In this article, we will look at the 10 Most Oversold Penny Stocks to Buy According to Analysts.

Small Cap Stocks Outlook 2025

In February 2025, Wellington Management published its outlook for small-cap stocks in 2025. The firm believes that 2025 could be the year for small-cap outperformance as the large-cap performance cycle is getting longer than usual. Peter Carpi, the Equity Portfolio Manager at Wellington noted that historically, small-cap and large-cap equities have traded in cycles, with outperformance cycles typically lasting 11 years. However, the market has entered the 14th year of large-cap outperformance. Moreover, Carpi highlighted that the large-cap stocks may be entering their final stage as noted by the increased narrowness and unsustainable valuations. On the other hand, small and mid-cap indices like the Russell 2500 Value and Mid Cap Value are near record-low relative valuations versus the S&P 500, creating a favorable entry point.

In addition, David DuBard, Micro-cap Equity Portfolio Manager argues that micro-cap companies present compelling undervaluation opportunities in 2025. He explained that the micro-cap market has become “less efficiently scrutinized” as investors increasingly favor larger, more liquid equities. This reduced attention lowers competition for alpha generation in the space. DuBard asserts that current conditions, which are marked by investor preference for larger stocks and cyclical shifts, are ideal for identifying undervalued microcaps. His strategy relies on exploiting inefficiencies in a segment where fundamental analysis can yield outsized returns.

Equity Portfolio Manager, Ranjit Ramachandran also likes small-cap growth stocks. He noted that after years of lagging behind large caps, small caps are projected to surpass large-cap earnings growth in 2025. This marks a critical inflection point, as small caps have trailed the S&P 500 in earnings and sales growth for the past two years. Ramachandran highlighted that valuations for small caps are near multiyear lows compared to large caps, creating a favorable entry point. This contrasts with large-cap indices like the S&P 500, which remain concentrated in tech-heavy sectors relative. He emphasizes that small caps are poised for accelerated earnings growth as a group, supported by broader economic tailwinds. While his colleague Sean Kammann attributes this to de-globalization trends and employment gains, Ramachandran’s focus remains on the cyclical shift toward small caps as large-cap dominance fades away.

With that let’s take a look at the 10 most oversold penny stocks to buy according to analysts.

Our Methodology

To compile the list of the 10 most oversold penny stocks to buy according to analysts, we used the Finviz stock screener and CNN. Using the screener we aggregated a list of penny stocks (under $5) that have fallen by more than 25% over the past 6 months but analysts see more than 25% upside to. We cross-checked the upside potential from CNN and ranked the stocks based on this metric, in ascending order. Please note that the data was recorded on March 14, 2025. Additionally, we have included the hedge fund sentiment around each stock.

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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

10 Most Oversold Penny Stocks to Buy According to Analysts

10. Angi Inc. (NASDAQ:ANGI)

Price: $1.57

6-Month Performance: -42.07% 

Number of Hedge Fund Holders: 16

Analyst Upside Potential: 59.24% 

Angi Inc. (NASDAQ:ANGI) operates as a digital marketplace connecting homeowners with home service professionals across over 500 categories. It provides tools for professionals to advertise services, engage with customers, and manage invoicing. It manages multiple brands, including Angi, HomeAdvisor, and Handy, each catering to distinct aspects of home services.

On February 13, Benchmark Co. analyst Daniel Kurnos reaffirmed a Buy rating on the stock with a price rating of $6. The analyst noted that the company surpassed Street expectations in recent quarters, with service requests declining less sharply than anticipated. This reflects operational stability despite macroeconomic headwinds. Moreover, despite Q1 2025 guidance for breakeven operating income, the company’s full-year 2025 Adjusted EBITDA outlook of $135 to $150 million aligns with long-term growth expectations. Angi Inc. (NASDAQ:ANGI) is proactively implementing opt-in changes to align with FCC rulings, which may enhance user experience and conversion rates. Kurnos notes that while this could cause short-term volatility, stabilization is anticipated by 2026, improving growth prospects. It is one of the most oversold penny stocks to buy according to analysts.

Meridian Small Cap Growth Fund stated the following regarding Angi Inc. (NASDAQ:ANGI) in its Q4 2024 investor letter:

“Angi Inc. (NASDAQ:ANGI) operates an online marketplace connecting homeowners with local, pre-screened home service professionals. During the quarter, Angi’s stock price declined following continued revenue challenges amid its strategic business refocusing. Despite strong underlying metrics, including service professional retention and net promoter scores, uncertainty surrounding new regulatory rules and the decision by its majority owner to spin off its holdings, weighed on the stock. We view these challenges as temporary and remain committed to a patient, long term approach. Angi’s efforts to improve lead quality and expand EBITDA margins are promising, and we believe downside risks are limited. We slightly trimmed our position during the quarter and will continue to monitor progress.”

9. Sasol Limited (NYSE:SSL)

Price: $4.33

6-Month Performance: -39.19%

Number of Hedge Fund Holders: 11

Analyst Upside Potential: 63.57% 

Sasol Limited (NYSE:SSL) is a global integrated energy and chemical company that operates through two core divisions: Energy and Chemical, with operations spanning 33 countries. The company demonstrated resilience in the fiscal second quarter of 2025 (six months ended 31 December 2024) despite macroeconomic challenges.

It improved its free cash flow by 84% year-over-year, driven by reduced capital expenditure, lower taxes paid, and positive working capital movements. However, FCF remained negative at ZAR1.1 billion, reflecting ongoing debt pressures. Moreover, as a strategic initiative, Sasol Limited (NYSE:SSL) partnered with Anglo American and De Beers to pilot renewable diesel feedstock using Solaris and Moringa plantations. The deal leverages the company’s existing infrastructure to process diverse feedstocks, potentially lowering production costs for renewable diesel.

On the mining side, the production remained stable quarter-over-quarter but fell 1% year-over-year due to lower demand and operational constraints. Earnings related to Gas operations rose 71% on higher prices and volumes, offsetting declines in Fuels and Chemicals Africa. The stock has fallen around 39% during the past 6 months, however, analysts expect more than 63% upside, making it one of the most oversold penny stocks to buy according to analysts.