In this article, we will discuss: 10 Best Penny Stocks to Buy for 2025.

The US stock market has been on a roll owing to a powerful rally in the technology sector. The S&P 500 has gained more than 23%, driven by gains in mega-cap stocks amid the artificial intelligence frenzy. Likewise, the gains have come amid a resilient US economy that has steered clear of recession. Improving monetary policy outlook on the US Federal Reserve cutting interest rate has also strengthened investor sentiments on equities.

While small-cap stocks have lagged behind the overall market, they are drawing special attention as most appear to be trading at highly discounted valuations. Often considered speculative investments due to their low price point and smaller market presence, penny stocks are turning out to be attractive investment plays heading into 2025.

READ ALSO: 10 Best Stocks to Buy According to Billionaire D.E. Shaw and 10 Best Stocks to Buy According to Billionaire David Einhorn.

According to VettaFi’s Todd Rosenbluth, 2025 could be the year for small-cap stocks that have lagged the overall market but are backed by solid underlying fundamentals.

“Small caps are going to become more in favor in 2025,” Rosenbluth said on CNBC’s “ETF Edge”. “They started to perk up since the election and are heading into the election as interest rates have been coming down.”

There is an increased focus on the best penny stocks to buy for 2025, as most are trading at discounted valuations. The discounted valuations come as the Russell 2000 is only up 11% for the year compared to a 23% gain for the S&P 500. The fact that penny stocks offer the potential for long-term capital appreciations supported by durable profit growth affirms why they are solid long-term plays. Fundstrat Global Advisors’ managing partner, Tom Lee, has already reiterated that small-cap stocks are trading at a discount with a medium price-to-earnings multiple of 10.

“Since 1987, small caps have traded on a medium P/E basis to a premium of the S&P 500. The S&P is at 17 times. I think small caps could in the next couple of years outperform by more than 100%,” Lee said in an interview with CNBC.

New Street Advisors CEO Delano Saporu shares similar sentiments; he believes small-cap stocks are well poised to outperform in 2025, having underperformed over the past year. Ever since Donald Trump won the election, penny stocks have advanced amid growing enthusiasm around the potential easing of regulations on businesses.

Profit taking in the magnificent seven stocks and other large-cap stocks on a roll is expected to benefit penny stocks. In addition, the outlook for penny stocks remains solid as investors rotate out of money market accounts as the Federal Reserve cuts interest rates as part of the easing policy spree.

Amid the profit-taking spree, the best penny stock to buy for 2025 should offer a way of diversifying an investment portfolio. By taking a small portion of an extensive portfolio and focusing on high-risk reward opportunities in penny stocks, investors can position themselves for solid returns in case of a breakout.

Our Methodology

To make our list of Best Penny Stocks to Buy for 2025, we scanned the US markets for stocks trading for less than $5. We settled on stocks with solid underlying fundamentals and tremendous upside potential. Finally we ranked the stocks in ascending order based on their upside potential.

Note: All data is as of December 27, 2024

At Insider Monkey, we are obsessed with 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

10. Ardagh Metal Packaging SA. (NYSE:AMBP)

Stock Upside Potential: 35.47%

Number of Hedge Fund Holders: 23

Ardagh Metal Packaging SA. (NYSE:AMBP) is a packaging and containers company that supplies consumer metal beverage cans. Its products are used in various end-use categories, including beer, carbonated soft drinks and energy drinks. It operates 23 metal beverage can production facilities in 9 countries. It is also one of the best penny stocks to buy in 2025 as it is well-positioned to benefit from enhanced consumer purchasing due to lower interest rates.

Central banks cutting interest rates have resulted in reduced borrowing costs, prompting consumers to borrow and spend more. Likewise, Ardagh Metal Packaging SA. (NYSE:AMBP) is seeing a significant increase in demand for its beverage cans. Demand for its cans was up by 2% in the third quarter. Consequently, revenues increased 1% year over year to $1.3 billion, with adjusted earnings rising 15% to $196 million.

While anticipating solid macroeconomics, Ardagh Metal Packaging SA. (NYSE:AMBP) has already raised its full-year earnings guidance to between $650 million and $660 million. The hike comes as management expects a solid volume/mix of its cans as they also strive to lower operating costs. Resilient beverage consumption trends and strong input cost management should allow the company to continue generating free cash flow and return value to shareholders in 2025. The stock currently yields 13.42%, which is ideal for income-focused investors.

9. Globalstar, Inc. (NYSE:GSAT)

Stock Upside Potential: 38.25%

Number of Hedge Fund Holders: 17

Globalstar, Inc. (NYSE:GSAT) is a communication services company that provides mobile satellite services. It offers duplex two-way voice and data products, including mobile voice and data satellite communications services. While the stock is up by about 10% in 2024, it is one of the best penny stocks to buy in 2025 as it moves to unlock new opportunities.

Globalstar, Inc. (NYSE:GSAT) has already inked a strategic partnership with Liquid Intelligent to enhance 5G connectivity in Africa, the Middle East and the Gulf regions. Growing demand for 5G connectivity amid the artificial intelligence revolution provides tremendous growth opportunities for Globalstar with its data satellite communication services.

In addition, the mobile satellite services company has already inked a strategic partnership with tech giant Apple. The partnership paves the way for the company to access $1.5 billion in funding for enhancing iPhone services. Globalstar, Inc. (NYSE:GSAT) will be able to expand its ground infrastructure and buy new satellites with the new funding. To develop and improve its constellation in low Earth orbit, Globalstar has already ordered up to 26 satellites in addition to the 31 satellites it currently operates.