On February 23, Pierre Ouimet, head investment strategist at UBS Canada, joined BNN Bloomberg to discuss the markets and provide a spotlight on undervalued sectors. The conversation centered on Ouimet’s slogan, ‘make portfolios diversified again,’ as a response to the current tensions between the US Supreme Court and the Trump administration. Ouimet noted that while the Supreme Court’s decision on tariffs is finally settled, the administration’s intent to fight back with a potential 10% global tariff means investors are not yet out of the woods. However, he believes that the fundamentals of the market remain strong enough to weather these political challenges.
In explaining his diversification strategy, Ouimet revealed that UBS Canada has been reducing its exposure to US dollar-denominated assets. Rather than focusing on a single trend or sector, he emphasizes having fingers in multiple pies. While he still favors tech, he has become more selective, noting a third wave of AI development characterized by recent weakness in software stocks. Regarding undervalued opportunities, Ouimet pointed strongly to the energy and mining sectors. He highlights the high free cash flow yields in energy, a sector that he believes is currently unloved by the market. In mining, he noted that while stock valuations have risen, the leverage they provide on increasing commodity prices is extraordinary.
That being said, we’re here with a list of the 13 most promising penny stocks under $5 to buy.
Our Methodology
We used screeners to identify stocks that are trading below $5 per share and had an average upside potential of at least 30%. We limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment. These stocks are also popular among analysts and elite hedge funds.
Note: All data was sourced on February 25.
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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
13 Most Promising Penny Stocks Under $5 to Buy
13. Talkspace Inc. (NASDAQ:TALK)
Talkspace Inc. (NASDAQ:TALK) is one of the most promising penny stocks under $5 to buy. On February 19, Talkspace reported 2025 earnings, with total revenue rising 22% year-over-year to ~$229 million. The company showed bottom-line growth, more than doubling its adjusted EBITDA to $15.8 million, while expanding its payer coverage to over 200 million lives. This was driven by a pivot toward enterprise and payer channels, which helped the company reduce marketing expenses even as brand awareness increased through new directory integrations with major insurance partners.
Despite the overall revenue growth, the company experienced a 30.4% decline in consumer-direct revenue, reflecting its deliberate shift away from the individual subscription model. Operating expenses rose by ~10%, influenced by the integration of the Wisdo acquisition. Management also noted the complexities of scaling within the Medicare market, though the company is actively participating in outcome-based CMS programs to capture further growth in Medicare Advantage enrollments.
For 2026, Talkspace Inc. (NASDAQ:TALK) is heavily focused on AI and search optimization for LLMs. The company is currently beta testing a specialized AI agent designed for secure mental health support, aiming to differentiate it from general-purpose AI as a clinically backed platform. With plans for further payer integrations in early 2026, the company expects a significant portion of future revenue to be driven by its existing member base and expanded clinical offerings.
Talkspace Inc. (NASDAQ:TALK) operates as a virtual behavioral healthcare company that connects patients with licensed mental health providers in the US.
12. ACV Auctions Inc. (NYSE:ACVA)
ACV Auctions Inc. (NYSE:ACVA) is one of the most promising penny stocks under $5 to buy. On February 23, ACV Auctions reported financial results for Q4 2025, with revenue reaching $184 million, which was a 15% increase year-over-year. The company achieved 12% annual unit growth, selling 193,000 vehicles in the final quarter alone. This was supported by an expansion in market reach, as franchise rooftop penetration rose to 35%.
A key driver of ACV Auctions’ strategy is the integration of AI to disrupt the traditional wholesale auction model. The company uses AI to provide condition-adjusted pricing guidance and automated recommendations, positioning itself as a primary tech innovator in the space. Management also highlighted the rollout of VIPER, which is a tool designed to help dealers optimize retail photos and increase service lane revenue.
Additionally, ACV Auctions is investing $11 million into expanding its network of inspectors and territory managers, particularly in emerging regions where they aim to capture additional market share despite a currently flat dealer wholesale environment. For 2026, ACV Auctions Inc. (NYSE:ACVA) provided a positive outlook with revenue guidance of $845 to $855 million, representing roughly 12% growth. The company plans to scale the ACV Max and VIPER platforms throughout the year to further differentiate its offerings and drive efficiency for its growing dealer network.
ACV Auctions Inc. (NYSE:ACVA) provides a wholesale auction marketplace to facilitate business-to-business used vehicle sales between a selling and buying dealership.
