In this article, we will look at the 10 Best Penny Stocks to Buy for 2026.

A rally in large-cap growth stocks was the catalyst behind US equities powering to record highs in 2025. Amid the rallies, premium valuations are already triggering concerns in the markets, with most counters trading above their historical norms.

Small-cap and penny stocks could be on the cusp of usurping their larger counterparts in 2026 and lead the markets higher. Consequently, Jonathan Krinsky, BTIG managing director and chief market technician, expects the breakout in small caps to stick for the better part of the year.

While the Russell 2000 small-cap index was up by 13% in 2025, Jefferies strategist Steven DeScantis insists the index could be in for significant gains.

According to DeScantis, lower interest rates alongside a steeper yield curve will ensure companies with small market caps come out on top.

“With earnings growth set to improve, a driver for our themes will be a broader equity market, with more stocks beating their indexes than average,” he added. “The smallest of the small is very cheap; Performs better when market broadens out.” Additionally, he expects small companies with a market cap of less than $1 billion to benefit from a pickup in mergers and acquisition activities.

“Given how unloved small caps have become, we think finding a partner makes sense, cash levels stand at $2.4T, and HY market is wide open,” DeScantis wrote. “Companies want to buy growth, scale matters, and getting bigger makes sense these days.”

Amid renewed focus on small-cap companies, let’s take a look at some of the best penny stocks to buy in 2026.

Our Methodology

To compile our list of 10 Best Penny Stocks to Buy for 2026, we used Finviz screener and other online sources to identify stocks trading for less than $5 a share. We focused on penny stocks with upside potential of more than 100% that were popular among elite hedge funds in the third quarter of 2025. Finally, we ranked the stocks in ascending order based on the hedge fund stakes 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).

Note: The upside potential and share price data are as of January 12, 2026.

Best Penny Stocks to Buy for 2026

10. American Bitcoin Corp (NASDAQ:ABTC)

Stock Upside Potential: 109.42%

Share Price: $1.82

Number of Hedge Fund Holders: 5

American Bitcoin Corp (NASDAQ:ABTC) is one of the best penny stocks to buy for 2026. On December 16, American Bitcoin Corp (NASDAQ:ABTC) reiterated that it is one of the 20 publicly traded Bitcoin treasury companies by holdings. That’s in part because it held 5,098 Bitcoin in strategic reserves as of December 14.

The company has successfully accumulated Bitcoin through a combination of mining operations and strategic purchases. It also holds Bitcoin in custody in addition to being pledged for miner purchases under an agreement with BITMAIN. Amid the soaring BTC holdings, the company is introducing a Bitcoin Yield Metric to complement its Satoshis Per Share disclosure.  The new metric measures the percentage change in SPS over defined periods, thereby informing investors about how Bitcoin evolves.

“In just over three months since our Nasdaq listing, we have surged past dozens of companies with our Bitcoin reserve now exceeding 5,098 BTC,” said Eric Trump, Co-Founder and Chief Strategy Officer of American Bitcoin.

On December 10, Roth MKM analyst Darren Aftahi initiated coverage of the stock with a Buy rating and a $4 price target.

American Bitcoin Corp (NASDAQ:ABTC) is a Bitcoin mining and treasury management company, majority owned by Canadian miner Hut 8 Mining. It provides computing power to mining pools, which use it to operate nodes and validate blocks on the blockchain.

9. Angel Studios Inc. (NYSE:ANGX)

Stock Upside Potential: 148.92%

Share Price: $4.31

Number of Hedge Fund Holders: 5

Angel Studios Inc. (NYSE:ANGX) is one of the best penny stocks to buy for 2026. On December 30, Angel Studios Inc. (NYSE:ANGX) announced it had achieved 25% member growth since, surpassing 2 million paying guild members.

The 2 million paying members are a significant milestone, coming barely a year after surpassing 1 million members in March 2025. The milestone validates the company’s audience-centric model and the values-driven stories that it champions. It also underscores the success of the recently released animated epic DAVID, which is now the highest-grossing faith-based animated theatrical opening of all time.

The 25% member growth underlines the company’s strategic focus on broadening its film and television series slate. The company has successfully introduced 430 new films, television episodes, and specials to its Guild members. In addition to enhancing the pipeline, the company has also made significant strides in owning its highest-performing franchises.

“Strong collaboration between the Guild and our filmmaker partners is our creative engine, and this growth demonstrates that our members want to participate in directly shaping the entertainment they enjoy. As we expand our slate, we are focused on distributing films and television series that earn exceptionally high audience satisfaction, in theaters and on the Angel platform.” Neal Harmon, Co-Founder and CEO of Angel, said.

The 2 million Guild members milestone also came on the heels of analysts at Oppenheimer initiating coverage of the stock with an Outperform rating and an $8 price target.

Angel Studios Inc. (NYSE:ANGX) is a community-driven film studio and streaming platform that lets audiences fund, choose, and distribute family-friendly movies and shows, often with faith-based or positive themes, by leveraging equity crowdfunding and its “Angel Guild” to bypass traditional Hollywood gatekeepers, producing content like The Chosen and Sound of Freedom.