The S&P 500 is set to outperform the Russell 2000 in annual performance for the 10th time over the past 12 years. During this time, the broad market index, the S&P 500, has made more than twice the gains of the smaller-cap Russell 2000.
As of November 6, the S&P 500 has gained 14.51% year-to-date. In comparison, the Russell 2000 has gained only 8.39%.
In September 2025, Jordan Irving, a small-cap portfolio manager at Glenmede Investment Management, said:
“They have underperformed relative to large caps for eons … so you get to a point where the bar to clear is pretty darn low.”
Irving also used forward price-to-earnings estimates and highlighted that the profit-generating companies in the Russell 2000 are trading at a significant discount compared to the S&P 500.
Mark Hackett, chief market strategist at Nationwide, said:
“We’re now going to see growth rates next year faster for small caps than large caps.”
The performance of small-cap companies is closely linked to the economy. According to Mark Luschini, chief investment strategist at Janney Montgomery Scott, smaller companies can be more affected by domestic growth than big multinational firms.
However, in August 2025, strategists at the Wells Fargo Investment Institute downgraded US small-cap stocks to “unfavorable.” They believe that economic growth won’t be strong enough to help small caps outperform large caps in 2026.
With this background in mind, let’s take a look at the 12 best American penny stocks to buy right now.
Image: Depositphotos
Our Methodology
To compile our list of the 12 best American penny stocks to buy right now, we used the Finviz stock screener to find stocks with a share price of under $5 as of November 6, 2025. We sorted our results based on market capitalization and picked the 30 largest American stocks. Next, we focused on the top 12 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q2 2025 database of 983 elite hedge funds. Finally, the 12 best American penny stocks to buy were ranked in ascending order based on the number of hedge funds holding stakes in them as of Q2 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).
12 Best American Penny Stocks to Buy Right Now
12. Plug Power Inc. (NASDAQ:PLUG)
Share Price: $2.51
Number of Hedge Fund Holders: 23
Plug Power Inc. (NASDAQ:PLUG) is one of the best American penny stocks to buy right now. On October 30, Plug Power Inc. (NASDAQ:PLUG) shared that it signed a binding supply agreement with Allied Biofuels FE LLC (ABF) for up to 2 gigawatts (GW) of GenEco PEM electrolyzer systems.
This deal will help ABF develop sustainable aviation fuel (SAF), electro-sustainable aviation fuel (eSAF), and green diesel. According to the report by Plug Power Inc. (NASDAQ:PLUG), the final investment decision is expected in the fourth quarter of 2026.
Previously, Plug Power Inc. (NASDAQ:PLUG) partnered with Allied Green Ammonia in Australia for 3 GW. With this new supply agreement for 2 GW with ABF, the total contracted electrolyzer capacity between Plug Power Inc. (NASDAQ:PLUG) and its Allied partners has now reached 5 GW.
The company’s technology will be used at ABF’s sustainable aviation fuel (SAF) and electro-sustainable aviation fuel (eSAF) plant in Uzbekistan, a strategically chosen site that can serve global sustainable fuel markets.
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.
11. Bit Digital, Inc. (NASDAQ:BTBT)
Share Price: $3.03
Number of Hedge Fund Holders: 27
Bit Digital, Inc. (NASDAQ:BTBT) is one of the best American penny stocks to buy right now. On October 31, Bit Digital, Inc. (NASDAQ:BTBT) shared its preliminary financial estimates for the third quarter ended September 30, 2025. These estimates were included in a filing with the Securities and Exchange Commission (SEC).
According to the filing, Bit Digital, Inc. (NASDAQ:BTBT) expects its preliminary unaudited revenue for the quarter ending September 30, 2025, to be between $28.9 million and $32.0 million. The cost of revenue, excluding depreciation, is expected to be between $11.5 million and $12.7 million. Additionally, the company expects cash and cash equivalents as of September 30, 2025, to range from $173.7 million to $184.5 million.
Bit Digital, Inc. (NASDAQ:BTBT) pointed out that these preliminary numbers are based on information that is currently available and are subject to the completion of the financial closing process. The actual results for the third quarter may differ from these preliminary estimates.
Previously, on October 7, Bit Digital, Inc. (NASDAQ:BTBT) also announced that it had acquired 653 Ethereum during the month of September 2025. The total average Ethereum acquisition price for all holdings as of September 30, 2025, was $2,643.27.
Bit Digital, Inc. (NASDAQ:BTBT) is a digital asset platform company that focuses on Ethereum-native treasury and staking strategies. It operates one of the largest Ethereum staking infrastructures in the world.
