In this article, we will take a look at overlooked penny stocks to invest in.
Penny stocks, or stocks trading under $5, often get overlooked due to their volatility and speculative nature. Keeping this general perception in mind, some investors miss out on genuinely compelling opportunities, but others, willing to look beyond the low share price and focus on fundamentals, unlock real value.
That backdrop appears increasingly relevant as broader market conditions turn more supportive of selective risk-taking. An article by iShares, titled “Investment Directions: 2026 outlook,” published on January 5, outlines that 2026 will be defined by stronger-than-trend growth, accommodative policy, and enhanced productivity. The author believes this makes selective risk-taking attractive. The publication advances by citing the latest client survey, in which 50% of respondents appeared bullish, with 48% of them likely to take risks in U.S. equities and 24% in emerging markets. On the other hand, investors who characterized themselves as bearish preferred developed markets abroad (24%) or considered Alts (24%).
That said, AI was kept as the focal point throughout the article, which proceeds to state,
“AI remains our top equity investment theme, as we believe the market continues to underappreciate the opportunity of the AI data center buildout. Overall, we believe AI-related names have the potential to lead again this year.”
A more constructive macro environment, improving investor risk appetite, and continued enthusiasm for AI-driven productivity are creating conditions in which overlooked stocks can come to the forefront.
With this backdrop in mind, let’s explore our selection of overlooked penny stocks to invest in.
Our methodology
For this article, we began by filtering for companies with a market capitalization of over $2 billion and a trading price under $5. After this initial screening, we shortlisted stocks with the fewest hedge fund holdings, based on Insider Monkey’s database as of Q3 2025, indicating an overlooked angle. Finally, we selected the stocks with the highest upside potential and arranged them in ascending order.
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).
8. Ardagh Metal Packaging S.A. (NYSE:AMBP)
Upside Potential as of January 21, 2026: 0.23%
Number of Hedge Fund Holders: 30
On January 12, UBS lifted the price target on Ardagh Metal Packaging S.A. (NYSE:AMBP) to $4.25 from $4 and maintained a Neutral rating on the stock, according to TheFly. As stated by the analyst in a research note, UBS is not expecting a major macroeconomic change in 2026.
Recently, many analysts have updated their outlook on the company. On January 8, Stefan Diaz from Morgan Stanley increased the price target on Ardagh Metal Packaging S.A. (NYSE:AMBP) to $4.30 from $4.10, reiterating an Equal Weight rating. While expecting global demand for beverages to grow 2.3% in 2026, the firm favours companies with the prospects of greater earnings revision and improved return on investment (ROI).
Earlier on January 6, Truist also raised the price target on Ardagh Metal Packaging S.A. (NYSE:AMBP) to $5 from $4, keeping a Hold rating. As the analyst noted in the research note, beverage cans appear well-positioned to accelerate in North America and Europe, and, because of disciplined supply management, containerboard producers may introduce price hikes.
Ardagh Metal Packaging S.A. (NYSE:AMBP) is a Luxembourg-based metal beverage can company operating in the United States, Europe, and Brazil. Incorporated in 1932, the company mainly serves beverage producers.
7. Plug Power Inc. (NASDAQ:PLUG)
Upside Potential as of January 21, 2026: 1.35%
Number of Hedge Fund Holders: 27
On January 9, TD Securities trimmed its price target on Plug Power Inc. (NASDAQ:PLUG) to $2 from $4 and downgraded the stock from Buy to Hold. According to the firm, uncertainty continues to build around demand, and risks tied to execution exist for the company’s prime offerings.
With worries regarding the ramp-up in electrolyzers and material handling, which the firm believes is materializing slower than previously thought, TD Cowen says it has been “on the wrong side of the PLUG trade for some time.” Despite anticipating gross margin improvement in 2026 and EBITDA breakeven in 2027, the firm considers it wise to remain on the sidelines. Another headwind highlighted is the lack of clarity on how Plug Power Inc. (NASDAQ:PLUG) will achieve positive free cash flow.
Overall, Plug Power Inc. (NASDAQ:PLUG) has mixed analyst sentiment, with 28% of analysts covering the stock assigning a Buy rating and slightly more than half holding a cautious view as of January 21. The range between the high and low consensus price targets is also wide, with the consensus 1-year median price target of $2.25 implying about 1.35% upside.
Plug Power Inc. (NASDAQ:PLUG) is a New York-based developer of hydrogen fuel cell product solutions. Founded in 1997, the company offers GenDrive, GenSure, Progen, and GenFuel, among others.
