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.
11. Indie Semiconductor Inc. (NASDAQ:INDI)
Indie Semiconductor Inc. (NASDAQ:INDI) is one of the most promising penny stocks under $5 to buy. On February 19, Indie Semiconductor reported a Q4 2025 revenue of $58 million, exceeding its outlook midpoint and marking an 8% sequential increase. For the full year 2025, total revenue reached $217.4 million. While the company recorded a net loss of $12.4 million for the quarter, its non-GAAP operating loss improved to $10.1 million, down from $14.2 million in the prior year.
Strategically, the company is capitalizing on the automotive industry’s structural shift toward Advanced Driver Assistance Systems and automated driving. Indie Semiconductor has seen strong adoption of its radar and vision solutions by industry leaders in both the US and China, including a major design win with a leading Chinese EV manufacturer. To ensure long-term stability, management mitigated supply chain risks by qualifying secondary source vendors for substrates and packaging.
Additionally, Indie Semiconductor Inc. (NASDAQ:INDI) is expanding into promising adjacent markets like robotics and quantum computing, where it expects to triple its optical product shipments in 2026. In 2026, Indie expects Q1 revenue to fall between $52 and $58 million, reflecting a seasonal slowdown in its Wuxi operations due to the Chinese New Year and reduced EV subsidies.
Indie Semiconductor Inc. (NASDAQ:INDI) provides automotive semiconductors and software solutions for advanced driver assistance systems, driver automation, in-cabin, connected car, and electrification applications.
10. N-able Inc. (NYSE:NABL)
N-able Inc. (NYSE:NABL) is one of the most promising penny stocks under $5 to buy. On February 19, N-able reported earnings for Q4 and the full year of 2025, reaching $130 million in quarterly revenue and a total ARR of $540 million. The company achieved a consistent 30% adjusted EBITDA margin throughout the year, supported by a healthy gross margin of 81%. The company also saw a 14% year-over-year increase in its higher-value customer segment, now totaling over 2,600 partners contributing $50,000 or more in ARR.
The focus for 2025 was heavily centered on AI and the integration of the Adlumin acquisition, which supported N-able’s presence in the AI Security Operations Center market. The CEO highlighted the success of N-zo, an embedded AI workflow assistant currently in limited preview that allows managed service providers/MSPs to manage environments using NL. Additionally, the opening of a new R&D center in India is expected to accelerate innovation across the company’s cybersecurity and data protection platforms, helping MSPs address an increasingly complex threat landscape.
For 2026, N-able Inc. (NYSE:NABL) projects total revenue between $554 and $559 million, representing ~8% to 9% growth. While management acknowledged competitive pressures and a slight dip in Q4 gross margins to 80%, the company anticipates stronger growth in H2 2026 as new AI-powered products, such as XDR and Disaster Recovery as a Service, reach general availability.
N-able Inc. (NYSE:NABL) provides cloud-based security, data protection, and unified endpoint management software solutions for managed service providers in the US, the UK, and internationally.
9. Solid Power Inc. (NASDAQ:SLDP)
Solid Power Inc. (NASDAQ:SLDP) is one of the most promising penny stocks under $5 to buy. On February 24, Solid Power reported Q4 and full-year 2025 results, where the company generated $21.7 million in annual revenue, which was an increase from 2024, driven largely by its line installation agreement with SK On. However, Solid Power reported an operating loss of $100.8 million and a net loss of $93.4 million ($0.51 per share).
One operational focus for 2025 was the validation of Solid Power’s electrolyte sampling through a joint evaluation agreement with Samsung SDI and BMW. Additionally, the company is nearing completion of site acceptance testing at SK On’s facility. Detailing the company’s manufacturing capabilities, management noted that the Electrolyte Innovation Center can process small batches in just days, while the current SP2 facility handles larger 40–50 kilogram batches over the course of a week.
In 2026, Solid Power Inc. (NASDAQ:SLDP) expects to commission its continuous electrolyte production line by year-end, a critical step toward industrial scale. Solid Power’s long-term strategy remains focused on supporting partners like SK On, who are targeting a start of production in 2029. For 2026, the company expects cash investment to be between $85 million and $100 million as it explores potential JV partnerships for electrolyte manufacturing in Korea, aiming for a 500 metric ton annual capacity.
Solid Power Inc. (NASDAQ:SLDP) develops solid-state battery technologies for EVs and other markets in the US. The company sells its sulfide-based solid electrolyte and licenses its solid-state cell designs & manufacturing processes.
8. Taboola.com Ltd. (NASDAQ:TBLA)
Taboola.com Ltd. (NASDAQ:TBLA) is one of the most promising penny stocks under $5 to buy. On February 25, Taboola announced financial results for Q4 and the full year 2025, with annual revenue rising 8% to $1.91 billion. The company’s core profitability metric, ex-TAC gross profit, grew 7% year-over-year to $713.5 million, while adjusted EBITDA reached $215.5 million with a stable 30% margin.
The company’s growth is increasingly driven by its Realize platform, which has improved advertiser retention and attracted non-scaled advertisers, contributing to a 6% annual increase in the scaled advertiser base. Geographically, international markets now represent 53% of total revenue, outperforming mature US markets.
Taboola.com Ltd. (NASDAQ:TBLA) also highlighted its massive publisher reach, with its technology integrated across 14,000 properties to engage over 600 million daily users. This scale, combined with a focus on high-value verticals like personal finance, which generated $120 million in annual revenue, remains a central pillar of its expansion strategy. For 2026, Taboola issued revenue guidance of $2.0 to $2.05 billion and adjusted EBITDA between $222 and $236 million.
Taboola.com Ltd. (NASDAQ:TBLA) operates an AI-based algorithmic engine platform in Israel, the US, the UK, Germany, and internationally. It offers Taboola, which is a platform that partners with websites, devices, and mobile apps to recommend editorial content and advertisements on the open web.
7. Galiano Gold Inc. (NYSE:GAU)
Galiano Gold Inc. (NYSE:GAU) is one of the most promising penny stocks under $5 to buy. On February 12, Galiano Gold reported a record-breaking Q4 and full year 2025. Gold production for Q4 reached 37,500 ounces, which was a 15% increase over the previous quarter, bringing the full-year total to 121,000 ounces. This operational momentum drove record quarterly revenue of $160 million, a 40% jump from Q3, supported by both higher output and favorable gold prices.
Strategically, Galiano is shifting its focus toward long-term resource expansion and the development of underground potential. The company recently declared its maiden underground mineral resource, which is expected to be a primary driver for growth. For 2026, Galiano has set an ambitious production guidance of 140,000 to 160,000 ounces, despite anticipating elevated All-in Sustaining Costs in the range of $2,000 to $2,300 per ounce due to increased royalty burdens.
Exploration efforts in 2026 will be intensive, with plans for at least 65,000 meters of drilling focused on expanding underground reserves at Abore and growing open-pit reserves at Esaase. The CEO emphasized that while throughput and crusher performance are critical, the successful ramp-up observed in late 2025 provides confidence in meeting the target of 5.8 million tons per annum. Although a downward revision to previous 2025 guidance impacted the immediate five-year outlook, Galiano Gold Inc. (NYSE:GAU) expects production to normalize and align with higher historical targets by 2027.
Galiano Gold Inc. (NYSE:GAU) is a gold mining company that owns a 90% interest in the Asanko Gold Mine, which consists of the Nkran, Esaase, Abore, and Miradani North open-pit mining areas located on the Asankrangwa Gold Belt in the Amansie West District of the Republic of Ghana, West Africa.
6. AbCellera Biologics Inc. (NASDAQ:ABCL)
AbCellera Biologics Inc. (NASDAQ:ABCL) is one of the most promising penny stocks under $5 to buy. On February 24, AbCellera Biologics announced its Q4 and full-year 2025 financial results, marking a major transition into a clinical-stage biotechnology company. The firm ended the year with $75 million in total revenue, which was composed of $27 million from partnered programs and $48 million from licensing and royalties, while reporting a net loss of $146 million.
This loss reflects a significant pivot toward internal pipeline development, as evidenced by a $187 million investment in R&D. The company’s clinical pipeline saw substantial progress in 2025, highlighted by the advancement of its lead program, ABCL635, into Phase 2 studies for vasomotor symptoms/VMS. Encouraging target engagement data has notably increased the estimated probability of success for this program, with a major readout expected in the third quarter of 2026.
Additionally, the company’s second lead program, ABCL575, is currently in Phase 1 trials with data anticipated by year-end. To support this expanding portfolio, AbCellera has nearly completed its own clinical manufacturing facility, providing greater control over its supply chain and proprietary technology. While AbCellera Biologics Inc. (NASDAQ:ABCL) is reducing transparency on partner-initiated program starts by moving to less frequent reporting, it remains focused on internal first-in-class programs in oncology and immunology.
AbCellera Biologics Inc. (NASDAQ:ABCL) discovers and develops antibody-based medicines for indications with unmet medical needs in the US.
5. Geron Corporation (NASDAQ:GERN)
Geron Corporation (NASDAQ:GERN) is one of the most promising penny stocks under $5 to buy. On February 25, Geron Corporation reported earnings results for Q4 and the full year of 2025, fueled by the commercial success of its first-in-class telomerase inhibitor, RYTELO. The company achieved $48 million in net product revenue for Q4 and $183.6 million for the full year. This growth was supported by a 9% increase in demand and the expansion of its ordering accounts to ~1,300.
Strategically, Geron underwent a significant transition in late 2025 to optimize its path toward sustainability. The company implemented a workforce reduction of ~one-third to lower future operating expenses while maintaining its commercial focus. R&D expenses decreased as costs for RYTELO shifted from clinical development to capitalized commercial manufacturing. Meanwhile, the company continues to build a robust body of scientific evidence, with 10+ investigator-sponsored trials underway and new data expected in H2 2026 regarding RYTELO’s use in real-world settings and earlier lines of treatment.
For 2026, Geron Corporation (NASDAQ:GERN) reiterated its financial guidance, projecting RYTELO net product revenue between $220 and $240 million. Beyond US commercial growth, the company is focused on the IMpactMF interim analysis in relapsed/refractory myelofibrosis and exploring pathways to bring RYTELO to international markets.
Geron Corporation (NASDAQ:GERN) is a commercial-stage biopharmaceutical company that develops therapeutic products for oncology. It offers RYTELO, which is a telomerase inhibitor for low to intermediate-1 risk myelodysplastic syndromes with transfusion-dependent anemia.
4. Sana Biotechnology Inc. (NASDAQ:SANA)
Sana Biotechnology Inc. (NASDAQ:SANA) is one of the most promising penny stocks under $5 to buy. On February 17, Sana Biotechnology appointed Brian Piper as Executive Vice President and Chief Financial Officer. Brian Piper joined the company with over 25 years of biopharmaceutical experience, most recently serving as CFO of Scorpion Therapeutics and its spin-off, Antares Therapeutics. His background includes significant leadership roles at Prelude Therapeutics, Aevi Genomic Medicine, and a 13-year tenure at Shire Pharmaceuticals.
This leadership change comes at a critical juncture as Sana Biotechnology Inc. (NASDAQ:SANA) approaches several major clinical milestones. Over the next 12 to 18 months, the company expects to generate initial clinical data for SC451, its hypoimmune-modified islet cell therapy for Type 1 diabetes, and SG293, an in vivo CAR T therapy for B-cell related diseases. These data readouts are viewed by management as significant value inflection points for the company’s proprietary platforms.
Financially, Sana Biotechnology’s most recent reports from late 2025 indicated a strengthened balance sheet following ~$133 million in equity financing. At that time, the company projected its cash runway to extend into late 2026. Piper’s immediate focus will involve overseeing disciplined capital allocation and maintaining a strong financial position to support the continued development of Sana Biotechnology’s in vivo CAR T and hypoimmune cell therapy portfolios.
Sana Biotechnology Inc. (NASDAQ:SANA) is a biotechnology company that utilizes engineered cells as medicines in the US. It develops ex vivo and in vivo cell engineering platforms for various therapeutic areas with unmet treatment needs.
3. Iovance Biotherapeutics Inc. (NASDAQ:IOVA)
Iovance Biotherapeutics Inc. (NASDAQ:IOVA) is one of the most promising penny stocks under $5 to buy. On February 24, Iovance Biotherapeutics reported earnings for Q4 and the full year 2025, highlighted by a 61% year-over-year increase in total annual revenue to $264 million. Q4 alone generated $87 million in product revenue, representing 30% growth over the previous quarter. This growth was largely driven by the success of Amtagvi, which saw a 112% increase in year-over-year revenue, alongside improved operational efficiency.
On the clinical and regulatory front, Iovance achieved several milestones that support its long-term outlook. The FDA granted Fast Track Designation for lifileucel in non-small cell lung cancer, a move that validates current clinical data and supports a projected 2027 launch for that indication. Additionally, the company reported a promising 50% confirmed response rate in advanced soft tissue sarcomas, with data showing that patient responses are deepening over time.
While management did not provide specific revenue guidance for 2026, they expressed confidence in the company’s expanding pipeline and the gradual ramp-up of community-based Authorized Treatment Centers/ATCs to complement their established academic network. Looking ahead, Iovance Biotherapeutics Inc. (NASDAQ:IOVA) is preparing for international market launches and continued data readouts for its combination therapies.
Iovance Biotherapeutics Inc. (NASDAQ:IOVA) is a commercial-stage biopharmaceutical company that develops and commercializes cell therapies using autologous tumor infiltrating lymphocyte for the treatment of metastatic melanoma and other solid tumor cancers in the US and internationally.
2. Recursion Pharmaceuticals Inc. (NASDAQ:RXRX)
Recursion Pharmaceuticals Inc. (NASDAQ:RXRX) is one of the most promising penny stocks under $5 to buy. On February 25, Recursion Pharmaceuticals reported its financial results for Q4 and the full year 2025, highlighting a pivotal transition from theoretical AI drug discovery to clinical validation. The company achieved a milestone with its REC-4881 program for Familial Adenomatous Polyposis/FAP, demonstrating a 43% median reduction in total polyp burden after 12 weeks of treatment.
Beyond its wholly-owned pipeline, Recursion reached its fifth milestone with Sanofi, bringing total payments from that partnership to $134 million. To date, the company has secured over $500 million in cumulative upfront and milestone payments through its various collaborations, including significant work with Roche and Genentech on neuroscience Phenomaps.
Due to disciplined capital allocation and the successful integration of its Exscientia combination, the company has extended its projected cash runway into early 2028. Total revenue for the year rose to $74.7 million, up from $58.8 million in 2024, driven largely by milestone achievements and expanded collaboration activities. For 2026, Recursion Pharmaceuticals Inc. (NASDAQ:RXRX) is focused on advancing five differentiated clinical programs and expects to report early Phase 1 data for multiple candidates, including REC-1245 and REC-7735. The company plans to engage with the FDA in H1 2026 to align on a registration pathway for its FAP program.
Recursion Pharmaceuticals Inc. (NASDAQ:RXRX) operates as a clinical-stage biotechnology company that decodes biology and chemistry by integrating technological innovations across biology, chemistry, automation, data science, and engineering to industrialize drug discovery in the US.
1. UWM Holdings Corporation (NYSE:UWMC)
UWM Holdings Corporation (NYSE:UWMC) is one of the most promising penny stocks under $5 to buy. On February 25, UWM Holdings reported financial results for Q4 and the full year 2025. The company achieved its highest quarterly loan origination volume since 2021, reaching $49.6 billion in Q4, which contributed to a total annual volume of $163.4 billion. The quarter was highlighted by total revenue of $945.2 million and net income of $164.5 million. For the full year, UWM generated $3.16 billion in revenue and $244.0 million in net income.
The company’s growth was supported by several initiatives and technological advancements aimed at strengthening the mortgage broker channel. Key highlights include the announcement of a definitive merger agreement to acquire Two Harbors Investment Corp., which is an MSR-focused REIT, and a new collaboration with BILT to enhance borrower retention through digital payment rewards.
Additionally, UWM Holdings Corporation (NYSE:UWMC) launched an AI-enhanced income calculator to streamline the loan approval process for brokers and secured arena naming rights with the Phoenix Suns and Mercury for its consumer brand, Mortgage Matchup. These moves are designed to create a closed-loop platform that drives long-term value and operational scale. For 2026, UWM Holdings expects first-quarter revenue to fall between $650 and $850 million.
UWM Holdings Corporation (NYSE:UWMC) originates, sells, and services residential mortgage lending in the US. The company offers mortgage loans through the wholesale channel.
While we acknowledge the potential of UWMC 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 UWMC and that has 100x upside potential, check out our report about this cheapest AI stock.
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