In this article, we will take a look at some of the fundamentally strong penny stocks to invest in.
We have all heard the old saying, “A penny makes a dime,” highlighting the idea that every little effort counts toward a bigger goal. This is particularly true in the case of stocks because every large stock was once a very cheap stock. Small investments at the right time and in the right stock can indeed lead to high levels of wealth, so always remember, a penny makes a dime, and a dime makes a dollar.
This leads us to the formal definition of a penny stock, which is a share that typically trades at a low price, usually under $5. When considering such stocks, it’s important to see whether these stocks are backed by solid financials, promising growth potential, and real business fundamentals. For savvy investors, these are hidden gems that go a long, long way.
Our Methodology
We have compiled a list of the 12 best penny stocks to invest in using the Finviz market screener. These stocks, with a price of less than $5, belong to various industries, from biotechnology and biopharmaceutical to marketing technology. These are then ranked in ascending order according to their upside potential, calculated using one-year price targets by Yahoo Finance.
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).
12. Uniti Group Inc. (NASDAQ:UNIT)
Upside Potential as of July 4, 2025: 32.30%
Analysts at TD Cowen have reaffirmed their “Buy” rating on Uniti Group Inc. (NASDAQ:UNIT), while maintaining a price target of $9.00. With such an optimistic outlook, the firm has reiterated its label as the top investment idea in the sector, alongside T-Mobile and Equinix.
From in-line revenue and EBITDA during the first quarter to an impressive dividend yield of around 14%, the company’s financials tell a somewhat compelling story. While the results matched key guidance metrics, the stock nearly fell. What the analysts believe is that the dip is due to a potential misunderstanding of pro forma financials and investor hesitation following the company’s change to a REIT status. However, these will impact Uniti Group Inc. (NASDAQ:UNIT) only in the short run.
As TD Cowen underscores, the company demonstrates solid bookings, with strand counts sold to hyperscalers assumed to be at least 30 times higher than they were several years ago, all thanks to the demand for generative AI. Having said that, analysts remain confident in what they call “twin engines of commercial and residential fiber super-cycles,” anticipating more than 90% upside for UNIT.
Uniti Group Inc. (NASDAQ:UNIT) is a U.S.-based internally managed real estate investment trust that provides fiber and other wireless solutions. With a market capitalization of $1.068 billion, the company focuses on the acquisition and development of mission-critical communications infrastructure.
11. Amplify Energy Corp. (NYSE:AMPY)
Upside Potential as of July 4, 2025: 171.69%
Benchmark has reaffirmed its Buy rating on Amplify Energy Corp. (NYSE:AMPY), with an unchanged price target of $11.00, citing the optimism surrounding the sale of Eagle Ford non-operated production. This potential surge of over 200% from the current levels means that this company is in the right direction to meet its strategic objectives.
The research firm highlights that moves like these alleviate investor worries concerning potential acquisitions, leverage problems, and dilution of the company’s Beta field prospects. This strategic initiative has the potential to improve the production and capital expenditure guidance for Amplify Energy Corp. (NYSE:AMPY) in August.
The results of the company’s next Beta well are expected within this quarter, which could advance the current data on the offshore California development that the analysts believe will shape the future for Amplify Energy Corp. (NYSE:AMPY).
Amplify Energy Corp. (NYSE:AMPY) is a Texas-based company that, along with its subsidiaries, acquires, exploits, and develops oil and natural gas properties. With a commitment to optimizing production and generating free sustainable cash flow, the company has properties in Oklahoma, the Rockies, federal waters offshore Southern California, East Texas/North Louisiana, and Eagle Ford.
10. Sana Biotechnology, Inc. (NASDAQ:SANA)
Upside Potential as of July 4, 2025: 192.48%
Morgan Stanley has assumed coverage on Sana Biotechnology, Inc. (NASDAQ:SANA) with an Overweight rating and a price target of $12.00. This optimism is totally in line with market sentiments that acknowledge the platform’s potential to develop tailored therapies driven by engineered cells.
The research firm’s confidence underpins the recent 12-week and 6-month T1D data for what the firm calls an “early proof point that helps validate the platform.” This means that the current price is nothing when the scale of opportunities of the company’s hypoimmune platform is considered. The analysts believe that the risk/reward profile is closely tied to the upside ahead of sustained pipeline progress. While the risk may be high, the reward is even higher.
The year-to-date returns of 93% delivered by Sana Biotechnology, Inc. (NASDAQ:SANA) is a testament to the company’s efforts, particularly in the context of Type 1 Diabetes – a market with the potential to reach as high as $24.36 billion by 2031.
Sana Biotechnology, Inc. (NASDAQ:SANA) is a Washington-based biotechnology company that uses engineered cells as medicines across the United States. The core offerings of the company include UP421, SC451, SC291, and SG299. Founded in 2018, the company has agreements with Beam Therapeutics Inc. and Harvard College.
9. Atai Life Sciences N.V. (NASDAQ:ATAI)
Upside Potential as of July 4, 2025: 224.80%
Aegis Capital analysts have reaffirmed their Buy rating on Atai Life Sciences N.V. (NASDAQ:ATAI), with an unchanged price target of $8.00, following the favorable Phase 2b results of the BPL-003 treatment for the company’s Treatment Resistant Depression (TRD).
Around 193 depression patients, who didn’t respond to previous treatment, were part of the Phase 2b trial testing three doses: 0.3 mg, 8 mg, and 12 mg. Not only the 8mg but also the 12mg dose showcased statistically significant improvement in an FDA-accepted measurement of depression, with a healthy side-effect profile.
The research firm believes these robust results strengthen the company’s efforts to proceed to a Phase 3 clinical program, which would result in marketing approval. Going forward, Atai Life Sciences N.V. (NASDAQ:ATAI) plans to schedule a post-Phase 2 meeting with the FDA, with the Phase 3 trial expected to begin only at the end of the upcoming year.
Another noteworthy development is the company’s recent $50 million private capital raise, which involved the sale of 18,264,840 common shares with 25% warrant coverage at the market price. Moves like these highlight Atai Life Sciences N.V. (NASDAQ:ATAI)’s capacity to raise cash when needed.
Atai Life Sciences N.V. (NASDAQ:ATAI) is a German clinical-stage biopharmaceutical company that researches, develops, and markets mental health treatments in the United States, Germany, and Canada. With a market capitalization of $587.639 million, the company is committed to healing mental health disorders.
8. Absci Corporation (NASDAQ:ABSI)
Upside Potential as of July 4, 2025: 229.31%
Morgan Stanley has assumed coverage on Absci Corporation (NASDAQ:ABSI) with an Overweight rating and a price target of $7, implying a potential upside of around 152%. As the company advances to a value inflection point with the lead candidate, TL1A monoclonal antibody ABS-101, analysts are hopeful that the company is heading north.
The Phase 1 interim data from its first-in-human healthy volunteer study for this key asset, examining as many as 40 participants with primary endpoints emphasizing not only safety but also tolerability, is anticipated for later this year. With a commitment to represent extended half-life underpinning quarterly dosing, the study will be a turning point for Absci Corporation (NASDAQ:ABSI).
The research firm notes that Absci Corporation (NASDAQ:ABSI) is working towards building a partner for ABS-101 and is already in talks with three major biopharma companies that lack TL1A assets. Any such partnership, if successful, would bring non-dilutive funding and advance the company’s cash runway beyond its current guidance of the first half of 2027.
Absci Corporation (NASDAQ:ABSI) is a Washington-headquartered data-first generative AI drug creation company that perfectly blends AI with scalable wet lab technologies. This effort to design tailored antibody therapeutics enables the company to transition to a more effective drug discovery and development enterprise.
7. GoldMining Inc. (NYSE:GLDG)
Upside Potential as of July 4, 2025: 317.58%
H.C. Wainwright has reaffirmed its Buy rating and $3.25 price target on GoldMining Inc. (NYSE:GLDG), citing the earn-in agreement announcement for the company’s Boa Vista project.
Earlier on July 1, 2025, GoldMining Inc. (NYSE:GLDG) signed an agreement with Australian Mines Limited, enabling the latter to own as much as an 80% stake in the Boa Vista project for cash and equity payments worth $7.0 million. The terms of the agreement reveal that Australian Mines has secured the right to earn a 51% ownership in the project in a span of three years as it allocates at least A$4.5 million toward exploration activities, including completing 6,000 meters of diamond core drilling and making an annual cash payment of $250,000 over the specified time.
The research firm pointed out that this collaboration would allow GoldMining Inc. (NYSE:GLDG) to monetize its asset base while steering more funds toward its flagship initiatives, as it would lead to the creation of a joint venture with the company retaining 49%.
GoldMining Inc. (NYSE:GLDG) is a Canadian mineral exploration company that acquires and develops gold and copper assets in the Americas. Among the company’s core projects are the La Mina Gold Project, Titiribi Gold-Copper Project, Whistler Gold-Copper Project, and São Jorge Gold Project. Incorporated in 2009, the company is centered on sustainable growth.
6. VYNE Therapeutics Inc. (NASDAQ:VYNE)
Upside Potential as of July 4, 2025: 347.89%
Analysts at H.C. Wainwright have reaffirmed their Buy rating on VYNE Therapeutics Inc. (NASDAQ:VYNE), with a price target of $4.50, implying an upside of nearly 215%. This optimism follows the company’s advancement of its VYN202 program for moderate-to-severe plaque psoriasis.
Just recently, the company’s Phase 1b trial was put on hold by the FDA due to testicular toxicity outcomes in dogs during non-clinical studies. The study, however, has been permitted to proceed in female patients at the 0.25 mg and 0.5 mg dosing levels. Since a higher 1 mg dose was excluded because of its narrower safety margin, VYNE Therapeutics Inc. (NASDAQ:VYNE) must first complete a 12-week non-clinical toxicology study in dogs before resuming male enrollment.
What provides the company financial stability at this crucial development stage is its high current ratio and low debt. After the study’s status update, VYNE Therapeutics Inc. (NASDAQ:VYNE) unblinded data from the enrolled participants, showing no serious side effects and no treatment discontinuations associated with the adverse cases.
VYNE Therapeutics Inc. (NASDAQ:VYNE), based in New Jersey, is a clinical-stage biopharmaceutical company that engages in the development of therapies to address chronic inflammatory and immune-mediated conditions. Founded in 2020, the company is committed to improving the immune system and inflammation.
5. Cognition Therapeutics, Inc. (NASDAQ:CGTX)
Upside Potential as of July 4, 2025: 702.47%
H.C. Wainwright has maintained a $3.00 price target for Cognition Therapeutics, Inc. (NASDAQ:CGTX), with an unchanged Buy rating. This potential upside of nearly 640% represents the company’s Phase 2 START Study enrollment success that exceeded 50%.
The START Study (NCT05531656), which is examining ervimesine (CT1812) in patients living with mild Alzheimer’s disease, is being conducted in partnership with the Alzheimer’s Clinical Trials Consortium (ACTC). The expected participants, with 540 individuals across approximately 50 sites, will receive either the drug or placebo for 18 months.
With around $81 million in grant support from the National Institute of Aging (NIA), a segment of the National Institutes of Health, Cognition Therapeutics, Inc. (NASDAQ:CGTX) has the necessary support to lead the study. The firm further outlines the clinical potential of zervimesine as the company accelerates the pace for a Phase 3 program.
Cognition Therapeutics, Inc. (NASDAQ:CGTX), based in New York, is a clinical-stage biopharmaceutical company that identifies and develops small molecule therapeutics aimed at age-related degenerative diseases and disorders of the central nervous system and retina. Incorporated in 2007, the company is committed to improving the lives of many.
4. Actelis Networks, Inc. (NASDAQ:ASNS)
Upside Potential as of July 4, 2025: 745.80%
On Thursday, Actelis Networks, Inc. (NASDAQ:ASNS) announced the completion of a previously disclosed private placement that secured nearly $1 million in gross proceeds before expenses.
With the price in line with the Nasdaq rules, the offering comprised 1,626,019 common stock shares at $0.615 per share, together with Series A-3 warrants to acquire as many as 1,626,019 additional shares and short-term Series A-4 warrants to purchase up to 3,252,038 shares.
Both warrants carry an exercise price of $0.615 per share and will be exercisable as soon as the shareholder approval is received. While the Series A-3 warrants expire five years after the approval, the Series A-4 warrants expire after 18 months. This means that Actelis Networks, Inc. (NASDAQ:ASNS) will receive roughly $3 million in additional gross proceeds, if and only if all warrants are fully exercised on a cash basis.
This placement comes at a crucial time, with the stock volatility at its high. However, the purpose of this transaction is what keeps the investors’ interest. Actelis Networks, Inc. (NASDAQ:ASNS) has revealed plans to use the proceeds as working capital for general corporate purposes.
Actelis Networks, Inc. (NASDAQ:ASNS) is a California-based company that focuses on the design, development, and commercialization of cyber-hardened, hybrid fiber networking solutions for Internet of Things (IoTs) and telecommunication governmental institutions and companies. From system integrators and distributors to contractors and resellers, the company serves a wide clientele.
3. Processa Pharmaceuticals, Inc. (NASDAQ:PCSA)
Upside Potential as of July 4, 2025: 926.60%
Analysts at H.C. Wainwright have reiterated their Buy rating on Processa Pharmaceuticals, Inc. (NASDAQ:PCSA) while maintaining a price target of $2, implying an upside of over 900%. This overwhelming optimism stems from the company’s comprehensive portfolio update just a few days ago.
While focusing on the clinical development of its leading candidate, NGC-Cap, Processa Pharmaceuticals, Inc. (NASDAQ:PCSA) has also started to initiate an adaptive pivotal Phase 3 study for PCS499 to address underserved kidney areas based on preliminary positive results and FDA approval of surrogate endpoints. With such a vision in mind, there is no doubt the company can actually exceed analyst expectations.
On top of that, Processa Pharmaceuticals, Inc. (NASDAQ:PCSA) has entered into a binding term sheet with privately held Intact Therapeutics, enabling it to receive $454 million in milestone payments, a 12% royalty on future sales, and a 3.5% equity stake in Intact. The exclusivity of its PCS12852 prokinetic agent for gastroparesis and other gastrointestinal motility disorders positions PCSA well to lead the market.
Processa Pharmaceuticals, Inc. (NASDAQ:PCSA) is a Maryland-based clinical-stage biopharmaceutical company that develops chemotherapy drugs to enhance the efficacy of cancer treatment. Incorporated in 2017, the company adopts a “Regulatory Science Approach” to more effectively lead its pipeline programs.
2. BioXcel Therapeutics, Inc. (NASDAQ:BTAI)
Upside Potential as of July 4, 2025: 1,104.80%
H.C. Wainwright analysts have reiterated their Buy rating on BioXcel Therapeutics, Inc. (NASDAQ:BTAI), while maintaining a price target of $8.00. This confidence stems from the favorable trial developments for the company’s BXCL501 treatment.
The Data Safety Monitoring Board (DSMB) put forward a second positive recommendation to BioXcel Therapeutics, Inc. (NASDAQ:BTAI), allowing the company to continue its SERENITY At-Home pivotal Phase 3 safety trial without modifications. This suggestion followed a review of unblinded safety data from 178 patients dosed through May 28, 2025.
As per the research firm, SERENITY readout exhibits low risk as the main outcome is safety-based, and considering the institutional settings, IGALMI has already received approval. While the expanded label is expected to be filed by the end of this year, the firm anticipates that BioXcel Therapeutics, Inc. (NASDAQ:BTAI) will receive a label extension during the second half of 2026.
BioXcel Therapeutics, Inc. (NASDAQ:BTAI) is a Connecticut-based company that serves as a biopharmaceutical company, alongside its OnkosXcel Therapeutics LLC subsidiary. Founded in 2017, the company employs AI to develop medicines in the areas of neuroscience and immuno-oncology.
1. Banzai International, Inc. (NASDAQ:BNZI)
Upside Potential as of July 4, 2025: 3,808.30%
On Thursday, Banzai International, Inc. (NASDAQ:BNZI) revealed plans to implement a one-for-ten reverse stock split of its Class A and Class B common stock, becoming official as soon as the market opens on July 8, 2025.
As per the company, the reverse split would increase its per-share price in compliance with Nasdaq’s minimum bid price requirement. This means that when the split takes place, Banzai International, Inc. (NASDAQ:BNZI) will have approximately 2.2 million shares of Class A common stock and 231,000 shares of Class B common stock outstanding, in contrast to the previous 22.4 million and 2.3 million shares, respectively.
The management also clarified that the split will have no influence on any shareholder’s stake in the company’s common stock, apart from minor adjustments associated with the rounding of fractional shares. What it will actually impact is all issued and outstanding shares of common stock, while adjusting the shares available for issuance under stock options and warrants.
Banzai International, Inc. (NASDAQ:BNZI), headquartered in Washington, is a marketing technology company that offers data-driven marketing and sales solutions. Through its two main segments, Banzai Operating Co., Inc., and Banzai Reel Acquisition Inc. (OpenReel), the company provides OpenReel, CreateStudio, Vidello, and Demio.
While we acknowledge the potential of BNZI 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 BNZI and that has 100x upside potential, check out our report about this cheapest AI stock.
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