In this article, we will look at the 10 Best Penny Stocks to Buy According to Hedge Funds.
On October 7, Ashley MacNeill, Head of Equity Capital Markets at Vista Equity, appeared on CNBC’s ‘Closing Bell’ to talk about the equity market.
She stated that she is remaining “responsibly bullish” on the market, which entails being measured in one’s approach, recognizing that being in an AI bubble is acceptable, and being mindful of the market’s tailwinds.
READ ALSO: 13 Most Undervalued Retail Stocks to Invest In and 14 Biotech Stocks with High Potential.
These include considering the Fed’s cuts, retail inflows, AI innovation, and the upcoming earnings cycle, which, by all accounts, is expected to be particularly strong, especially when compared to the last earnings cycle.
With these trends in view, let’s look at the best penny stocks to buy according to hedge funds.
Our Methodology
We used stock screeners to make a list of the best stocks with a stock price less than $5 and selected the top 10 with the highest number of hedge fund holders as of Q2 2025. We sourced the hedge fund sentiment data from Insider Monkey’s database. The list is sorted in ascending order of hedge fund holders.
Note: All data was sourced on October 9.
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 Best Penny Stocks to Buy According to Hedge Funds
10. Wipro Limited (NYSE:WIT)
Stock Price: $2.70
Number of Hedge Fund Holders: 19
Wipro Limited (NYSE:WIT) is one of the best penny stocks to buy according to hedge funds. CLSA analyst Sumeet Jain maintained a Buy on the stock with a price target of INR265, on October 3.
In other news, Wipro Limited (NYSE:WIT) announced on September 15 that it entered into an expanded partnership with CrowdStrike for the launch of Wipro CyberShield MDR, which is “an AI-powered unified managed security service (MSS) that simplifies and strengthens enterprise security operations”.
Management stated that CyberShield MDR employs a modern SOC to deliver industry-leading capabilities, providing AI-driven automation, enhanced visibility, and higher efficiency.
Wipro Limited (NYSE:WIT) is a global information technology, consulting, and outsourcing company involved in the development and integration of solutions.
The company’s operations are divided into the following segments: Information Technology Services, India State Run Enterprise Services, and Information Technology Products.
9. BlackBerry Limited (NYSE:BB)
Stock Price: $4.79
Number of Hedge Fund Holders: 20
BlackBerry Limited (NYSE:BB) is one of the best penny stocks to buy according to hedge funds. On October 3, CIBC analyst Todd Coupland reiterated a bullish stance on BlackBerry Limited (NYSE:BB), giving the stock a buy rating with a $6.00 price target.
BlackBerry Limited (NYSE:BB) reported in its fiscal Q2 2026 results that the total company revenue for the quarter surpassed prior guidance at $129.6 million, reflecting a growth of 3% year-over-year.
Management further reported that total company GAAP and adjusted gross margin rose by 4 percentage points year-over-year to 75%. QNX revenue for the quarter also exceeded guidance, achieving a 15% year-over-year growth to $63.1 million.
BlackBerry Limited (NYSE:BB) provides intelligent security software and services. The company’s operations are divided into the following segments: Cybersecurity, Internet of Things (IoT), and Licensing and Other.
8. Plug Power Inc. (NASDAQ:PLUG)
Stock Price: $3.48
Number of Hedge Fund Holders: 23
Plug Power Inc. (NASDAQ:PLUG) is one of the best penny stocks to buy according to hedge funds. On October 7, Plug Power Inc. (NASDAQ:PLUG) was downgraded to a Hold from a Buy by Clear Street with a price target of $3.50.
The rating update came after Plug Power Inc. (NASDAQ:PLUG) announced the succession of new CEO Jose Luis Crespo, who would replace Andy Marsh in the role in March next year.
The analyst told investors that the current valuation shows insufficient remaining upside after the strong outperformance of the stock, up 170% in the past four weeks.
Plug Power Inc. (NASDAQ:PLUG) provides alternative energy technology focusing on the development, design, manufacturing, and commercialization of hydrogen and fuel cell systems that are primarily employed for the material handling and stationary power markets.
7. Banco Bradesco S.A. (NYSE:BBD)
Stock Price: $3.17
Number of Hedge Fund Holders: 23
Banco Bradesco S.A. (NYSE:BBD) is one of the best penny stocks to buy according to hedge funds. Banco Bradesco S.A. (NYSE:BBD) reported a recurring net income of R$6.1 billion in its fiscal Q2 2025 results, reflecting a growth of 3.5% quarter-over-quarter and 28.6% year-over-year. Resultantly, ROAE topped 14.6% in the quarter.
Management further reported that revenue for the quarter reached R$34.0 billion, reflecting a growth of 15.1% year-over-year. This growth was driven by “an expressive growth” across all lines, including net interest income, income from insurance, and fee and commission income.
Banco Bradesco S.A. (NYSE:BBD) added that as per its guidance, revenue performance would be the primary reason behind the company’s profitability increase in 2025.
Banco Bradesco S.A. (NYSE:BBD) received a rating update on September 30, with Bank of America Securities analyst Mario Pierry maintaining a Buy rating on the stock and raising the price target from $3.19 to $4.12.
The analyst consensus on Banco Bradesco S.A. (NYSE:BBD) is currently a Moderate Buy, with the stock’s median price target of $3.17 implying an upside of 29.34% from current levels.
Formerly known as Banco Brasileiro de Descontos SA, Banco Bradesco (NYSE:BBD) is a public company based in Brazil that engages in the Banking Services Industry Group.
It operates as a wide-ranging commercial bank in terms of credit operations, total assets, and the volume of funding and deposits.
The company has a broad range of banking and financial services and products for key national and international institutions, companies, and individuals in Brazil and abroad.
6. Ambev S.A. (NYSE:ABEV)
Stock Price: $2.17
Number of Hedge Fund Holders: 23
Ambev S.A. (NYSE:ABEV) is one of the best penny stocks to buy according to hedge funds. On October 3, Goldman Sachs slashed the price target on Ambev S.A. (NYSE:ABEV) to R$10.10 from R$10.20, maintaining a Sell rating on the stock.
The firm told investors in a research note that the latest industrial product data by IBGE reflected a 12% decrease in alcoholic beverage production in Brazil in August. This averages to a 13% year-over-year contraction quarter-to-date, and a 4% drop over the past 12 months.
Ambev S.A. (NYSE:ABEV) produces, distributes, and sells beverages. Its offerings include carbonated soft drinks, beer, and other non-alcoholic and non-carbonated products.
The company’s operations are divided into the following geographical segments: Brazil, Central America and the Caribbean (CAC), and Canada.
5. Denison Mines Corp. (NYSE:DNN)
Stock Price: $2.89
Number of Hedge Fund Holders: 27
Denison Mines Corp. (NYSE:DNN) is one of the best penny stocks to buy according to hedge funds. On October 2, Desjardins analyst Bryce Adams reiterated a bullish stance on Denison Mines Corp. (NYSE:DNN), giving the stock a Buy rating with a C$5.00 price target.
In its fiscal Q2 2025 results, Denison Mines Corp. (NYSE:DNN) announced the first production at McClean Lake North using SABRE MininG.
In addition, Denison Mines Corp. (NYSE:DNN) obtained provincial approval of environmental assessment for Wheeler River, while also attaining around 80% completion of total engineering for Phoenix.
Denison Mines Corp. (NYSE:DNN) is involved in the exploration and development of uranium. The company holds interests in the Athabasca Basin, Wheeler River, Midwest Project, McClean Lake, and Waterbury Lake.
4. Transocean Ltd. (NYSE:RIG)
Stock Price: $3.32
Number of Hedge Fund Holders: 32
Transocean Ltd. (NYSE:RIG) is one of the best penny stocks to buy according to hedge funds. In a report released on October 6, Citi maintained a Hold on Transocean Ltd. (NYSE:RIG) and assigned a price target of $3.50.
Transocean Ltd. (NYSE:RIG) reported in its fiscal Q2 2025 results net unfavorable items of $957 million. The adjusted net income for the quarter came up to $19 million after consideration of these net unfavorable items.
Management also reported that contract drilling revenues for the three months ended June 30 rose sequentially by $82 million to $988 million, attributing the increase to improved revenue efficiency, improved rig utilization, an additional day in the quarter, and higher reimbursement revenues.
Transocean Ltd. (NYSE:RIG) provides offshore contract drilling services for oil and gas wells. The company also owns and operates offshore drilling fleets such as ultra-deepwater, deepwater, harsh environment, and midwater rigs.
3. Clarivate Plc (NYSE:CLVT)
Stock Price: $3.69
Number of Hedge Fund Holders: 33
Clarivate Plc (NYSE:CLVT) is one of the best penny stocks to buy according to hedge funds. On September 29, RBC Capital analyst Ashish Sabadra assigned a Hold rating to Clarivate Plc (NYSE:CLVT) and set a price target of $6.00.
However, Wolfe Research initiated coverage of the stock on September 3 with a Peer Perform rating, assigning a $4 to $5 fair value range.
The firm told investors that while Clarivate Plc (NYSE:CLVT) boasts a strong market share with limited competition, it faces risks from sources such as AI disintermediation, tighter university and healthcare budgets, and a relatively high net leverage ratio.
Clarivate Plc (NYSE:CLVT) has an analyst consensus rating of Hold, and the stock’s median price target of $3.68 implies an upside of 35.87% from current levels.
Clarivate Plc (NYSE:CLVT) provides global information, workflow solutions, and analytics. The company operates through the following segments: Academia and Government (A&G), Intellectual Property (IP), and Life Sciences and Healthcare (LS&H).
2. Coty Inc. (NYSE:COTY)
Stock Price: $4.26
Number of Hedge Fund Holders: 33
Coty Inc. (NYSE:COTY) is one of the best penny stocks to buy according to hedge funds. RBC Capital analyst Nik Modi expressed bullish sentiments for Coty Inc. (NYSE:COTY) on October 3, giving the stock a Buy rating.
However, Canaccord Genuity analyst Susan Anderson reiterated a Hold rating on Coty Inc. (NYSE:COTY) on October 1 and set a $4.00 price target.
The same day, Bank of America Securities maintained a Sell rating on the stock with a $3.5 price target. Similarly, Barclays also reiterated a Sell rating on Coty Inc. (NYSE:COTY) on October 1, assigning the stock a price target of $3.5.
Coty, Inc. (NYSE:COTY) is a beauty company that operates a portfolio of brands in color cosmetics, fragrance, and skin and body care. Its Prestige segment operates an array of luxury brands, including Gucci, Marc Jacobs, Miu Miu, Tiffany & Co., Kylie Cosmetics by Kylie Jenner, Hugo Boss, Burberry, Chloe, Calvin Klein, SKKN BY KIM, and more.
Coty, Inc.’s (NYSE:COTY) mass beauty products are primarily sold through supermarkets, hypermarkets, drugstores, department stores, e-commerce retailers, and other channels.
1. Under Armour, Inc. (NYSE:UA)
Stock Price: $4.74
Number of Hedge Fund Holders: 37
Under Armour, Inc. (NYSE:UA) is one of the best penny stocks to buy according to hedge funds. UBS reiterated a Buy rating on Under Armour, Inc. (NYSE:UA) on September 29, assigning a price target of $7.50.
However, Under Armour, Inc. (NYSE:UA) was downgraded to a Hold on September 15 by Redburn Atlantic analyst Geoff Lowery, who assigned a $6.00 price target to the stock.
Under Armour, Inc. (NYSE:UA) develops, markets, and distributes branded athletic performance apparel, accessories, and footwear for men, women, and youth. It operates in four geographic segments: North America, EMEA, Asia-Pacific, and Latin America.
While we acknowledge the potential of UA 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 UA and that has 100x upside potential, check out our report about this cheapest AI stock.
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Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
