On December 23, CNBC reported that Julie Biel, Chief Market Strategist at Kayne Anderson Rudnick, joined Fast Money to discuss where the Russell 2000 may be headed and what investors can expect from small-cap stocks in 2026. Biel said she remains positive about small caps. She noted that they are more sensitive to economic conditions and are likely to benefit from lower interest rates as small-cap companies tend to borrow on a variable interest rate market.
For the past 18 months, Biel has been saying that small caps will start to outperform once the earnings really come through. She noted that some small caps did outperform but the gains are mostly driven by lower-quality companies that have no earnings, such as those in biotech and quantum-related areas.
According to Biel, this trend has made it difficult for active managers to beat their benchmarks. She indicated that it has been frustrating for those waiting for high-quality small caps to be rewarded.
Despite this, Biel said that earnings growth is what truly matters over the long term. She said that the overall setup for 2026 looks more favorable for small-cap stocks compared to mid-cap and large-cap stocks, and even the Magnificent 7. As a result, she thinks small caps could be a good place for investors to look.
With this background in mind, let’s take a look at the 10 best US penny stocks to buy.
Our Methodology
To compile our list of the 10 best US penny stocks to buy, we used the Finviz stock screener. We sorted our results based on market capitalization and picked the top 30 American stocks with a share price of under $5 as of January 2, 2026. Next, we focused on the top 10 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q3 2025 database of 978 elite hedge funds. Finally, the 10 best US penny stocks to buy were ranked in ascending order based on the number of hedge funds holding stakes in them as of Q3 2025.
Why do we care about what hedge funds do? 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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
10 Best US Penny Stocks to Buy
10. Plug Power Inc. (NASDAQ:PLUG)
Share Price: $2.23
Number of Hedge Fund Holders: 27
Plug Power Inc. (NASDAQ:PLUG) is one of the best US penny stocks to buy. On December 31, Clear Street upgraded its rating on Plug Power Inc. (NASDAQ:PLUG) from Hold to Buy but also lowered its price target from $3.50 to $3.00.
The research firm that the stock now offers “attractive upside potential” from the current stock price. Clear Street noted that the opportunity is now more compelling than when Plug Power Inc. (NASDAQ:PLUG) was trading at around $4.00 in early October.
Clear Street cut the price target mainly because of dilution from the company’s convertible refinancing, which was completed in late November. The firm also applied a slightly lower valuation multiple to its 2027 sales forecast. The new price target of $3.00 is based on a valuation of 4 times expected enterprise value to sales, using Clear Street’s 2027 sales estimate of $1.07 billion.
According to the research firm, this valuation is still slightly higher than Plug Power Inc.’s (NASDAQ:PLUG) three-year historical average. Clear Street’s analysis suggests that this premium valuation reflects expected cost savings, a lower annual cash burn rate, and improving opportunities for European refinery electrolyzers.
Previously, on December 18, Craig-Hallum also reiterated a Buy rating on Plug Power Inc. (NASDAQ:PLUG). Overall, the 12-month median price target of $2.50 set by analysts indicates a potential upside of 13% from the current stock price.
Plug Power Inc. (NASDAQ:PLUG) is a global company specializing in hydrogen fuel-supply solutions. It provides electrolyzers, liquid hydrogen, fuel cell systems, storage tanks, and fueling infrastructure to various industries, including material handling, industrial applications, and energy producers.
9. Taboola.com Ltd. (NASDAQ:TBLA)
Share Price: $4.43
Number of Hedge Fund Holders: 29
Taboola.com Ltd. (NASDAQ:TBLA) is one of the best US penny stocks to buy. On December 19, Rosenblatt initiated coverage on Taboola.com Ltd. (NASDAQ:TBLA), giving the stock a Buy rating and setting the price target at $6. The research firm said that Taboola.com Ltd.’s (NASDAQ:TBLA) stock has been “mis-characterized as a secular loser from Google AI-search.” This has impacted the stock’s performance over the past year.
Rosenblatt pointed out that the company has made solid progress after its merger with Connecity and its strategic equity partnership with Yahoo. According to the research firm, these efforts have helped position Taboola.com Ltd. (NASDAQ:TBLA) for future growth because of its early adoption of AI for direct marketing across a network of more than 9,000 publishers. Rosenblatt also pointed to improvements in the company’s ad system, Realize, which launched at the start of 2025. The firm said that this has expanded the company’s appeal to marketers.
Also on December 19, Benchmark reiterated its Buy rating on Taboola.com Ltd. (NASDAQ:TBLA) with a price target of $4.50. Benchmark is confident about the company’s core native advertising business, which it sees as stable. The firm added that Taboola.com Ltd.’s (NASDAQ:TBLA) management expects low single-digit percentage revenue growth in 2026 for the company’s Native business, excluding traffic acquisition costs.
Benchmark also highlighted Realize as a key platform update that is contributing to improved the revenue outlook for the company.
Taboola.com Ltd. (NASDAQ:TBLA) is a performance advertising technology company that powers recommendations for the open web to help people explore things they might like. The company helps digital properties, including websites, devices, and mobile apps, to drive monetization and user engagement.
8. Coty Inc. (NYSE:COTY)
Share Price: $3.11
Number of Hedge Fund Holders: 30
Coty Inc. (NYSE:COTY) is one of the best US penny stocks to buy. On December 23, Banco Santander downgraded its rating on Coty Inc. (NYSE:COTY) from Outperform to Neutral and set a price target of $3.50. The firm noted that the company’s “transition phase” may take longer due to the CEO change.
On December 22, Evercore ISI also downgraded Coty Inc. (NYSE:COTY) from Outperform to In Line and set a price target of $7. This update comes after the departure of the company’s CEO, Sue Nabi. Coty Inc. (NYSE:COTY) announced that Markus Strobel, a Procter & Gamble veteran, has been appointed Executive Chairman of the Board and Interim CEO. Evercore ISI sees this moment as a “pivotal juncture” for the company at a time when it is conducting a strategic review of its Consumer division.
According to Evercore ISI’s analysis, the Consumer division accounts for about 15% of Coty Inc.’s (NYSE:COTY) profits but it also creates “nearly all of the operational challenges and bearish sentiment” for the company. The research firm noted that there is limited “visibility on timing and catalysts for a potential value unlock.” Evercore ISI sees the stock as undervalued but it noted that it is expected to “remain undervalued” as near-term outperformance is unlikely.
Previously, on December 12, TD Cowen lowered its price target on Coty Inc. (NYSE:COTY) from $4.00 to $3.75 and kept its Hold rating. The firm pointed to risks such as post-holiday inventory reductions, promotional pressures, a challenging environment in mass cosmetics, and a slower-than-expected recovery in the US market.
Coty Inc. (NYSE:COTY) is an American multinational beauty company with a portfolio of iconic brands across fragrance, color cosmetics, and skin and body care.
7. CytomX Therapeutics, Inc. (NASDAQ:CTMX)
Share Price: $4.25
Number of Hedge Fund Holders: 31
CytomX Therapeutics, Inc. (NASDAQ:CTMX) is one of the best US penny stocks to buy. On December 5, Piper Sandler reaffirmed its Buy rating on CytomX Therapeutics, Inc. (NASDAQ:CTMX) with a price target of $6.50.
Also on December 5, H.C. Wainwright reiterated its Buy rating on CytomX Therapeutics, Inc. (NASDAQ:CTMX) with a price target of $10. This update comes as the company approaches an important data readout for its CX-2051 therapy in colorectal cancer. H.C. Wainwright outlined specific performance benchmarks to measure how successful the upcoming dataset could be. In its most optimistic or “slam dunk” scenario, the firm expects an objective response rate of 25% to 30% or higher, median progression-free survival of at least six months, and Grade 3 diarrhea in less than 5% of patients.
H.C. Wainwright also described a “bull case” scenario, which would still be seen as positive. This will include an objective response rate of 15% to 20% or higher, a median progression-free survival of at least five months, and Grade 3 diarrhea in less than 10% of patients. The research firm’s analysis included input from Dr. Michael Pishvaian, who was reportedly impressed by the CX-2051’s interim data, and especially noted its performance in patients previously treated with irinotecan.
On the downside, the firm also defined a “bear case” scenario. This would include an objective response rate of 10% or lower with a median progression-free survival of only two to three months. These benchmarks provide investors with clear metrics to assess the upcoming clinical results.
CytomX Therapeutics, Inc. (NASDAQ:CTMX) is a clinical-stage, oncology-focused biopharmaceutical company focused on developing masked biologics that conditionally activate in the tumor microenvironment.
6. Newell Brands Inc. (NASDAQ:NWL)
Share Price: $3.72
Number of Hedge Fund Holders: 31
Newell Brands Inc. (NASDAQ:NWL) is one of the best US penny stocks to buy. On December 3, Canaccord Genuity reiterated its Buy rating on Newell Brands Inc. (NASDAQ:NWL) with a price target of $7. This update comes after investor meetings with the company’s management team in Boston.
Canaccord Genuity pointed out that the company’s management, including CEO Christopher Peterson and CFO Mark Erceg, showed confidence despite a difficult year. Newell Brands Inc. (NASDAQ:NWL) is pleased with the progress of its turnaround strategy, which has been underway for about two and a half years.
Newell Brands Inc. (NASDAQ:NWL) has announced a workforce reduction of around 10% of its professional and clerical employees. The company will also close about 20 Yankee Candle stores in the US and Canada. Newell Brands Inc. (NASDAQ:NWL) expects this productivity plan to deliver annualized pre-tax cost savings of about $110 million to $130 million when it is fully implemented.
Canaccord Genuity expects 2026 to be the first year of net distribution gains for the company since its acquisition of Jarden, which was completed nearly a decade ago. This suggests that the company’s turnaround efforts may be starting to show results.
However, on December 2, UBS reduced its price target on Newell Brands Inc. (NASDAQ:NWL) from $5.50 to $4.00. The research firm pointed out that investors are expected to remain cautious and take a “wait and see” approach until there is clearer evidence that the company’s performance is starting to materialize.
Newell Brands Inc. (NASDAQ:NWL) is an American consumer goods company with a strong portfolio of brands such as Rubbermaid, Sharpie, Graco, Coleman, Rubbermaid Commercial Products, Yankee Candle, Paper Mate, FoodSaver, Dymo, EXPO, Elmer’s, Oster, NUK, Spontex, and Campingaz.
5. JetBlue Airways Corporation (NASDAQ:JBLU)
Share Price: $4.59
Number of Hedge Fund Holders: 36
JetBlue Airways Corporation (NASDAQ:JBLU) is one of the best US penny stocks to buy. On December 8, Morgan Stanley reduced its price target on JetBlue Airways Corporation (NASDAQ:JBLU) from $8 to $7 while keeping an Equal Weight rating on the stock.
Morgan Stanley pointed out that it still has an “attractive” outlook on the US airline industry looking into 2026. The firm believes that if airlines can deliver a stable and “boring” year, it could help show the true normalized earnings power of the group and may lead to a “transformative year for the stocks.”
In other news, on December 30, JetBlue Airways Corporation (NASDAQ:JBLU) announced that it will be launching a new daily nonstop service between New York’s John F. Kennedy International Airport (JFK) and Cleveland Hopkins International Airport (CLE). The new route is scheduled to begin on March 30, 2026, and tickets are already available for sale. This nonstop service will give customers in Northeast Ohio more travel options and access to JetBlue Airways Corporation’s (NASDAQ:JBLU) New York focus city.
The new Cleveland-to-New York service will add to the company’s existing nonstop service from Cleveland to Boston, which is another focus city for the airline. JetBlue Airways Corporation (NASDAQ:JBLU) expects the new service to improve connectivity for customers, offering more convenient access to New York City and one-stop connections to many destinations in Florida, the Caribbean, and Latin America. It will also include daytime service to London Heathrow and flights operated by the company’s global partner airlines.
JetBlue Airways Corporation (NASDAQ:JBLU) is an American major airline that carries customers to over 100 destinations across the US, Latin America, the Caribbean, Canada, and Europe.
4. Geron Corporation (NASDAQ:GERN)
Share Price: $1.32
Number of Hedge Fund Holders: 37
Geron Corporation (NASDAQ:GERN) is one of the best US penny stocks to buy. On December 11, H.C. Wainwright maintained its Neutral rating on Geron Corporation (NASDAQ:GERN) after the company announced a strategic restructuring plan. The plan is designed to position the company for long-term value creation while also improving financial discipline.
The company shared that its strategic restructuring plan is expected to reduce its workforce by about one-third. When Geron Corporation (NASDAQ:GERN) made this announcement, it had around 260 employees in its workforce. The company also expects that this strategic move will help streamline operations and maintain focus on driving RYTELO commercial growth in the US, explore opportunities to make RYTELO available outside the US, and continue making progress on the Phase 3 IMpactMF trial.
H.C. Wainwright noted that Geron Corporation (NASDAQ:GERN) expects its operating expenses in 2026 to be lower than the 2025 levels once most of the cuts are completed in the first quarter of 2026. Based on the guidance on operating expense reduction, the research firm believes the company could reach profitability in the second half of 2026.
In the first half of 2026, Geron Corporation (NASDAQ:GERN) is also expected to share an update on its European commercialization strategy. Additionally, in the second half of 2026, the company expects to share interim overall survival data from the IMpactMF trial.
Geron Corporation (NASDAQ:GERN) is a commercial-stage biopharmaceutical company focused on developing therapies for patients with blood cancers.
3. Alight, Inc. (NYSE:ALIT)
Share Price: $1.88
Number of Hedge Fund Holders: 39
Alight, Inc. (NYSE:ALIT) is one of the best US penny stocks to buy. On December 19, Needham reiterated its Buy rating on Alight, Inc. (NYSE:ALIT) but lowered its price target from $4.5 to $3.5 on the stock.
Also on December 19, DA Davidson reiterated its Buy rating on Alight, Inc. (NYSE:ALIT) with a price target of $6. This update comes after news of the departure of the company’s CFO. Alight, Inc. (NYSE:ALIT) announced that its Chief Financial Officer, Jeremy Heaton, will be leaving the company to pursue an opportunity outside of the benefits administration industry.
According to the report by the company, Greg Giometti, who currently serves as Alight, Inc.’s (NYSE:ALIT) Senior Vice President and Head of Financial Planning and Analysis, has been appointed Interim Chief Financial Officer. This appointment will take effect on January 9.
Giometti joined Alight, Inc. (NYSE:ALIT) in 2020 and has taken on roles with growing responsibility within the company’s finance team. Previously, Giometti also held various finance positions at different companies.
DA Davidson kept its positive view on Alight, Inc. (NYSE:ALIT) despite the CFO’s departure. The research firm believes that the company’s new CEO and interim CFO might set “conservatively low” expectations for near-term quarterly results. DA Davidson also believes that the decline in the price of the stock is “overdone.”
Alight, Inc. (NYSE:ALIT) is a leading cloud-based human capital technology and services provider. The company’s Alight Worklife platform helps organizations manage employee benefits like healthcare, payroll, and wellbeing.
2. Under Armour, Inc. (NYSE:UA)
Share Price: $4.97
Number of Hedge Fund Holders: 41
Under Armour, Inc. (NYSE:UA) is one of the best US penny stocks to buy. On January 1, UBS reaffirmed its Buy rating on Under Armour, Inc. (NYSE:UA) with a price target of $8. UBS sees the company as a turnaround opportunity and believes that future performance could exceed market expectations.
The investment firm projects that Under Armour, Inc. (NYSE:UA) could achieve a 25% compound annual growth rate in earnings per share over the next five years. UBS expects the company to drive this growth through considerable innovation and better leverage of the brand name. The firm believes that these should lead to improvement in Under Armour, Inc.’s (NYSE:UA) North American revenue growth rate, which could help lift the company’s valuation over time.
UBS also highlighted findings from its Evidence Lab’s 11th annual global athletic wear survey, which shows that Under Armour, Inc. (NYSE:UA) is one of the most recognized and well-liked athletic wear brands in the world. It belongs in the same category as brands such as Lululemon, Jordan, Adidas, Puma, On, Hoka, Skechers, and New Balance.
The investment firm pointed out that the average market value of publicly traded standalone brands in this group is about $19 billion, compared with Under Armour, Inc.’s (NYSE:UA) market capitalization of just $2.1 billion. This shows that the valuation gap between the company and its competitors is too large.
Under Armour, Inc. (NYSE:UA) is an American sportswear company that designs, markets, and distributes branded athletic performance apparel, footwear, and accessories.
1. UWM Holdings Corporation (NYSE:UWMC)
Share Price: $4.41
Number of Hedge Fund Holders: 45
UWM Holdings Corporation (NYSE:UWMC) is one of the best US penny stocks to buy. On December 19, Jefferies initiated coverage on UWM Holdings Corporation (NYSE:UWMC), giving the stock a Hold rating and setting the price target at $5.
The research firm noted that UWM Holdings Corporation (NYSE:UWMC) is in a good position structurally and has strong operating leverage as the next mortgage cycle approaches. However, Jefferies believes the current share price already reflects a balanced risk-reward profile.
Using forecasts from Fannie Mae, Jefferies expects total mortgage originations to increase to $2.3 trillion in 2026 and $2.5 trillion in 2027.
The firm sees long-term growth potential for UWM Holdings Corporation (NYSE:UWMC). Jefferies pointed to the company’s growing broker channel, cost savings from servicing insourcing expected by 2027, and AI-enabled processes that could help improve loan volumes and gain-on-sale margins.
However, the research firm noted that the current share price of UWM Holdings Corporation (NYSE:UWMC) already reflects “a material portion of the medium-term recovery narrative.”
Earlier, on December 18, Keefe, Bruyette & Woods (KBW) raised its price target on UWM Holdings Corporation (NYSE:UWMC) from $6.50 to $6.75 while maintaining a Market Perform rating on the stock.
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.
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