In this article, we will look at the 10 Hot Penny Stocks to Buy Now.

How Did Small Caps Do In Q4 2024?

On January 2, Royce Investment Partners published their analysis regarding the performance of the small caps during the fourth quarter of 2024. The report highlighted that small-cap stocks, represented by the Russell 2000 Index, achieved a modest gain of 0.3%, marking the second consecutive positive quarter. However, this performance lagged behind large-cap stocks, as the Russell 1000 Index rose by 2.7% in the same period. Francis Gannon, Co-Chief Investment Officer, and Managing Director, pointed out a unique “bowl-shaped” return pattern among US equities in the last quarter of 2024, with the Russell Microcap Index increasing by 5.9% and the Russell Top 50 Index by 5.5%.

Gannon highlighted that while December’s results were disappointing for many stocks, particularly small-cap and micro-cap indexes, the overall year was strong for small-cap performance, with an annual increase of 11.5%. However, on the other hand, this also marked the eighth consecutive year where small-caps underperformed relative to large-caps. Historically speaking the data reveals that the Russell 2000 has only outperformed the Russell 1000 in four of the last twenty years, with a significant underperformance streak noted since 2016. Gannon acknowledged that this is a long period of wait to see small cap leadership but he sees promising signs for the leadership to be just around the corner.

While explaining his bullish sentiment Gannon discussed the dynamics of volatility in the US equity markets. He contrasted large-cap and small-cap stocks’ performance in 2024 and noted that large-cap stocks experienced relatively low volatility throughout the year, as indicated by the CBOE Volatility Index. Apart from a brief spike in early August, large-cap stocks maintained a notably stable performance, mirroring trends observed in 2023. However, on the other hand, small-cap stocks exhibited a slightly different volatility profile. Gannon highlights that historically, about 42% of trading days in the Russell 2000 see price movements of 1% or more. In 2024, this figure was marginally lower at 41%, indicating that small-caps remained somewhat volatile but not significantly. He emphasizes that this trend of volatility is expected to change, predicting a return to more typical levels of volatility across stocks in 2025. He encouraged investors to view increased volatility not merely as a source of fear but as an opportunity for long-term investment strategies.

With that let’s take a look at the 10 hot penny stocks to buy now.

Our Methodology

To create the list of 10 hot penny stocks to buy now, we used the Finviz stock screener. Using the screener we first aggregated a list of penny stocks (price between $1-$5) and then sorted it in ascending order of their 6-month performance. Next, we ranked these stocks based on the number of hedge fund holders, in ascending order, sourced from Insider Monkey’s Q4 2024 database. Please note that the data was collected on February 20, 2025.

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 363.5% since May 2014, beating its benchmark by 208 percentage points (see more details here).

10 Hot Penny Stocks to Buy Now

10. reAlpha Tech Corp (NASDAQ:AIRE)

Price: $1.80

6-Months Performance: 46.34%

Number of Hedge Fund Holders: 1

reAlpha Tech Corp (NASDAQ:AIRE) uses artificial intelligence to make the process of buying a home easier and more affordable. It offers a platform where homebuyers can purchase properties without paying traditional commission fees, which can be quite high. The company has also developed various AI tools that help users throughout the home buying process such as Claire, an AI real estate agent available 24/7 to answer questions and guide users through buying a home, and Market Insights, which provides detailed property data and market insights, helping buyers make informed decisions.

reAlpha Tech Corp (NASDAQ:AIRE) has been making significant developments. During the fiscal third quarter of 2024, the company announced completing its fifth acquisition. It acquired Be My Neighbor, a mortgage brokerage licensed in 27 states of the US. Moreover, the company also launched its Mobile App called reAlpha Super App. As a result of these developments, the company grew its revenue by a staggering 475% year-over-year and exceeded its previous guidance by 274%. Looking ahead, the company expects to grow revenue by 130% to 190% in the next quarter. It is one of the hot penny stocks to buy now.

9. Jayud Global Logistics Limited (NASDAQ:JYD)

Price: $4.20

6-Months Performance: 483.33%

Number of Hedge Fund Holders: 3

Jayud Global Logistics Limited (NASDAQ:JYD) specializes in providing logistics and supply chain solutions, primarily focusing on freight forwarding and international trade. The company offers various services including air frights, sea frights, land transportation, and warehousing.

The company is expanding its operations. In June 2024, Jayud Global Logistics Limited (NASDAQ:JYD) partnered with Lazbao Group to expand into the Southeast Asian e-commerce market. The agreement aimed to establish chartered air services from the company across Lazbao’s service areas in Southeast Asia. Later, in October, the company further expanded its operations in the United States by acquiring stakes in two logistics facilities in California and a licensed customs brokerage firm in Georgia. These acquisitions are part of Jayud Global Logistics Limited’s (NASDAQ:JYD) efforts to increase its operational presence in the United States and improve its logistics services. As a result of these strategic expansions, the stock has gained more than 480% over the past 6 months, making it one of the hot penny stocks to buy now.