In this article, we will look at the 10 Best Penny Stocks to Buy and Hold Under $5.
Smaller companies have started to attract more attention on Wall Street. After years in which mega-cap technology names drove most of the market’s gains, investors are taking a closer look at areas that were largely left behind. Many of these businesses are operating in fast-growing niches, yet still remain relatively underfollowed by large institutional investors.
That is also the message coming through in the asset-manager commentary. Franklin Templeton says “both small-cap quality and value are poised for meaningful rebounds in 2026” and adds that “the current period” is “an opportune time to invest in select small-caps for the long run.” AllianceBernstein makes a similar point from a macro angle, arguing that “the tide may be turning” and that “Attractive valuations are finally being accompanied by earnings growth expected to surpass large-caps.” Janus Henderson adds that “multiple drivers beyond interest rates support small caps heading into 2026,” while “small-cap valuations remain historically cheap relative to large caps” and earnings growth is “converging with large-cap levels.” Put together, the case is not just that small stocks are cheaper. It is that parts of the small-cap universe may now have a more durable earnings and valuation setup than they have had in years.
This article is less about chasing volatility and more about finding smaller names that may have better prospects than the market is giving them credit for. With that in mind, let’s take a look at the 10 Best Penny Stocks to Buy and Hold Under $5.
Our Methodology
We used the Finviz screener to identify stocks that are trading below $5 per share and are viewed favorably by analysts. We then limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment. These stocks are also popular among analysts and elite hedge funds.
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 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
10. Evotec SE (NASDAQ:EVO)
On April 14, 2026, H.C. Wainwright assumed coverage of Evotec SE (NASDAQ:EVO) with a Buy rating and a $7 price target, citing the company’s shift from a legacy asset-heavy integrated model toward a more streamlined and capital-efficient structure. The firm views current share levels as an attractive entry point for long-term investors.
On the same day, Evotec SE (NASDAQ:EVO) announced the appointment of Ingrid Müller as Chief Operating Officer, effective May 1. She will join the company’s management board and oversee global operations as well as the execution of Evotec’s Horizon initiative. Müller most recently served as VP of portfolio strategy and execution at CureVac.
Last month, Deutsche Bank analyst Fynn Scherzler lowered the price target on Evotec SE (NASDAQ:EVO) to €4.50 from €6 previously and maintained a Hold rating on Evotec SE (NASDAQ:EVO) shares.
Evotec SE (NASDAQ:EVO) provides drug discovery and development services across multiple therapeutic areas globally.
9. Arbutus Biopharma Corporation (NASDAQ:ABUS)
On April 14, 2026, Arbutus Biopharma Corporation (NASDAQ:ABUS) announced that the FDA granted Fast Track designation to imdusiran for the treatment of chronic hepatitis B, a step that could help accelerate its development and review timeline.
On April 6, 2026, Jefferies lowered its price target on Arbutus Biopharma Corporation (NASDAQ:ABUS) to $5.50 from $7 while maintaining a Buy rating, citing updated assumptions around the outcome of Moderna’s appeal tied to their legal settlement. The firm raised its estimated probability of Moderna prevailing under 28 U.S.C. Section 1498 to 75% from 25%, which would impact the contingent $1.3B payment.
Last month, Arbutus and Genevant Sciences, a subsidiary of Roivant Sciences, reached a global settlement with Moderna valued at up to $2.25B related to the use of lipid nanoparticle (LNP) technology in COVID-19 vaccines. The agreement includes a $950M upfront payment scheduled for July 2026 and an additional $1.3B contingent on the appellate ruling. The settlement also includes licensing terms, with Moderna receiving a non-exclusive global license for LNP technology in infectious disease applications.
Arbutus Biopharma Corporation (NASDAQ:ABUS) develops therapies targeting infectious diseases, including chronic hepatitis B.
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