In this article, we will be taking a look at the 5 Best Penny Stocks Under $1 According to Hedge Funds. If you wish to see the full list, visit 10 Best Penny Stocks Under $1 According to Hedge Funds.
5. Cardlytics, Inc. (NASDAQ:CDLX)
Number of Hedge Fund Holders: 12
Stock Price as of Last Close of May 12: $0.67
Cardlytics, Inc. (NASDAQ:CDLX) is among the best penny stocks.
TheFly reported on May 8 that Lake Street reduced its price target on CDLX to $1.25 from $1.50 while reiterating a Hold rating, citing a reset in expectations following the company’s first-quarter guidance and ongoing uncertainty tied to recent business changes.
Cardlytics, Inc. (NASDAQ:CDLX) reported its first-quarter 2026 results on May 7 for the period ended March 31, 2026. Revenue totaled $34.3 million, down 39% from $56.4 million a year earlier. Billings reached $58.1 million, a 37% decline from $92.1 million. Adjusted contribution came in at $19.7 million, down 28% year over year from $27.3 million. The company recorded a net loss of $4.5 million, or $0.08 per diluted share, improving from a $13.3 million loss, or $0.26 per share.
The corporation’s adjusted EBITDA was slightly positive at $0.2 million versus a negative $4.1 million last year. Adjusted net loss narrowed to $6.2 million, or $0.11 per share, compared with $10.3 million, or $0.20. Operating cash outflow was $5.6 million versus $6.7 million, while free cash flow was negative $7.9 million compared to negative $10.8 million. Monthly qualified users declined 8% to 197.0 million, and ACPU fell to $0.10 from $0.13. Usage metrics showed continued pressure across the platform’s audience and monetization levels during the quarter, with an overall trend
Cardlytics, Inc. (NASDAQ:CDLX) is a commerce media company that partners with banks to run rewards programs and deliver targeted ads using first-party card transaction data, along with purchase analytics.
4. Vistagen Therapeutics, Inc. (NASDAQ:VTGN)
Number of Hedge Fund Holders: 15
Stock Price as of Last Close of May 12: $0.62
Vistagen Therapeutics, Inc. (NASDAQ:VTGN) is also among the best penny stocks.
TheFly reported on May 12 that VTGN shared early findings from the continuing extension phase of its Phase 3 PALISADE-3 study evaluating fasedienol for acute social anxiety disorder. Participants who entered the extension study used 3.2 micrograms of fasedienol as needed in real-world anxiety-triggering situations for up to 12 months, with dosing allowed multiple times daily and no new safety concerns observed. Exploratory outcomes over four months showed improvement on clinician-rated Liebowitz Social Anxiety Scale and Social Phobia Inventory measures. Overall tolerability remained strong with no identified adverse trends, and patients reported gradual benefit over time, supporting continued development of intranasal therapy for anxiety treatment.
Previously, on May 8, Vistagen Therapeutics, Inc. (NASDAQ:VTGN) reported that the final participant completed the last scheduled visit in the randomized, double-blind, placebo-controlled phase of its PALISADE-4 Phase 3 trial evaluating fasedienol nasal spray for acute social anxiety disorder.
The study’s open-label extension is continuing. PALISADE-4 is a U.S. multicenter trial assessing the single-dose treatment effect of fasedienol on anxiety symptoms during a controlled public speaking challenge, using the Subjective Units of Distress Scale as the primary endpoint. Eligible participants from the blinded phase who joined the extension may continue using the therapy in everyday situations up to six times daily for as long as 12 months.
Vistagen Therapeutics, Inc. (NASDAQ:VTGN) is a clinical-stage biopharmaceutical company based in South San Francisco. It develops rapid-onset intranasal CNS therapies (“pherines”) for psychiatric and neurological disorders.
3. Humacyte, Inc. (NASDAQ:HUMA)
Number of Hedge Fund Holders: 15
Stock Price as of Last Close of May 12: $0.91
Humacyte, Inc. (NASDAQ:HUMA) is among the best penny stocks under $1 according to hedge funds.
TheFly reported on May 14 that HUMA saw its price target increased to $1.50 from $1.00 in a revised research update, with a Buy rating reiterated on the shares. The updated outlook followed the company’s first-quarter results, after which the model was adjusted. The outlook remains positive due to continued opportunity for Symvess in vascular trauma, along with longer-term growth potential from expansion into additional indications. These include arteriovenous access, coronary artery bypass grafting, and peripheral artery disease, all of which represent larger overall addressable markets compared with the current use case.
On May 13, Humacyte, Inc. (NASDAQ:HUMA) released its first-quarter 2026 financial results and business update for the period ended March 31, 2026. Commercial sales of Symvess totaled $0.5 million, or 29 units, compared with $0.1 million and five units in the prior-year quarter. Collaboration revenue fell sharply to $2,000 from $0.4 million as a prior research phase concluded. Cost of goods sold rose to $2.0 million, driven by inventory write-downs and manufacturing overhead. Research and development expenses increased to $19.5 million due to higher material and production costs, while general and administrative expenses were broadly stable at $7.9 million. Net loss widened to $17.6 million, and cash stood at $48.9 million at quarter-end.
Humacyte, Inc. (NASDAQ:HUMA) is a biotechnology company based in Durham that develops bioengineered human tissues. Its flagship product, Symvess, is an off-the-shelf vascular graft designed for vascular repair without immune rejection.
2. Heron Therapeutics, Inc. (NASDAQ:HRTX)
Number of Hedge Fund Holders: 16
Stock Price as of Last Close of May 12: $0.96
Heron Therapeutics, Inc. (NASDAQ:HRTX) is another of the best penny stocks on this list.
TheFly reported on May 11 that HRTX saw its price target reduced to $4 from $6 while the Buy rating was reiterated in a recent research update from H.C. Wainwright analyst Brandon Folkes. The note followed a weaker-than-expected first-quarter performance and highlighted continued uncertainty around the Zynrelef product’s growth trajectory, described as still needing proof of consistent adoption. The analyst also pointed to the need for stronger revenue conversion and improved commercial momentum in order to sustain investor interest in the stock’s public market valuation and longer-term outlook.
On the same day, Heron Therapeutics, Inc. (NASDAQ:HRTX) reported its first-quarter 2026 financial results for the period ended March 31, 2026, along with a corporate update. Total net revenue was $34.7 million, with Acute Care revenue rising 32% year over year, supported by ZYNRELEF at $10.2 million and APONVIE at $3.4 million. Oncology Supportive Care generated $21.1 million, including $20.5 million from CINVANTI, while SUSTOL continued its planned decline.
The company ended the quarter with $44.8 million in cash and equivalents and reaffirmed full-year 2026 guidance for revenue of $173–183 million and Adjusted EBITDA of $10–20 million. Commercial expansion efforts, including a planned sales force increase for Q3 2026, remain on track. Demand trends improved across key products, with ZYNRELEF and APONVIE showing strong growth, while development work on the prefilled syringe program continues as scheduled.
Heron Therapeutics, Inc. (NASDAQ:HRTX) is a biotechnology company based in Cary that develops and commercializes therapies for acute care and oncology, focusing on improving treatment for unmet medical needs.
1. Definitive Healthcare Corp. (NASDAQ:DH)
Number of Hedge Fund Holders: 20
Stock Price as of Last Close of May 12: $0.92
Definitive Healthcare Corp. (NASDAQ:DH) is among the best penny stocks on this list.
TheFly reported on May 8 that Baird reduced its price target on DH to $1.10 from $1.30 in a revised outlook, while a Neutral rating was maintained. The adjustment came after the firm refreshed its financial model in response to the company’s first-quarter performance.
On May 7, Definitive Healthcare Corp. (NASDAQ:DH) released its first-quarter 2026 results for the period ended March 31, 2026, reporting revenue of $55.9 million, down 6% from $59.2 million a year earlier. The company recorded a net loss of $192.4 million, which included significant goodwill impairment charges, compared with a $155.1 million loss in the prior-year quarter.
The company’s Adjusted profitability showed improvement, with adjusted net income of $8.5 million versus $7.0 million, and adjusted EBITDA rising to $15.3 million, or 27% of revenue, compared with $14.7 million and 25% previously. Cash flow from operations reached $11.6 million, while unlevered free cash flow totaled $18.0 million. Looking ahead, the business issued second-quarter and full-year 2026 guidance, projecting stable revenue trends alongside continued adjusted profitability and EBITDA margin expansion supported by operating efficiency and disciplined cost management.
Definitive Healthcare Corp. (NASDAQ:DH) is a SaaS healthcare data company based in Framingham. It provides analytics on healthcare providers and claims to help clients improve sales, marketing, and market research.
While we acknowledge the potential of DH 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 DH and that has 100x upside potential, check out our report about the cheapest AI stock.
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