In this article, we discuss 10 best debt-free penny stocks to buy now.
Inflation in the U.S. has dropped to the lowest level since 2021, setting the stage for the Federal Reserve to cut interest rates. With inflation down to 2.5%, close to the recommended 2%, the prospects of the U.S. Federal Reserve conducting more than one interest rate cut heading into year-end is more than guaranteed.
Investors tend to be excessively hopeful regarding the extent and timing of Federal Reserve rate reductions. The markets are fond of reduced rates as they can boost economic growth by reducing the cost of borrowing for U.S. businesses and individuals.
READ ALSO: 10 Undervalued Cyclical Stocks to Buy According to Analysts and 10 Best US Stocks to Buy Under $5.
The prospect of an interest rate cut of more than 50 basis points before year-end makes the case for being bullish in the equity markets. Penny stocks could be an ideal play on the risk-reward front, given that valuations in the overall market have gotten out of hand.
With the S&P 500 up by more than 17% for the year, large-cap stocks are trading at premium valuations after blockbuster gains over the past year. The artificial intelligence frenzy has catalyzed the blockbuster move to the upside. Nevertheless, debt-free penny stocks are still trading at discounted valuations with tremendous upside potential.
While inflation levels have eased significantly over the past year, it does not mean that prices of things have dropped significantly. According to Lisa Sturtevant, chief economist at Bright MLS, consumers are paying more than 20% more for goods and services than before the pandemic. However, the prospects of lower interest rates should be a boon for companies.
Access to cheap capital should be much easier with the benchmark rate coming down. Penny stocks, mostly made up of low market cap companies, should be the biggest beneficiaries as they could access capital to ramp up operations and fund growth.
Nevertheless, concerns are growing on Wall Street that interest rate reduction might come too late, as numerous American consumers are already struggling to cope with the burden of elevated costs and limited capacity to increase their spending. A wave of disappointing economic data, especially in the labor market, sends jitters that the economy might be slowing.
Jamie Dimon has already reiterated that there is a 30% to 40% chance of the economy plunging into recession. According to Dimon, the long-running high interest rate environment put more pressure on the economy in the run-up to pull inflation down to 2%.
With recession fears gathering steam in recent months, a wave of caution has gripped the equity market as investors remain wary of the elevated valuation. Amid these concerns, the Best Debt Free Penny Stocks to Buy Now offer a way out of the debacle as such companies are well poised to benefit from inflation and interest rates dropping.
American companies continue to have dangerously high debt levels on their financial statements. A report from S&P Global Ratings reveals that the number of corporate debt defaults spiked last year and could see a resurgence in 2024, as companies with limited liquidity face the burden of high interest rates.
In 2023, 153 companies could not fulfill their debt payment commitments, a notable jump from 85 in the prior year, indicating an 80% increase. This represents the highest default rate in seven years, excluding the sharp increase during the COVID-19 pandemic in 2020.
While many U.S. companies boast robust balance sheets, a considerable amount of defaults originate from companies with negative cash flows and high debt levels. Experts label these companies heavily in debt as “zombies,” as they fight to stay afloat, barely able to cover the interest on their debts, and frequently teetering on the brink of collapse. Penny stocks with solid balance sheets and low debt levels offer one of the best ways of diversifying an investment portfolio at highly discounted valuations.
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Our Methodology
To make our list of the 10 Best Debt Free Penny Stocks to Buy Now, we used the Yahoo Finance and Finviz stock screeners to find penny stocks with a market cap of over $500 million. Next, we shortlisted the stocks whose enterprise value was less than the market cap and had a debt of less than $50 million. Finally, we ranked these cash-rich stocks in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024.
At Insider Monkey, we are obsessed with 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Debt-Free Penny Stocks to Buy Now
10. Super Group (SGHC) Limited (NYSE:SGHC)
Market Cap as of September 13: $1.76 Billion
Enterprise Value: $1.45 Billion
Hedge Funds Holding Stakes as of Q2 2024: 7
Super Group (SGHC) Limited (NYSE:SGHC) is one of the best debt-free penny stocks to buy now when Federal Reserve interest rate cuts are poised to bolster consumers’ purchasing power. Operating as an online sports betting and gaming operator, the company should benefit from increased liquidity in the market due to lower interest rates.
The company operates through two leading platforms: Betway, one of the most renowned online sports betting platforms, and Spin, a multi-brand online casino providing various gaming options such as table games and slot machine games.
Super Group (SGHC) Limited (NYSE:SGHC) already benefits from lower inflation levels, as reflected in its solid second-quarter results. Super Group delivered record revenues in the second quarter at $451 million, representing a 9% year-over-year increase. Strong revenue growth was due to robust performance from both its platforms. The company also announced a notable rise in Monthly Active Users to 4.5 million, marking a 21% growth compared to the year before.
Consequently, Super Group (SGHC) Limited (NYSE:SGHC) exited the quarter in a solid financial position with a debt-free balance sheet and $340 million in unrestricted cash. Buoyed by the strong financial position, the company approved its first-ever dividend of $0.10 a share.
While trading at a discount with a price-to-earnings multiple of 8, it is one of the best penny stocks to own owing to its low debt holding of $29.8 million. Additionally, the stock yields 2.86%, making it a solid pick for passive income.
In Q2 2024, seven hedge funds held Super Group (SGHC) Limited (NYSE:SGHC)’s stocks, maintaining the same number as in the previous quarter.
9. Cronos Group Inc. (NASDAQ:CRON)
Market Cap as of September 13: $824.85 Million
Enterprise Value: -$21.34 Million
Hedge Funds Holding Stakes as of Q2 2024: 12
Cronos Group Inc. (NASDAQ:CRON) is one of the best debt-free penny stocks to buy now to gain exposure in the multibillion cannabis sector at a cheap valuation. As of the end of June the company only had about $1.9 million in debt on its balance sheet.
Operating as a cannabinoid company, it engages in the cultivation, production, and marketing of cannabis products. Its product line includes dried flowers, pre-rolls, oils, vaporizers, edibles, and cannabis tinctures under the Spinach.
It stands as one of the biggest marijuana companies in Canada, having expanded into Israel and Europe. It encompasses three distinct brands, covering both recreational and medical cannabis products.
In Q2 2024, Cronos Group Inc. (NASDAQ:CRON) set a new record for its highest quarterly net income, reaching $27.8 million, marking a 46% increase compared to the previous year’s period. This surge in revenue was driven by a 46% increase year-over-year in Canada, a 27% increase year-over-year in Israel, expansion in Germany, and the start of sales in the United Kingdom. Gross profit of $6.3 million in Q2 2024 increased by $3.2 million from Q2 2023. The increase was primarily due to higher cannabis flower and extract sales in Canada, Germany, and the U.K.
The cannabis company has grown its revenue over the years and reduced its losses by a substantial amount. These positive financial results could enable the stock to continue its upward trend, which was initially sparked by the hopeful outlook on U.S. marijuana legalization. This is the second valid reason to consider purchasing this stock.
Even if the U.S. federal government does not legalize marijuana, the hopefulness surrounding it and the expectation could extend the upward phase of many Canadian marijuana companies, including Cronos Group Inc. (NASDAQ:CRON). Numerous states have approved the use of cannabis for medical and recreational purposes, and the addition of more states to this list could also strengthen Crono’s long-term outlook.
Shares of Cronos Group Inc. (NASDAQ:CRON), were held by 12 hedge funds in the Insider Monkey database at the end of Q2 2024.
8. RLX Technology Inc. (NYSE:RLX)
Market Cap as of September 13: $2.62 Billion
Enterprise Value: $1.46 Billion
Hedge Funds Holding Stakes as of Q2 2024: 14
RLX Technology Inc. (NYSE:RLX) is a consumer defensive investment play that engages in the manufacture and distribution of e-vapor products. Its exposure to the Chinese consumer market affirms its growth metrics owing to the market size.
The company has expanded its footprint in China thanks to the launch of the large Daqian collection, which includes 6-ml and 10-ml capsules priced lower than its top-of-the-line Infinity capsules. The new collection has allowed the company to target budget-savvy shoppers.
RLX Technology Inc. (NYSE:RLX) also expanded its international footprint with the release of the RELX Pod Pro. It’s been targeting more Southeast Asian customers with high-quality products as it continues diversifying its offerings.
Consequently, the company was on a roll in the second quarter, delivering a 66% increase in revenues that totaled $86.3 million. It marked the sixth consecutive quarter of revenue growth, affirming underlying growth; its earnings were up by 100% to $0.02 a share, beating consensus estimates and underlining why it is one of the best debt-free penny stocks to buy now.
RLX Technology Inc. (NYSE:RLX)’s latest earnings report underlines the firm’s ability to withstand and adjust in a changing market environment. By concentrating on expansion globally, diversifying its product range, and fostering innovation, RLX Technology is setting the stage to tackle the hurdles and possibilities presented by the shifting e-vapor market.
While the stock is trading at a premium with a price-to-earnings multiple of 23, the company is expected to achieve record revenue and earnings growth numbers. Additionally, it rewards income-focused investors with a 2.40% dividend yield thanks to its low debt level of about $5.69 million as of June 2024.
In the second quarter, 14 hedge funds held stakes in RLX Technology Inc. (NYSE:RLX) valued at $60.8 million. As of June 30, Wildcat Capital Management was the most prominent stakeholder, holding 18.05 million shares worth $33.20 million.
7. Arbutus Biopharma Corporation (NASDAQ:ABUS)
Market Cap as of September 13: $815.54 Million
Enterprise Value: $675.15 Million
Hedge Funds Holding Stakes as of Q2 2024: 15
Arbutus Biopharma Corporation (NASDAQ:ABUS), a biopharmaceutical company, develops novel therapeutics for chronic Hepatitis B virus (HBV) infection. It boasts a robust product line that includes imdusiran, which suppresses HBV antigens.
With the stock trading near all-time highs, the rally has come on investors taking note of the company’s tremendous potential backed by its innovative hepatitis B treatments. Its outperformance also indicates investor confidence in its therapeutic pipeline in the healthcare market.
Arbutus Biopharma Corporation (NASDAQ:ABUS) has shared encouraging results from its early-stage trials of its RNAi drug imdusiran, indicating it might be a promising option for treating hepatitis B. The firm intends to start its next phase of clinical trials for imdusiran, supported by its existing cash reserves estimated at around $148.5 million.
Arbutus Biopharma Corporation (NASDAQ:ABUS) exited the second quarter with $148.5 million in cash, enough to finance the development of its pipeline. Arbutus holds more cash than debt on its balance sheet, a positive sign of financial stability. It held about $1.59 million in debt as of the end of June.
The positive clinical trial results and careful handling of assets set the stage for the company to keep its quest for a possible cure for hepatitis B. As the company deals with the intricacies of clinical trials and legal matters, investors and interested parties will eagerly await more information on the advancement of Imdusiran and other projects in development.
As of June 2024, 15 out of the 912 hedge funds profiled by Insider Monkey had held a stake in the company. Arbutus Biopharma Corporation (NASDAQ:ABUS)’s biggest investor is David Salanic’s Whitefort Capital since it owns $39.76 million worth of shares.
6. Cipher Mining Inc. (NASDAQ:CIFR)
Market Cap as of September 13: $1.04 Billion
Enterprise Value: $940.10 Million
Hedge Funds Holding Stakes as of Q2 2024: 15
Cipher Mining Inc. (NASDAQ:CIFR) is a financial services company that develops and operates industrial-scale bitcoin mining data centers in the U.S. Consequently, it is one of the best debt-free penny stocks to buy now to gain exposure in the burgeoning cryptocurrency space.
Its competitive edge stems from being an energy-cost-efficient company in the Bitcoin mining sector. Additionally, it is one of the most financially stable companies in the cryptocurrency space with a low debt level of about $23 million as of June 2024.
Concentrating on getting power contracts at fixed prices that are unusually low, around $0.027 per kilowatt hour has made it one of the most affordable operations in the sector. This economical approach significantly boosts Cipher’s profit margins, enabling it to stay profitable even when the market is unstable.
In August, Cipher Mining Inc. (NASDAQ:CIFR) mined 151 Bitcoin, marking a drop from the 169 Bitcoin it mined in July, mainly because of its involvement in demand-response initiatives and a rise in the complexity of the network. However, Cipher Mining’s operational hash rate rose from 8.7 EH/s in July to 9.1 EH/s in August, mainly because of the introduction of new S21 and S21 Pro Bitmain mining machines.
The company has been expanding its operations as it looks to take advantage of the skyrocketing Bitcoin price. It has already completed the acquisition of a new 300MW development site in Texas. The acquisition is poised to increase its portfolio to over 2.5 GW across 10 sites.
Cipher Mining Inc. (NASDAQ:CIFR)’s long-term plan involves major growth in operations and the initiation of a powerful computing infrastructure company. These recent developments highlight Cipher Mining’s dedication to expanding its operations and improving efficiency within the sector.
Cipher Mining Inc. (NASDAQ:CIFR)’s valuation also looks attractive at current levels as it trades at a forward price-to-earnings ratio of 4.43x, a significant discount to its peers. 15 hedge funds held the stock at the close of Q2 2024.
5. Bitfarms Ltd. (NASDAQ:BITF)
Market Cap as of September 13: $920.36 Million
Enterprise Value: $740.86 Million
Hedge Funds Holding Stakes as of Q2 2024: 16
Bitfarms Ltd. (NASDAQ:BITF) is a crypto company that engages in the mining of cryptocurrency coins and tokens. It owns and operates server farms that validate transactions on the Bitcoin Blockchain and earn cryptocurrency from block rewards and transaction fees.
The Canada-based crypto mining company is reaping the rewards of a resurgence in interest in Bitcoin. As the price surges above $50,000 per coin, Bitfarms will be able to generate more revenues for its mined output. It has since revealed plans to grow into the American market by setting up a new facility in Sharon, Pennsylvania. The company intends to build a power capacity of up to 120 megawatts (M.W.) at this new site.
Additionally, Bitfarms Ltd. (NASDAQ:BITF) is focused on enhancing its operational efficiency. It anticipates its hash rate, which measures the number of transactions processed per second, could increase to as high as 21. This metric, also called the company’s hash rate, is crucial for evaluating the performance of crypto mining operations.
The company has also recently emerged as an acquisition target, with Riot Farms plotting a $950 million takeover. Any takeover offers an opportunity to generate some return on a premium price target. Nevertheless, Bitfarms has downplayed the takeover bid, opting to implement an off-market poison pill.
Bitfarms Ltd. (NASDAQ:BITF) is one of the best debt-free, debt-free penny stocks for investors looking to diversify their investment portfolio into crypto. It boasts of a low debt portfolio of about $15.9 million. It also boasts significant Bitcoin holdings owing to its robust mining operations; therefore, it is well-positioned to benefit from Bitcoin stabilizing above the $50,000 coin level.
Additionally, Arbutus Biopharma has announced a reduction in its workforce by 40% to prolong its financial stability until the fourth quarter of 2026. These recent updates underscore the company’s strategic emphasis on progressing its top hepatitis B drug candidate while navigating legal challenges.
As of Q2 2024, 16 hedge funds held Bitfarms Ltd. (NASDAQ:BITF), with Millennium Management emerging as the most dominant shareholder.
4. Agilon Health Inc. (NYSE:AGL)
Market Cap as of September 13: $1.36 Billion
Enterprise Value: $1.01 Billion
Hedge Funds Holding Stakes as of Q2 2024: 17
Agilon Health Inc. (NYSE:AGL) is a healthcare company that delivers medical services to senior citizens by working with family doctors across the United States. It offers a service that oversees all patients’ medical requirements by charging a fee similar to a subscription-based on the number of members and the monthly cost.
The company delivered solid second-quarter results that affirm underlying growth amid a challenging economic environment. Revenue in the quarter was up 39% to $1.5 billion as Medicare Advantage membership grew by 385 to 513,000. The company ended the quarter with a net loss of $31 million and a debt holding of $36 million.
The second quarter’s results aligned with the guidance, as Agilon Health Inc. (NYSE:AGL) maintained a medical margin and adjusted EBITDA guidance for the full year. Additionally, Agilon is progressing in implementing its performance action plan, which should accelerate profitability while strengthening the value proposition to physicians and payers.
Despite struggling to profit, Agilon Health Inc. (NYSE:AGL) has demonstrated remarkable growth figures. The firm’s 3-year Revenue Growth Rate per Share is at 49.40%, far exceeding the average of 92.57% among its rivals, which underlines why it is one of the best debt-free penny stocks to buy now.
As of June 30, 17 hedge funds held long positions in the company, with Rock Springs Capital Management holding the largest stake valued at $58.21 million.
Here is what Artisan Mid Cap Fund said about Agilon Health, inc. (NYSE:AGL) in its fourth quarter 2023 investor letter:
“We ended our investment campaigns in Agilon Health, inc. (NYSE:AGL) and BioNTech during the quarter. We initiated a GardenSM position in Agilon in early 2023 with a view that the company’s health care delivery model had the potential to provide both higher quality and lower cost care to seniors, which is a growing market due to an aging population. The company’s ability to scale while expanding margins was our biggest point of uncertainty, and it came to fruition as membership growth has tracked well but medical margins have struggled. After concluding that our probability of success has decreased, we decided to move on in favor of higher conviction ideas.”
3. Denison Mines Corp. (NYSE:DNN)
Market Cap as of September 13: $1.45 Billion
Enterprise Value: $1.34 Billion
Hedge Funds Holding Stakes as of Q2 2024: 21
Denison Mines Corp. (NYSE:DNN) is an energy company engaged in acquiring, exploring, and developing uranium properties in Canada. Its flagship project is the Wheeler River Uranium project in the Athabasca Basin region in northern Saskatchewan.
It is one of the best debt-free penny stocks to buy now to bet on the growing demand for uranium to generate clean energy. It is financially stable, going by a low debt holding of about $310,000. Therefore, it is well positioned to generate optimum value from its uranium holdings amid the increasing demand for clean energy to power data centers in the artificial intelligence race.
Additionally, Denison Mines Corp. (NYSE:DNN) is well positioned to profit following reports that Russian President Vladimir Putin is poised to restrict exports of uranium, titanium, and nickel. The export curb in response to Western sanctions will trigger a further increase in Uranium prices amid strong demand.
Denison Mines Corp. (NYSE:DNN) has demonstrated its forward-thinking approach to generating long-term value by purchasing 2.5 million pounds of uranium at $29.6 per pound in 2021. Its Uranium stockpile has appreciated in value significantly
The firm now possesses 2.2 million pounds, estimated at approximately $180 million. This, along with its significant cash holdings of C$121 million, places Denison Mines in a strong financial position within the uranium sector, free from debt constraints.
In Q2 2024, 21 hedge funds held positions in Denison Mines Corp. (NYSE:DNN), down from 22 in the previous quarter, according to Insider Monkey’s database. The total value of these holdings was approximately $95.36 million. Among these, Steve Cohen’s Point72 Asset Management held the largest stake.
2. B2Gold Corp. (NYSE:BTG)
Market Cap as of September 13: $4.05 Billion
Enterprise Value: $3.62 Billion
Hedge Funds Holding Stakes as of Q2 2024: 22
B2Gold is a basic materials company that engages in the exploration and development of mines across the globe. The company primarily mines gold; therefore, it is well positioned to profit as gold prices edge higher on finding support above the $2,200 an ounce level.
The company maintains gold mining operations in Mali, Namibia, and the Philippines, and the Goose project is under construction in Canada. The company suffered a major setback in the year’s first half, with production dropping 27% due to reduced mining activity at the Fekola mine.
Consequently, total gold production in the second quarter of 2024 was 212,508 ounces below expectations due to hitches at the Fekola mine. Nevertheless, the company is on course to produce between 800,000 and 870,000 ounces of gold before the end of the year.
BTG hopes to recover the lost output at Fekola in the first six months of 2025. Additionally, the firm looks forward to a considerable rise in gold output from the Fekola Complex in 2025. This potential increase is due to the handling of ore with a higher grade from the Fekola and Cardinal pits, along with the support from the Fekola Regional.
From a valuation perspective, B2Gold Corp trades at a discount with a price-to-earnings multiple of 6, lower than the industry’s average and 39% below its five-year median. In addition, it remains one of the best debt-free penny stocks to buy now, given a low debt level of $40.31 million. Additionally, the stock rewards income-focused investors with a 5.84% dividend yield.
In Q2 2024, hedge fund interest in B2Gold Corp. (NYSE:BTG) increased, with the number of funds holding stakes rising from 19 to 22, according to Insider Monkey’s database. The total value of these stakes is approximately $132.61 million. Notably, Jim Simons’s Renaissance Technologies emerged as the largest stakeholder.
1. Matterport, Inc. (NASDAQ:MTTR)
Market Cap as of September 13: $1.42 Billion
Enterprise Value: $1.06 Billion
Hedge Funds Holding Stakes as of Q2 2024: 25
Matterport, Inc. (NASDAQ:MTTR) is one of the best debt-free penny stocks to buy now to gain exposure in the technology sector. Operating as a spatial data company, it focuses on digitization and datafication. It offers Matterport Capture Services, a fully managed solution for enterprise subscribers; Matterport Pro3, a 3D camera that scans properties; and Matterport Pro2.
Matterport, Inc. (NASDAQ:MTTR), recognized for its spatial data software specializing in converting and cataloging the constructed environment, has been active in the packaged software sector. Resi, a company based in the U.K. specializing in home extensions, has embraced its technology, showcasing the growing acknowledgment of its cutting-edge technology within the industry.
It has also achieved notable progress in its acquisition by CoStar, with shareholders approving the merger, marking an essential phase in the amalgamation process. The companies expect the deal to be finalized by the fourth quarter of 2024.
During the second quarter of 2024, the business earned $2.22 million in income, which fell short of the market predictions by $2.27 million. This marked a 6.69% increase compared to the previous year. The earnings per share came in at $0.02, matching the market’s forecasts. The number of subscribers rose by 28% year-over-year, bringing the total to 1.06 million. The company broadened its geographical reach by 33% from the previous year, covering a total of 44.0 billion square feet.
Matterport, Inc. (NASDAQ:MTTR) remains in good financial health, having enough liquid assets to cover its short-term debts, which affirms why it is one of the best debt-free penny stocks to buy now. Additionally, the company’s balance sheet is strengthened by having more cash than debt, indicating a favorable outlook for its financial adaptability in the future. Its total debt as of the end of June stood at $820,000.
As of Q2 2024, Matterport, Inc. (NASDAQ:MTTR) has 25 hedge fund holders. The most prominent among them is Magnetar Capital, holding a stake valued at $27.60 million.
The best debt-free penny stocks to buy now are dirt-cheap stocks with tremendous upside potential and poised to generate significant long-term value. However, given that the artificial intelligence arms race is just starting, under-the-radar A.I. stocks are trading at highly discounted valuations with greater promise for anyone looking to diversify their portfolio. If you are looking for an A.I. stock that is more promising than the top activist investment plays, check out our report about the cheapest A.I. stock.
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