In this article, we will look at the 10 Best Penny Stocks with Huge Upside Potential.
The Russell 2000 index, which represents small-cap companies, has gained roughly 16.2% on a year-to-date basis. These gains have surpassed the performance of the S&P 500, which has grown 10.82% during the same time. To talk about the small-cap performance, Francis Gannon, Royce Investment Partners Co CIO, appeared on a CNBC Television interview on May 29. He noted that the small-cap story goes way back, beyond just the year-to-date comparison. Gannon highlighted that the Russell 2000 has been up more than 40% over the past year, surpassing the 28% gains of the S&P 500 index during the same time.
Gannon believes that this outperformance is driven by a strong earnings story. He highlighted that back in 2023 and 2024, the earnings story for small caps was crippled and in negative figures. However, the earnings are expected to be ahead of the large caps in 2026. Gannon noted that small caps have also benefited from favorable policies, including deregulation, the tax act, and an increase in productivity through advancements in AI. Notably, Gannon mentioned that historically, whenever small caps start to outperform the larger counterparts, the trend usually continues for over a decade.
With that, let’s take a look at the 10 Best Penny Stocks with Huge Upside Potential.
Our Methodology
To curate the list of 10 Best Penny Stocks with Huge Upside Potential, we used the Finviz stock screener, CNN, and Insider Monkey’s Hedge Funds database. Using the screener, we aggregated a list of stocks trading below $5 with analysts expecting more than 30% upside over the next 12 months. Next, we cross-checked the upside potential from CNN and ranked the stocks in ascending order of this metric. We have limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment. Stock prices, analyst upside potential, and related market data were collected as of June 1, 2026.
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. Insider Monkey’s quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 599.2% since May 2014, beating its benchmark by 372 percentage points (see more details here).
10 Best Penny Stocks with Huge Upside Potential
10. B2Gold Corp. (NYSEAMERICAN:BTG)
Number of Hedge Fund Holders: 37
Analyst Upside Potential: 52.03%
Although B2Gold Corp. (NYSEAMERICAN:BTG) currently trades around $4.6, analysts expect more than 50% upside over the next 12 months. In fact, the stock has risen more than 6% since the fiscal Q1 2026 earnings were released on May 6. B2Gold Corp. (NYSEAMERICAN:BTG) also ranks among our Best Penny Stocks with Huge Upside Potential.
This performance was based on the company’s strong first quarter, with gold production reaching 238,000 ounces, ahead of internal expectations. Management noted that this helped lower unit operating costs. Cash operating costs were just over $1,000 per ounce produced, and all-in sustaining costs were below $2,000 per ounce sold, both better than expectations due to higher output, lower costs, and lower sustaining capex.
In addition, the profitability and cash generation were also solid as net income came in at $0.15 per share, along with an operating cash flow of $386 million. Strategically, the company returned capital and reshaped its portfolio. B2Gold repurchased $80 million worth of shares, renewed its buyback for up to 10% of the public float, and sold 70% stake in Fingold to Agnico Eagle for $325 million. Moreover, the company also announced a leadership transition to new CEO Mike Cinnamond and announced a Q2 dividend of $0.02 per share.
B2Gold Corp. (NYSEAMERICAN:BTG) is an international gold mining company headquartered in Vancouver, Canada. They are engaged in the exploration, development, and operation of gold mines globally.
9. RLX Technology Inc. (NYSE:RLX)
Number of Hedge Fund Holders: 17
Analyst Upside Potential: 55.07%
RLX Technology Inc. (NYSE:RLX) is one of the Best Penny Stocks with Huge Upside Potential. RLX Technology Inc. (NYSE:RLX) reported its fiscal Q1 2026 earnings on May 20. Wall Street has a bullish sentiment on the stock as 80% of the 5 analysts covering the stock maintain a Buy rating. The 12-month average price target suggests more than 55% upside from current levels.
During the fiscal first quarter, the company nearly doubled its revenue with 96.2% year-over-year growth to RMB1,585.8 million ($229.9 million). Management attributed this growth to faster international expansion, the acquisition of a European business, and a one-time export-policy benefit.
In addition to revenue, the profitability also increased with gross margins improving to 31.8% from 28.6%. The US GAAP net income grew 32.1% to RMB294.2 million ($42.6 million), while non‑GAAP net income rose 41.4% to RMB357.3 million ($51.8 million).
Management also highlighted key strategic growth drivers, including continued international rollout with localized market approaches and regional partners, integration of R&D, and a nexus between manufacturing and commercial functions to boost efficiency. Looking ahead, management is now focused on product innovation, distribution, and retail expansion.
RLX Technology Inc. (NYSE:RLX) is a leading branded e-vapor company based in China, specializing in the design, manufacture, and distribution of electronic vapor products. The company’s advantage consists of a strong R&D base and market research that makes it possible to create e-vapor products tailored to adult smokers’ needs.
8. UWM Holdings Corporation (NYSE:UWMC)
Number of Hedge Fund Holders: 40
Analyst Upside Potential: 63.40%
UWM Holdings Corporation (NYSE:UWMC) is one of the Best Penny Stocks with Huge Upside Potential. On May 28, UWM Holdings Corporation (NYSE:UWMC) issued a public statement criticizing Two Harbors’ board for delaying a shareholder vote to obtain approval for the CCM transaction.
The statement released on UWM Holdings’ investor relations page said that Two Harbors is delaying the vote, refusing to negotiate, and preventing shareholders from getting the best value. Management argued that its proposal of $12.50 per share cash or 2.3328 UWMC shares is superior to CrossCountry Mortgage’s (CCM) best and final offer of $12.00 per share plus a pro‑rated stub dividend. The company also noted that the offer meets the board’s stated criteria of all‑cash, fully financed, and invites immediate, good‑faith talks to finalize a deal that benefits Two Harbors’ shareholders.
The statement also accused the Two Harbors’ board and advisors of running a flawed process, prioritizing management over shareholders, wasting money on advisors, and using adjournments as delay tactics. UWMC singled out Chairman Kasnet for adjourning the meeting despite shareholder opposition, calling that action disenfranchising.
In the release, UWM Holdings Corporation (NYSE:UWMC) urged Two Harbor shareholders to vote against the CCM transaction and pressure the board to engage in negotiations.
UWM Holdings Corporation (NYSE:UWMC) is the indirect parent company of United Wholesale Mortgage (UWM), which is the largest wholesale mortgage lender in the US.
7. Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX)
Number of Hedge Fund Holders: 33
Analyst Upside Potential: 67.13%
Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) is one of the Best Penny Stocks with Huge Upside Potential. On May 14, Morgan Stanley raised the price target on Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) from $5 to $5.50, while keeping an Equal Weight rating on the shares.
The rating follows the company’s first-quarter financial and business update reported on May 6. During the quarter, the company reported $6.47 million in revenue, which was well short of analysts’ expectations of $16.28 million. On the bright side, the EPS beat forecasts with a loss of $0.22 per share, while the Street was expecting a $0.26 loss per share.
The company also provided an update on clinical progress of its pipeline, including REC-1245, REC-4881, and REC-4539, and is targeting early phase milestones for REC‑7735, REC‑102, REC‑617, and REC‑3565. Management noted that the pipeline remains on track across all wholly owned and partnered programs. Moreover, the end-to-end AI-driven platform was defined as the engine behind the progress. The company highlighted transcriptomics models that aim to bridge lab perturbations and patient biology, improving target selection, patient stratification, and experimental efficiency. Management presented these models, including the broader Recursion OS as value multipliers that accelerate design cycles, reduce re-runs, and increase translational fidelity.
Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) is a biotechnology company focused on using AI, automation, and data science to industrialize drug discovery.
6. Grab Holdings Limited (NASDAQ:GRAB)
Number of Hedge Fund Holders: 50
Analyst Upside Potential: 68.50%
Grab Holdings Limited (NASDAQ:GRAB) is one of the Best Penny Stocks with Huge Upside Potential. On May 21, Sachin Mittal from DBS maintained a Buy rating on Grab Holdings Limited (NASDAQ:GRAB) with a price target of $5.93. Earlier on May 11, Phillip Securities had reiterated a Buy rating on the stock with a price target of $7.
The positive ratings follow the company’s fiscal Q1 2026 earnings, which showed improvements in the top and bottom line. During the quarter, the company reported a revenue of $955 million, reflecting 24% year-over-year growth. The growth was attributed to on-demand and financial services. The on-demand GMV also grew 24% during the same time to reach $6.1 billion. Moreover, the company also witnessed an increase of 17% in monthly transacting users, and GMV per transacting user increased 4%.
The profitability also improved with adjusted EBITDA increasing 46% year-over-year to reach a record high of $154 million. As a result, the margins were lifted from 13.7% a year ago to 16.2% in Q1. Management has reiterated its full-year guidance at revenue in the range of $4.04 billion to 4.10 billion and adjusted EBITDA in the range of $700 million to $720 million.
Grab Holdings Limited (NASDAQ:GRAB) offers a superapp in Southeast Asia, providing services across deliveries, mobility, and digital financial services. The company serves millions of consumers in Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
While we acknowledge the potential of GRAB 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 GRAB and that has 100x upside potential, check out our report about the cheapest AI stock.
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