter airlines in the US.

7. SEALSQ Corp (NASDAQ:LAES)

Share Price: $3.78

Number of Hedge Fund Holders: 7

SEALSQ Corp (NASDAQ:LAES) is one of the best new penny stocks to invest in. On December 18, Cantor Fitzgerald initiated coverage on SEALSQ Corp (NASDAQ:LAES), giving the stock an Overweight rating and setting the price target at $7.

Cantor Fitzgerald pointed out that quantum computing security risks are a major factor supporting the company’s future prospects. The firm noted that SEALSQ Corp (NASDAQ:LAES) is working on post-quantum technology solutions in both hardware and software that can help address these threats.

The research firm’s price target of $7 is based on an enterprise value-to-sales multiple of 17x for the estimated 2027 sales. This suggests that Cantor Fitzgerald is confident in the company’s long-term growth. The firm also noted that while quantum computing is still in an early stage of development, it has already gained strong investor attention and increased awareness among corporations, governments, and policymakers.

In other news, on December 19, SEALSQ Corp (NASDAQ:LAES) shared its strategic plan for 2026-2030. The company will be focusing on advancing quantum computing that is emerging from within the semiconductor industry by using silicon and CMOS-compatible manufacturing processes. This approach will help create quantum systems that are scalable, secure, and suitable for industrial use.

According to the report, SEALSQ Corp (NASDAQ:LAES) is actively pursuing this quantum computing approach, where qubits are designed using silicon and CMOS-compatible processes to be compatible with current semiconductor design tools, fabrication plants, testing methods, and global supply chains.

SEALSQ Corp (NASDAQ:LAES) is a semiconductor company and a leading innovator in Post-Quantum Technology hardware and software solutions.

6. New Horizon Aircraft Ltd. (NASDAQ:HOVR)

Share Price: $1.47

Number of Hedge Fund Holders: 8

New Horizon Aircraft Ltd. (NASDAQ:HOVR) is one of the best new penny stocks to invest in. On December 4, New Horizon Aircraft Ltd. (NASDAQ:HOVR) announced that it has entered into a partnership with Motion Applied, which was previously the high-performance technology division of the McLaren Group from Formula 1.

Under this partnership, Motion Applied will design and manufacture a customized motor drive inverter for New Horizon Aircraft Ltd.’s (NASDAQ:HOVR) hybrid-electric VTOL, the Cavorite X7. This system will help improve power efficiency and reduce weight in the aircraft’s vertical lift system. Through its world-famous pedigree and capacity for on-site design, manufacturing, and testing, Motion Applied will support the company’s work towards building its full-scale prototype and moving forward with its certification program.

According to the report by New Horizon Aircraft Ltd. (NASDAQ:HOVR), the Cavorite X7 will utilize Motion Applied’s MCU-X platform and feature a custom air-cooled silicon carbide motor drive inverter, which will convert direct current from the onboard batteries into alternating current to power the electric motors.

This advanced system is expected to weigh under 3 kilograms and is designed to deliver faster and more efficient power transfer while requiring less cooling by leveraging silicon carbide technology. It will be designed to improve overall aircraft efficiency, power density, and range for a hybrid-electric VTOL like the Cavorite X7.

New Horizon Aircraft Ltd. (NASDAQ:HOVR) is an advanced aerospace engineering company developing the Cavorite X7, a hybrid-electric Vertical Takeoff and Landing (eVTOL) aircraft designed to fly like a conventional plane but with VTOL ability.

5. GrabAGun Digital Holdings Inc. (NYSE:PEW)

Share Price: $3.01

Number of Hedge Fund Holders: 9

GrabAGun Digital Holdings Inc. (NYSE:PEW) is one of the best new penny stocks to invest in. On December 22, GrabAGun Digital Holdings Inc. (NYSE:PEW) announced that it has started accepting cryptocurrency payments on its website. The company says that it is the first major firearms retailer to support Bitcoin, USD Coin, and Tether. These new payment options reinforce GrabAGun Digital Holdings Inc.’s (NYSE:PEW) position as the most forward-thinking and technology-focused platform in the industry.

By offering more ways to pay, GrabAGun Digital Holdings Inc. (NYSE:PEW) is focused on its long-term plan to build a modern and scalable digital commerce platform for the next generation of firearms consumers. The crypto checkout experience is designed to be fast, secure, and compliant for regulated commerce. It gives customers additional flexibility while also offering the same reliability and compliance as traditional payment options.

Earlier, on December 1, GrabAGun Digital Holdings Inc. (NYSE:PEW) announced that it has entered into a strategic partnership with Silencer Shop, which is the nation’s biggest suppressor distributor and a leader in National Firearms Act (NFA) solutions. This move allows the company’s customers to access Silencer Shop’s extensive and carefully curated selection of firearm suppressors and related accessories.

This collaboration utilizes a combined GrabAGun Digital Holdings Inc. (NYSE:PEW) and Silencer Shop network of authorized dealers. It also uses Silencer Shop’s proprietary technology platform to make the often complex process of buying NFA-regulated items simpler.

GrabAGun Digital Holdings Inc. (NYSE:PEW) is a digitally native ecommerce retailer of firearms, ammunition, related accessories, and other outdoor enthusiast products.

4. The Generation Essentials Group (NYSE:TGE)

Share Price: $1.03

Number of Hedge Fund Holders: 10

The Generation Essentials Group (NYSE:TGE) is one of the best new penny stocks to invest in. On December 26, The Generation Essentials Group (NYSE:TGE) shared that it has executed a sale and purchase agreement to acquire the Hilton Garden Inn New York City Tribeca. The company has already paid an irrevocable deposit and aims to complete the acquisition within the next two months.

The Hilton Garden Inn New York City Tribeca is located in the heart of Tribeca along the Avenue of the Americas. It is surrounded by SoHo, Hudson Square, and Battery Park. The hotel sits in one of Lower Manhattan’s most dynamic and evolving neighborhoods. It offers 151 rooms and suites, over 5,000 square feet of retail space for food and beverage operations, a rooftop area, and facilities such as a full fitness center and a business center. The property also benefits from convenient subway access.

The Generation Essentials Group (NYSE:TGE) has announced four acquisition deals in major cities around the world during the financial year 2025. Among these, the New York hotel transaction is seen as a key achievement as the company approaches the end of the year.

Following its de-SPAC transaction with a special purpose acquisition company backed by Lawrence Ho’s Black Spade Capital, The Generation Essentials Group (NYSE:TGE) has recently executed definitive agreements to acquire three hotels. These deals represent assets valued at more than $300 million and, once completed, are expected to expand the company’s hotel portfolio by around 500 rooms in just six months.

The Generation Essentials Group (NYSE:TGE) is a French media, entertainment, and hospitality company that focuses on global strategies and developments in multi-media, entertainment, and cultural affairs around the world. The company holds a diversified portfolio of media and entertainment businesses and a global portfolio of premium properties.

3. Neumora Therapeutics, Inc. (NASDAQ:NMRA)

Share Price: $1.79

Number of Hedge Fund Holders: 15

Neumora Therapeutics, Inc. (NASDAQ:NMRA) is one of the best new penny stocks to invest in. On December 1, RBC Capital upgraded its rating on Neumora Therapeutics, Inc. (NASDAQ:NMRA) from Sector Perform to Outperform and increased its price target from $4 to $7.

This increase in price target reflects the firm’s view that Neumora Therapeutics, Inc. (NASDAQ:NMRA) is expanding its focus beyond neurology. According to RBC Capital, this shift is not fully reflected in the company’s current valuation.

RBC Capital highlighted the company’s early-stage asset in the NLRP3 class as a key strength. The firm noted that this asset is positioned competitively and has shown promise across multiple large-market indications. These include areas such as obesity and cardiometabolic disease, which could significantly increase Neumora Therapeutics, Inc.’s (NASDAQ:NMRA) long-term opportunity.

Additionally, the firm believes that the data that is expected in 2026 could help better define the potential and may have a meaningful positive impact on Neumora Therapeutics, Inc.’s (NASDAQ:NMRA) valuation.

At the same time, RBC Capital is staying cautious about the company’s later-stage neurology programs, including KOR, V1a, and M4. However, the firm noted that the current valuation appears to reflect very limited expectations for these programs. This suggests that any positive outcomes could provide upside potential.

Neumora Therapeutics, Inc. (NASDAQ:NMRA) is a clinical-stage biopharmaceutical company focused on developing treatments for brain diseases.

2. KinderCare Learning Companies, Inc. (NYSE:KLC)

Share Price: $4.32

Number of Hedge Fund Holders: 18

KinderCare Learning Companies, Inc. (NYSE:KLC) is one of the best new penny stocks to invest in. On December 18, BMO Capital reiterated its Buy rating on KinderCare Learning Companies, Inc. (NYSE:KLC) with a price target of $6 on the stock.

However, on December 17, Morgan Stanley kept its Hold rating on KinderCare Learning Companies, Inc. (NYSE:KLC) while maintaining the price target at $6.

In other news, KinderCare Learning Companies, Inc. (NYSE:KLC) reported the return of Tom Wyatt as Chief Executive Officer, effective December 2, 2025. Wyatt was the CEO of the company for more than a decade and he will continue to serve as Chairman of the Board. He is replacing former CEO Paul Thompson, who stepped down as a board member. Thompson will continue his employment until December 31, 2025, to support a smooth leadership transition.

According to the report by KinderCare Learning Companies, Inc. (NYSE:KLC), Tom Wyatt served as the company’s CEO from 2012 until June 2024 and has been Chairman of the Board since 2021. During his 12 years as CEO, he played a key role in transforming the company by driving significant occupancy and top-line and bottom-line growth. Under his leadership, the company focused on high standards of excellence in education, people and culture, health and safety, and growth and operations. This focus contributed to record-high levels of employee and customer engagement.

KinderCare Learning Companies, Inc. (NYSE:KLC) provides early childhood and school-age education and care in 41 states and the District of Columbia. It offers differentiated, flexible child care solutions through its portfolio of brands and services.

1. Fractyl Health, Inc. (NASDAQ:GUTS)

Share Price: $2.20

Number of Hedge Fund Holders: 26

Fractyl Health, Inc. (NASDAQ:GUTS) is one of the best new penny stocks to invest in. On December 19, Canaccord Genuity reiterated its Buy rating on Fractyl Health, Inc. (NASDAQ:GUTS) with a price target of $8. This comes after a series of virtual meetings with the company’s leadership, including Co-founder and Chief Executive Officer, Dr. Harith Rajagopalan, along with Head of Investor Relations and Corporate Development, Brian Luque.

During the meetings, many key areas of the business were discussed, including the underlying mechanism of duodenal ablation, the Revita procedure and its clinical profile, current development and regulatory status, commercial opportunities for Fractyl Health, Inc. (NASDAQ:GUTS), reimbursements, and the six-month midpoint data readout from the REMAIN-1 study, which is expected in January.

Canaccord Genuity pointed out that much of the discussion focused on the commercial opportunities for Fractyl Health, Inc. (NASDAQ:GUTS). These were supported by the positive clinical data that the company has shared so far. The research firm expressed confidence following these meetings.

Previously, on December 2, H.C. Wainwright also reaffirmed its Buy rating on Fractyl Health, Inc. (NASDAQ:GUTS) while keeping the price target at $8.

Also on December 2, Fractyl Health, Inc. (NASDAQ:GUTS) announced positive six-month results from its open-label REVEAL-1 Cohort, which involved individuals with obesity who had lost at least 15% of their total body weight using GLP-1 medications and who either needed or chose to stop GLP-1 therapy.

The data showed that patients who received a single Revita procedure after stopping GLP-1 therapy were able to maintain stable body weight and glycemic control over a six-month period. This highlights Revita’s potential as a first-in-class therapy for maintaining weight loss after discontinuation of GLP-1 therapy.

Fractyl Health, Inc. (NASDAQ:GUTS) a metabolic therapeutics company focused on pioneering pattern-breaking approaches that treat root causes of serious metabolic diseases like obesity and type 2 diabetes (T2D).

While we acknowledge the potential of GUTS as an investment, 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 GUTS and that has a 100x upside potential, check out our report about this cheapest AI stock.

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