Solus’ Dan Greenhaus, and Invesco’s Brian Levitt together appeared on CNBC’s ‘Closing Bell’ on April 15 to talk about tariffs, market uncertainty, and risk concerns. The discussion started with Dan Greenhaus expressing his belief that many worst-case scenarios are already priced into the market. He acknowledged that he’s cautious but not overly worried. He pointed out recent events, like the exemptions on auto part imports and the 90-day delay on tariff implementation, as evidence that President Trump is listening to advisors and avoiding pushing toward extreme outcomes. Greenhaus attributed these actions to the rebound seen in the stock market. At the same time, he agreed that the administration has been rather inconsistent, in the context of Morgan Stanley’s comment that investors should prepare for more inconsistencies. But he argued that many investors are assuming scenarios closer to the worst rather than the best. He emphasized that while frightening predictions about skyrocketing prices are taking over media right now, these scenarios are unlikely to materialize.
Brian Levitt built on Greenhaus’ optimism while acknowledging the ongoing uncertainty as well. He attributed this uncertainty to the reliance on decisions from the White House rather than traditional policy mechanisms. He compared the current situation to 2018 when markets fell 20% in a quarter before rebounding due to trade pauses and Fed intervention. He cautioned that the current S&P 500 multiples are not at recession levels so there are potential downside risks if uncertainty remains. While Levitt thinks that business investment and consumer confidence metrics show signs of prolonged volatility, Greenhaus further emphasizes that periods of heightened uncertainty often end up presenting long-term investment opportunities. He acknowledged risks such as sudden tariff increases but also encouraged investors to take advantage of these moments when risk premiums rise.
That being acknowledged, we’re here with a list of the 11 most promising penny stocks according to analysts.
Phone with stocks chart
Our Methodology
We sifted through the Finviz stock screener to compile a list of the top penny stocks that were trading below $5 and had the highest analysts’ upside potential (at least 40%). The stocks are ranked in ascending order of their upside potential. We have also added the hedge fund sentiment for each stock, as of Q4 2024, which was sourced from Insider Monkey’s database.
Note: All data was sourced on April 15.
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).
11 Most Promising Penny Stocks According to Analysts
11. Lumen Technologies Inc. (NYSE:LUMN)
Share Price as of April 15: $3.47
Number of Hedge Fund Holders: 44
Average Upside Potential as of April 15: 44.09%
Lumen Technologies Inc. (NYSE:LUMN) is a networking company that provides integrated products and services. It operates in two segments: Business and Mass Markets. It primarily offers products and services that range from dark fiber & conduit to VPN data network service. It serves under the Lumen, Quantum Fiber, CenturyLink, and Black Lotus Labs brands.
The company helps businesses use AI by providing networking edge cloud security and other services that support AI processing. Wells Fargo recently upgraded the stocks due to the company’s private connectivity fabric-related sales and potential for its quantum fiber unit. Lumen continues to enhance network connectivity and utilization to meet the growing AI demand. On February 21, Erick Luebchow of Wells Fargo raised the stock’s rating from an Underweight to Equal Weight with a $5 price target.
In 2024, the company closed deals valued at a total of $8.5 billion with leading technology firms, such as Microsoft, AWS, Google, and Meta. These agreements are building the network infrastructure required by these companies for their AI operations. Due to such partnerships, Lumen Technologies Inc. (NYSE:LUMN) anticipates an increase in its network capacity. The total inter-city fiber network is projected to grow from 12 million miles in 2022 to a potential 47 million miles by 2028.
ClearBridge Small Cap Strategy stated the following regarding Lumen Technologies, Inc. (NYSE:LUMN) in its Q3 2024 investor letter:
“Stock selection in the communication services sector was a significant detractor during the period, largely due to not owning Lumen Technologies, Inc. (NYSE:LUMN), which provides products and services including dark fiber, edge cloud services and internet protocol, among others. The company, which began the quarter with a $1.1 billion market cap, skyrocketed after it signed agreements with Microsoft and Corning to use its network and technologies to support their AI data center buildouts, resulting in a nearly 350% return and ending the quarter with a $7.2 billion market cap. However, despite this meteoric rise, we believe that the company remains a highly risky asset with a significantly leveraged balance sheet, and one not suitable for our focus on high-quality, long-term compounders.”
10. Grab Holdings Ltd. (NASDAQ:GRAB)
Share Price as of April 15: $3.98
Number of Hedge Fund Holders: 57
Average Upside Potential as of April 15: 44.47%
Grab Holdings Ltd. (NASDAQ:GRAB) provides a superapp and operates in Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. It operates through four segments: Deliveries, Mobility, Financial Services, and Others. It offers the Grab ecosystem, which is a single platform with superapps for mobility, delivery, and digital financial services.
On March 10, Citi analyst Alicia Yap maintained a Buy rating on the company with a steady price target of $6.25. Grab focuses on using its ecosystem to drive cross-selling. For example, customers who use both the Food and Mart services have spent 4x more and have 2.5x higher frequency uplifts as compared to those who use only the food delivery services. Retention rates for such customers are also 2x.
This drives high on-demand Gross Merchandise Value (GMV) at Grab Holdings Ltd. (NASDAQ:GRAB). The company saw a 20% year-over-year rise in on-demand GMV in Q4 2024. This improvement was attributed to Grab’s product and tech-led initiatives. For instance, the company introduced Saver Rides and Priority Deliveries. Such features improve affordability and reliability at the company, which helps retain customers old customers and attract new ones.
Hedge Fund Resource Center