We recently compiled a list of the 11 Best Fundamentally Strong Penny Stocks to Buy Now. In this article, we are going to take a look at where DocGo Inc. (NASDAQ:DCGO) stands against the other fundamentally strong penny stocks.
Fundamentally strong penny stocks can represent highly attractive investment opportunities, primarily because they tend to be underfollowed companies operating outside the radar of most institutional investors and prominent sell-side analysts. Due to limited coverage, these stocks often remain hidden gems with significant untapped potential, making them ideal candidates for investors seeking outsized returns through diligent research and stock picking. Unlike speculative penny stocks, those supported by solid financial fundamentals – such as solid revenue growth, positive profitability, manageable debt levels, and robust performance even during economic slowdowns – indicate higher quality and reduced downside risk. Research consistently suggests that investing in undervalued, fundamentally strong small-cap or micro-cap (which are usually penny stocks) companies can generate superior long-term performance, largely because the market eventually recognizes and appropriately values their underlying quality.
READ ALSO: 12 Best Fundamental Stocks to Buy Now
While fundamentally strong penny stocks can offer compelling upside, exposure to them should be carefully timed, as their performance tends to be cyclical and highly sensitive to broader market sentiment. Historically, penny stocks have outperformed during periods of economic recovery, early bull markets, and risk-on environments. In contrast, during times of heightened volatility, tightening monetary policy, or flight-to-safety phases, these stocks often underperform due to their perceived risk and lower liquidity. That’s exactly what has been happening in the last 2 months since the inauguration of the new US administration – the small cap sector (as proxied by ETFs) has reached a new 5-year low on a relative basis vs. the broad market in March 2025 as the Trump 2.0 tariff turmoil has caused significant declines in valuations. Even the Federal Reserve Chair Jerome Powell recognizes the unstable outlook as he used the word “uncertainty” 16 times in his press conference last week.
As the reputable Yardeni Research boutique has put it,
“Markets continue to suggest that economic growth outside of the US is increasingly likely to improve while downside risks to US growth are rising.”
As a result, US stock valuation multiples are falling closer to their international counterparts. We believe this evolution has created opportunities for the most courageous investors willing to take a contrarian stance – the stock valuations suggest weakness, all while economic indicators reveal that the backbone of the US economy is still strong. For reference, the labor market remains strong, with no meaningful spike in jobless claims, which reinforces our belief that consumers remain strong. Likewise, business activity (as proxied by PMI) remained elevated in March, and employment surged. With a healthy consumer and industrial sector, the odds are that the upcoming months will not bring any meaningful economic slowdown, which is now becoming increasingly anticipated by analysts.
With that being said, the key takeaway for readers is that small caps, and particularly penny stocks, could become favored again, as the new batch of economic indicators suggests a strong economy going forward. Moreover, the recent 10% correction in the US stock market valuations offers more affordable opportunities to seek entry points. In this context, we believe that fundamentally strong penny stocks should be preferred by investors, as their higher quality and resilience raise the odds that they will deliver a satisfactory performance and outperform the broad market.
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Our Methodology
To find fundamentally strong penny stocks we used Finviz to filter for stocks with a stock price below $5.00, with at least 10% revenue growth in the last 3 years. Then we manually selected companies with stable businesses, established product lines, and a demonstrated history of performing well even during economic slowdowns. Finally, we compare the list with our Q4 2024 proprietary database of hedge funds’ ownership and include in the article the top 11 stocks with the largest number of hedge funds that own the stock.
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).
DocGo Inc. (NASDAQ:DCGO)
Number of Hedge Fund Holders: 17
DocGo Inc. (NASDAQ:DCGO) is a technology-driven mobile health services provider offering on-demand medical care outside traditional clinical settings. The company delivers services such as urgent care, chronic condition management, preventative care, and medical transportation through a network of mobile clinicians supported by a proprietary digital platform. DCGO contracts with healthcare systems, governments, and enterprise clients to provide scalable healthcare delivery solutions, often at patients’ homes or workplaces. Its logistics platform enables real-time scheduling, routing, and documentation, enhancing operational efficiency.
DocGo Inc. (NASDAQ:DCGO)’s 2024 financial results show a company in transition, with a shift away from migrant-related programs toward its core mobile health services. While full-year revenue slightly declined to $616.6 million from $624.2 million in 2023, the company improved its profitability metrics, with adjusted gross margin rising to 34.6% and adjusted EBITDA reaching $60.3 million. However, the fourth quarter was notably impacted by an accelerated wind-down of migrant-related contracts, leading to a $7.6 million net loss and a steep drop in adjusted EBITDA to $1.1 million. DCGO attributed these declines to unexpected program closures and increased investment in its payer-focused verticals, including higher staffing and operational costs to support future growth.
Looking ahead, DocGo Inc. (NASDAQ:DCGO) is leaning into strategic expansion, particularly through its care gap closure programs, which now serve over 700,000 patients – a massive leap from 2,000 just a year prior. The company has secured multiple new contracts with hospitals and government agencies and made technology and personnel investments to support scaling. While 2025 revenue guidance remains unchanged at $410–$450 million, EBITDA margin expectations were revised downward from 8–10% to approximately 5% due to ongoing investment. Despite short-term margin compression, management is confident these strategic moves will drive long-term, sustainable growth and a transition to higher-quality recurring revenue streams. With 17 hedge funds owning the stock, DCGO is one of the best fundamental stocks to buy now.
Overall DCGO ranks 6th on our list of the 11 best fundamentally strong penny stocks to buy now. While we acknowledge the potential of DCGO as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DCGO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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