In this piece, we will discuss the 10 Overlooked Penny Stocks to Buy Right Now.
Broader market forces are shaping the backdrop for smaller, overlooked names as investors weigh what comes next for stocks in the second half of 2026.
Reuters reported on June 30, 2026, that the U.S. stock market faces several tests to sustain its rally into the second half of 2026, including the durability of AI spending, a high bar for corporate earnings, and interest rate policy under a new Federal Reserve chairman. The S&P 500 has gained more than 8% this year, extending a bull run past three years, while the Nasdaq Composite has risen 11%, though both indexes pulled back in June.
AI infrastructure spending remains central to the rally, with five companies including Microsoft, Alphabet and Amazon projected to spend a combined $730 billion in capital expenditures this year, according to JPMorgan. Columbia Threadneedle’s Nicolas Janvier, head of North American equities, said the market has already priced in continued heavy spending, while Natixis portfolio strategist Garrett Melson warned that crowded positioning in AI-related trades leaves the market vulnerable to any shift in the narrative.
S&P 500 earnings are projected to climb more than 26% in 2026, according to LSEG IBES, with DWS’s David Bianco noting there is little room for disappointment. Meanwhile, mega IPOs from SpaceX, and expected listings from Anthropic and OpenAI, could test investor appetite to absorb new equity issuance. Newly installed Fed Chairman Kevin Warsh’s hawkish first meeting has also raised the prospect of near-term rate hikes, adding another variable for markets to navigate.
With that background in mind, we will not move to our list of the overlooked penny stocks to buy right now.
Our Methodology
To compile our list of overlooked penny stocks to buy, we screened for companies trading below $5 per share with analyst-implied upside potential of at least 20%. We then evaluated hedge fund ownership and selected stocks with relatively lower hedge fund participation than their industry peers, suggesting they remain underfollowed by institutional investors. Hedge fund data was sourced from Insider Monkey’s database of more than 1,000 hedge funds as of Q1 2026. The stocks are ranked in ascending order based on their upside potential.
Note: All data sourced on July 2, 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. Petco Health and Wellness Company, Inc. (NASDAQ:WOOF)
Number of Hedge Fund Holders: 22
Upside Potential: 24.08%
Petco Health and Wellness Company, Inc. (NASDAQ:WOOF) ranks among the overlooked penny stocks to buy right now, supported by strong upside potential. A return to positive comparable sales is drawing a mixed but improving set of price target adjustments from Wall Street.
On June 3, 2026, Petco Health and Wellness Company, Inc. (NASDAQ:WOOF) reported first-quarter 2026 results. Net sales rose 0.2% to $1.5 billion, with comparable sales up 0.7%, marking the company’s first positive comp in five quarters. Gross margin expanded 21 basis points to 38.4%, operating income rose 50.5% to $24.6 million, and adjusted EBITDA came in at $97.3 million versus $89.4 million a year earlier. Net loss widened to $15.1 million from $11.7 million.
Petco Health and Wellness Company, Inc. (NASDAQ:WOOF)’s CEO Joel Anderson said the results validate the company’s “Reach for the Sky” strategy, citing improvement in consumables and continued strength in services. Petco reaffirmed its full-year 2026 outlook, guiding for adjusted EBITDA of $415 million to $430 million.
The earnings prompted several analyst responses.
On June 5, 2026, Goldman Sachs raised its price target on Petco Health and Wellness Company, Inc. (NASDAQ:WOOF) to $4.14 from $3.83 while keeping a “Neutral” rating, calling the quarter an inflection point. On June 4, 2026, Evercore ISI’s Oliver Wintermantel raised the firm’s target to $3.50 from $3, keeping an “In Line” rating, saying more proof is still needed. That same day, Citi’s Steven Zaccone lowered the firm’s target to $3.25 from $4, maintaining “Neutral” and citing reduced EBITDA estimates against a weaker consumer backdrop.
The stock is down over 5% over the past year.
Petco Health and Wellness Company, Inc. (NASDAQ:WOOF) is a comprehensive pet care retailer and services provider that focuses on improving the health and wellness of pets through products, services, and veterinary care. It operates pet care centers, offers online shopping with delivery options, and provides services such as grooming, training, and veterinary care, including vaccinations and surgery.
9. Lithium Americas Corp. (NYSE:LAC)
Number of Hedge Fund Holders: 18
Upside Potential: 33.11%
Lithium Americas Corp. (NYSE:LAC), backed by significant analyst-implied upside, ranks among the overlooked penny stocks to buy right now. The company’s Thacker Pass project has drawn fresh Wall Street attention just as construction accelerates toward a 2027 startup, giving investors a new data point on how the market views the risk-reward setup.
On July 1, 2026, Goldman Sachs analyst Duffy Fischer initiated coverage of Lithium Americas Corp. (NYSE:LAC) with a “Neutral” rating and a $4.50 price target. Fischer’s note pointed to Thacker Pass as poised to become the first significant lithium capacity built in the United States, while also flagging ongoing risk tied to construction execution and operating efficiency.
That initiation followed an operational update Lithium Americas Corp. (NYSE:LAC) gave alongside its first-quarter 2026 results.
CEO Jonathan Evans said construction work is moving toward mechanical completion in late 2027, with more than 1,300 workers on site as of mid-May and headcount expected to top 2,000 at peak. As of March 31, 2026, Lithium Americas Corp. (NYSE:LAC) held roughly $1.2 billion in total cash and restricted cash, including $529 million at the Thacker Pass joint venture level. Detailed engineering had surpassed 95% complete, and procurement was more than 70% finished.
The company continues targeting total 2026 capital expenditures of $1.3 billion to $1.6 billion for Thacker Pass Phase 1. Shares of Lithium Americas Corp. (NYSE:LAC) are down more than 13% so far in 2026.
Lithium Americas Corp. (NYSE:LAC) is a lithium development company.
8. NIO Inc. (NYSE:NIO)
Number of Hedge Fund Holders: 31
Upside Potential: 41.10%
NIO Inc. (NYSE:NIO) ranks among the overlooked penny stocks to buy right now, supported by strong upside potential. Record deliveries across its three brands are keeping the stock in focus heading into the second half of 2026.
On July 1, 2026, NIO Inc. (NYSE:NIO) reported its June and second-quarter delivery results.
The company delivered 40,597 vehicles in June, up 62.9% year-over-year, split between 21,908 NIO-brand vehicles, 11,743 ONVO vehicles and 6,946 FIREFLY vehicles. For the second quarter, NIO Inc. (NYSE:NIO) delivered 107,658 vehicles, a 49.4% year-over-year increase, pushing cumulative deliveries to 1,188,715 as of June 30, 2026.
That delivery strength followed a series of product milestones.
On June 18, 2026, NIO Inc. (NYSE:NIO) rolled out an upgraded version of its WorldModel intelligent driving system to more than 700,000 users, adding a three-layer training framework the company said improves handling of complex driving scenarios. On June 22, 2026, the All-New ES8 passed 120,000 cumulative deliveries, and its five-seat version began presales on June 28, 2026. Days later, on June 26, 2026, the ES9 reached 10,000 deliveries within 30 days of its May 28 launch, a record for premium battery electric vehicles priced above RMB500,000 in China.
Despite that operational momentum, shares of NIO Inc. (NYSE:NIO) are down nearly 10% year-to-date, even as more than 70% of covering analysts remain bullish on the stock.
NIO Inc. (NYSE:NIO) designs, manufactures, and sells electric vehicles. It provides users with power express valet services, home charging, and other power solutions, such as battery swapping, public charging, and access to power mobile charging trucks. The company offers its products under the brands NIO, ONVO, and FIREFLY.
7. Tilray Brands, Inc. (NASDAQ:TLRY)
Number of Hedge Fund Holders: 10
Upside Potential: 58.01%
Tilray Brands, Inc. (NASDAQ:TLRY), backed by significant analyst-implied upside, ranks among the overlooked penny stocks to buy right now. A fresh acquisition aimed at deepening its medical cannabis footprint in Canada is giving investors a new angle on the stock despite a steep year-to-date selloff.
On June 29, 2026, Tilray Brands, Inc. (NASDAQ:TLRY) announced the acquisition of HelloMD Corporation, a digital healthcare and patient engagement platform. Following court approval granted the same day, the company plans to acquire HelloMD’s Canadian medical cannabis assets after emerging as the successful bidder in its formal sale process. Tilray said the deal creates a fully vertically integrated medical cannabis framework in Canada, linking cultivation, clinical expertise, practitioner support, product access, and fulfillment.
Blair MacNeil, President of Tilray Brands, Inc. (NASDAQ:TLRY) Canada, said the combination of HelloMD’s digital healthcare platform with Tilray’s medical cannabis portfolio and national fulfillment capabilities builds a more connected pathway for patients and healthcare practitioners. HelloMD CEO Larry Lisser said the platform has supported hundreds of thousands of patients through telehealth consultations and personalized guidance since its founding.
Tilray Brands, Inc. (NASDAQ:TLRY) also pointed to potential opportunities in adjacent wellness categories such as sleep support and pain management, areas where over-the-counter products represent a large market the company is not yet meaningfully part of. The press release did not disclose the financial terms of the transaction.
Shares of Tilray Brands, Inc. (NASDAQ:TLRY) are down more than 50% in 2026 so far.
Tilray Brands Inc. (NASDAQ:TLRY) is a leading global lifestyle and consumer packaged goods (CPG) company that operates at the intersection of the cannabis, beverage alcohol, wellness, and medical industries. Operating in over 20 countries, they focus on diversified revenue across four main business segments.
6. Prime Medicine, Inc. (NASDAQ:PRME)
Number of Hedge Fund Holders: 23
Upside Potential: 79.95%
Prime Medicine, Inc. (NASDAQ:PRME) ranks among the overlooked penny stocks to buy right now, supported by strong upside potential. Multiple regulatory clearances across its gene-editing pipeline are prompting analysts to turn more constructive on the stock.
On June 29, 2026, H.C. Wainwright upgraded Prime Medicine, Inc. (NASDAQ:PRME) to “Buy” from “Neutral” with a price target of $8. The upgrade came after New Zealand’s Medicines and Medical Devices Safety Authority accepted the clinical trial application for PM577a, the company’s investigational therapy for Wilson’s disease. The firm called the clearance a meaningful de-risking event, noting it marks the first clinical authorization for an in vivo prime editing therapy from Prime Medicine.
That clearance, announced by the company on June 18, 2026, enables Prime Medicine, Inc. (NASDAQ:PRME) to begin a global Phase 1/2 study evaluating PM577a in adults and adolescents with Wilson Disease. CEO Allan Reine called the milestone a defining moment, pointing to PM577a’s potential to correct the disease at the genomic level with a one-time therapy. Chief Medical Officer Mohammed Asmal said the trial design draws on the company’s preclinical work, with proof-of-concept data expected in 2027.
Meanwhile, on June 22, 2026, the FDA granted Regenerative Medicine Advanced Therapy designation to PM359, Prime Medicine, Inc. (NASDAQ:PRME)’s stem cell therapy for p47phox-deficient chronic granulomatous disease (CGD), based on Phase 1/2 clinical data published in The New England Journal of Medicine. Reine said the designation supports engagement with the FDA toward a future Biologics License Application.
Prime Medicine, Inc. (NASDAQ:PRME) is a biotechnology company that delivers genetic medicines to address the spectrum of diseases by deploying gene editing technology.
While we acknowledge the potential of PRME 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 PRME and that has 100x upside potential, check out our report about the cheapest AI stock.
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