In this article, we discuss the 10 best NYSE penny stocks to buy along with the latest inflation report and its probable impact on small-cap stocks.
The latest Consumer Price Index (CPI) data by the Bureau of Labor Statistics was released on June 12, which suggests a deceleration in inflation, which could be positive for the US market and economy. Stabilizing prices, particularly in core categories like shelter and food, indicate potential relief for consumers and might influence the Federal Reserve’s monetary policy decisions favorably. The steadying of inflation could enhance consumer confidence and support economic stability.
Additionally, the latest inflation report for May, released on June 28, showed that personal income in the U.S. increased by $114.1 billion, up 0.5%, while disposable personal income (DPI) also rose by 0.5% to $94 billion, showing its slowest increase since March 2021. The core Personal Consumption Expenditures (PCE) index, a key measure for the Federal Reserve that excludes food and energy costs, rose by 0.1% from April, matching Wall Street’s expectations and slowing from April’s 0.3% rise. Annually, core PCE increased by 2.6% which was the smallest gain in over three years.
The data showed a steady rise in income and spending. Real DPI, adjusted for inflation, grew by 0.5%, and real PCE rose by 0.3% due to a 0.6% increase in spending on goods and a 0.1% increase in spending on services. Healthcare, housing, and transportation services contributed to the rise in service spending, while prescription drugs led to an increase in goods spending. Overall, the data showed rising incomes, controlled inflation, and increased consumer spending. This combination suggests steady economic growth and stability, along with manageable inflationary pressures.
What Does the Data Mean for Small-Cap Stocks?
We discussed the key developments of the Fed’s latest meeting in our best Robinhood stocks article, where we mentioned that the chairman’s statement indicated that there has been some improvement in lowering inflation toward the desired 2% target. However, he emphasized the need for more data and evidence to confirm that this downward trend is consistent and sustainable. This means that the latest data might not be sufficient enough yet, but it still is a good start to making up the Fed’s mind toward rate cuts. The CME FedWatch Tool reveals that 58% of the market believes that the Fed will cut rates by 25 basis points.
Back in April, Peter Kraus, CEO of Aperture Investors told CNBC that inflation has restricted the growth of small-cap stocks and they have underperformed the large-cap stocks by 9% per annum for the last three years. While he had some recession concerns, he said that if the interest rates decline, the small-cap stocks are going to outperform. He noted that over the long term, even though the falls of the broader market and the small caps are different, the returns are usually equal.
Keeping that in mind, we look at some of the best NYSE penny stocks in our current article. While not all of them are small-cap stocks, they could certainly benefit from a decline in interest rates.
10 Best NYSE Penny Stocks To Buy
Our Methodology
For this article, we identified over 60 stocks trading under $5 with Buy or better ratings from Wall Street analysts and a market cap of over $200 million. We further narrowed down our list to 10 stocks based on multiple but different metrics such as future growth prospects, valuations, and shareholder returns. We listed the stocks in ascending or of their hedge fund sentiment which was taken from Insider Monkey’s database of over 900 elite hedge funds. We preferred the stocks that were profitable over the last twelve months. Nevertheless, some stocks in the list are yet to post profits and analysts keep an optimistic outlook for them.
Why do we care about what hedge funds do? 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 NYSE Penny Stocks To Buy
10. Waterdrop Inc. (NYSE:WDH)
Share Price as of June 27: $1.10
Number of Hedge Fund Holders: 1
Waterdrop Inc. (NYSE:WDH) is a China-based company that offers online insurance brokerage services. The company is trading at 9.4x its 2024 earnings which makes its valuation attractive enough for investors to explore the stock more. It is our 10th best NYSE penny stock to buy.
In early 2024, amidst ongoing economic recovery, the personal insurance sector showed consistent growth, which created a favorable environment for Waterdrop Inc. (NYSE:WDH). The company reported a Q1 total revenue of RMB705 million (RMB 1 = US$0.14), which is a 16.3% increase year-over-year. Additionally, the company achieved a GAAP net profit of RMB80.6 million, which grew 62.2% year-over-year. It marks the ninth consecutive quarter of profitability since Q1 of 2022, which is a clear sign of the company’s sustained financial health and operational efficiency.
Moreover, Waterdrop Inc. (NYSE:WDH) recently issued its first special cash dividend since its 2021 listing. The dividend amounted to US$0.04 per ADS or US$0.004 per ordinary share. Furthermore, the company has actively pursued share buybacks, repurchasing 45.5 million ADS in the open market as of the end of May 2024. This initiative, which began with the announcement of a stock repurchase program in September 2021, has totaled approximately $95.9 million in consideration.
Renaissance Technologies is the only shareholder of Waterdrop Inc. (NYSE:WDH) and has a position worth $210,000, as of March 31.
9. Lithium Americas Corp. (NYSE:LAC)
Share Price as of June 27: $2.78
Number of Hedge Fund Holders: 4
Lithium Americas Corp. (NYSE:LAC) is a lithium exploration and development company operating in the US and Canada. The company owns the Thacker Pass project, which is situated in McDermitt Caldera where the largest known lithium deposit in the world has been discovered.
The Thacker Pass project is the biggest growth prospect of Lithium Americas. The company is well-positioned to benefit from the growing demand for lithium, driven by the global transition to electric vehicles and renewable energy storage. The U.S. Department of Energy’s $2.26 billion loan supports the strategic importance of this project for U.S. national interests. Moreover, General Motors’ exclusive rights to Phase 1 production for up to 10 years further validate the project’s potential. The project’s Phase 1 alone could supply enough lithium to meet the battery needs of approximately 800,000 EVs annually, which positions Lithium Americas Corp. (NYSE:LAC) as a key player in the lithium supply chain. Although there has been some pressure on lithium prices recently, the company’s management believes that they will normalize when the project is operational in 2026.
As of the first quarter, 4 hedge funds were bullish on Lithium Americas Corp. at a total stake value of $2.5 million. It takes the 9th position on our list of best NYSE penny stocks and takes the top spot on our list of stocks that will 10x in 5 years according to analysts.
8. Yalla Group Limited (NYSE:YALA)
Share Price as of June 27: $4.58
Number of Hedge Fund Holders: 6
Yalla Group Limited (NYSE:YALA) is a Dubai-based company that offers social networking and gaming applications, called Yalla and Yalla Ludo, respectively. At a stake value of $6.4 million, 6 hedge funds held positions in Yalla Group Limited (NYSE:YALA) in the first quarter. As of Q1, Millennium Management is the top shareholder in the company and has a position worth $3.6 million.
Yalla Group Limited (NYSE:YALA) has risen prominently in the MENA region with its original voice-based app, which initially achieved strong revenue growth in the double and even triple digits. However, the company’s newer gaming segment has emerged as its primary growth driver. In Q1, the robust performance of its flagship applications contributed to the company’s revenue of $78.7 million, a 7.1% increase from $73.5 million in the same period last year. Also, the company’s average monthly active users grew by 14.6% year-over-year to 37.8 million. Additionally, the average revenue per paying user rose to $6.03 in the quarter, up from $5.39 in the previous year’s first quarter. These metrics highlight the increasing engagement and monetization potential of its platform. Furthermore, the company’s ongoing improvements to the gaming experience showed results in the quarter as paying users increased by 7.3% quarter-over-quarter.
Yalla Group Limited (NYSE:YALA) has adjusted its gaming strategy to focus on partnerships with established studios known for their successful game releases. By joining the UK Interactive Entertainment Association (Ukie), the world’s oldest video game and interactive entertainment trade body, the company aims to strengthen industry ties and strengthen its market position. In its Q1 2024 earnings call, Chairman and CEO Mr. Tao Yang emphasized the importance of global collaboration with game developers and the promotion of industry connectivity.
Yalla Group is one of the best NYSE penny stocks to buy as it is trading at a significant discount to its industry. The company is trading at a forward PE ratio of 6.4x compared to the industry average of around 25x. The Street-high estimate of $7 shows an upside of nearly 54% to the company’s stock at current levels on June 27.
7. FinVolution Group (NYSE:FINV)
Share Price as of June 27: $4.64
Number of Hedge Fund Holders: 11
FinVolution Group (NYSE:FINV), previously known as PPDAI Group Inc., is a China-based company that runs a fintech platform. In Q1, 11 hedge funds had investments in FinVolution Group (NYSE:FINV), with positions worth $28.142 million. GLG Partners is the most dominant shareholder in the company as of Q1 with a stake worth $13.54 million. It is one of the best NYSE penny stocks to buy.
FinVolution Group’s (NYSE:FINV) strong performance in the first quarter of 2024 highlights its effective strategy and resilience across both domestic and international markets. With a clear focus on its “Local Focus, Global Outlook” approach, the company has significantly expanded its reach and served approximately 31 million borrowers across China, Indonesia, and the Philippines as of the first quarter.
During the quarter, international revenue increased to RMB595 million, up 33% year-over-year, which accounted for 19% of the total revenue of $438.4 million. In Indonesia, FinVolution Group capitalized on a favorable economic climate, characterized by GDP growth exceeding 5% in 2023 driven by robust domestic consumption and increased investment. In the first quarter alone, transaction volume in Indonesia surged by 41% year-over-year to RMB2.21 billion, with outstanding loan balances climbing 34% to RMB1.27 billion. The Philippines is another important international market for the company, where the economic outlook remains optimistic with projected GDP growth between 6% to 7% for 2024. This positive forecast aligns well with FinVolution Group’s (NYSE:FINV) growth strategy, driving substantial year-over-year transaction volume growth of RMB560 million, which increased by 194% year-over-year and 27% sequentially.
FinVolution Group’s valuation makes it a stock worthy of attention. The company is trading at an earnings multiple of 3.59x its 2024 earnings which makes it a dirt cheap stock in the fintech space. Moreover, analysts also see the stock in quite a favorable light as all seven analysts that have covered the stock keep a Buy rating on it. Their average price target shows a 39% upside to the stock from current levels on June 27.
6. Banco Santander, S.A. (NYSE:SAN)
Share Price as of June 27: $4.62
Number of Hedge Fund Holders: 13
Banco Santander, S.A. (NYSE:SAN) offers many financial services, including demand and time deposits, asset management and private banking services, corporate and investment banking services, and more.
Banco Santander, S.A. (NYSE:SAN) is in the position to expand its reach and solidify its position as a leader in the financial services industry as it gained 5 million new customers over the past year alone. Moreover, the company’s track record of net operating income growth is also impressive as it has achieved double-digit increases in net operating income year-over-year for the past eight quarters. Reporting a net profit of €2.9 billion in the first quarter, Banco Santander, S.A. saw an 11% increase compared to the same period last year, with a 9% rise in constant euros. The company’s efficiency ratio (expenses/revenue) improved by 1.4% year-over-year to 42.6%. Additionally, the Spanish giant’s return on tangible equity (ROE excluding intangible assets) climbed 55 basis points year-over-year to 14.9% in the quarter.
Banco Santander, S.A.’s (NYSE:SAN) shareholder value creation in Q1 was quite healthy, with a notable 14% growth due to its disciplined capital allocation strategies and the execution of share buyback programs. Over the past three years, the company has repurchased approximately 11% of its outstanding shares, which has led to an impressive return on investment of around 19% for its shareholders.
In Q1, 8 hedge funds held stakes in Banco Santander, S.A. (NYSE:SAN), with positions worth $9 million. As of the first quarter, Citadel Investment Group is the most significant shareholder in the company with a position worth $1.4 million.
5. Custom Truck One Source, Inc. (NYSE:CTOS)
Share Price as of June 27: $4.35
Number of Hedge Fund Holders: 13
Custom Truck One Source, Inc. (NYSE:CTOS) offers specialty equipment rental and sale services and runs through Equipment Rental Solutions, Truck and Equipmsegments, and Aftermarket Parts and Services segments.
Custom Truck One Source, Inc. (NYSE:CTOS) makes effective use of its scale and integrated business model to offer superior customer service and cost-effective solutions. With a fleet exceeding 10,000 units and an average age of 3.7 years, the company provides high reliability and operational efficiency to its clients. The strategic placement of over 40 operational locations, up from 35 at the end of Q3 last year, including recent acquisitions like SOS Fleet Services and AMD Maintenance and Repair, strengthens its service coverage and market penetration, especially in underserved regions like the Gulf Coast and New York City metro area.
Custom Truck One Source, Inc. (NYSE:CTOS) is well-positioned to capitalize on favorable industry tailwinds, including federal infrastructure investments and advancements in electrification and data center development. The company’s planned stance on regulatory changes, such as upcoming chassis emission regulations, is evidence of its readiness to meet evolving customer demands and regulatory requirements.
According to our database, 13 hedge funds held stakes in Custom Truck One Source, Inc. (NYSE:CTOS) in the first quarter, with positions worth $26 million. Additionally, Wall Street analysts have an average price target of $7.1, representing a 63% upside to the stock price from June 27 levels.
4. Nokia Oyj (NYSE:NOK)
Share Price as of June 27: $3.73
Number of Hedge Fund Holders: 13
Nokia Oyj (NYSE:NOK) is a Finland-based company that offers mobile, fixed, and cloud network solutions. It is one of the best NYSE penny stocks to buy. In the first quarter, 13 hedge funds had stakes in Nokia Oyj (NYSE:NOK), with total positions worth $441.823 million. As of March 31, Pzena Investment Management is the biggest shareholder in the company with a stake worth $239 million.
Nokia Oyj (NYSE:NOK) has been strategically expanding its partnership network in recent months, which shows the management’s plan to grow the company with regard to AI and 5G technologies. The company entered into partnerships with Nvidia, Google, and Dell in the first half of 2024. The partnership with Nvidia focuses on AI-ready radio access network solutions and makes use of Nvidia’s AI technology to enhance Nokia’s Cloud RAN capabilities. This move is significant as edge computing gains popularity, particularly in the advancement of AI development and deployment across telecommunications infrastructure. Furthermore, Nokia’s recent agreement with Alphabet’s Google Cloud focuses on integrating Google’s AI solutions like Vertex AI and Gemini 1.5 Pro into Nokia’s Network. This integration is focused on furthering the development of 5G enterprise and consumer applications. Nokia Oyj’s (NYSE:NOK) tactful partnerships with leading AI and cloud computing companies position it well to capitalize on the fast-growing AI and 5G markets and give the company a substantial growth opportunity. Even capturing an adequate fraction of this market could potentially grow the company’s annual revenue.
As of June 27, Nokia is trading at a forward PE ratio of 9.53, at a 73% discount from the industry average, making it one of the best NYSE penny stocks to buy now.
3. Ambev S.A. (NYSE:ABEV)
Share Price as of June 27: $2.09
Number of Hedge Fund Holders: 14
Ambev S.A. (NYSE:ABEV) produces, distributes, and sells beer, draft beer, carbonated soft drinks, malt and food, other alcoholic beverages, and non-alcoholic and non-carbonated products.
Ambev S.A. (NYSE:ABEV) stands as the largest beverage company in Brazil, controlling over 60% of the beer market in the country while maintaining a strong presence across Latin America. The company’s diversified portfolio includes both alcoholic and non-alcoholic beverages, which positions it strategically to benefit from evolving consumer preferences and market opportunities. Ambev S.A.’s dominant position in the Brazilian beer market provides a solid foundation for revenue growth. The Brazil beer market is projected to grow at a CAGR of over 4.83% from 2023 to 2028, according to the Brazil Beer Market Overview, 2028 report by Bonafide Research. This growth trajectory presents significant opportunities for Ambev S.A. to expand its market share and profitability.
As mentioned in Ambev S.A.’s (NYSE:ABEV) Q1 2024 earnings call, it reported its best volume performance in history for beer in Brazil, with a 3.6% growth in beer volumes. The management mentioned that the growth outpaced the industry’s performance, which indicates market share gains. Premium and super-premium brands such as Corona, Spaten, and Original grew impressively, with Corona registering over 70% growth. The management maintains a strong focus on financial discipline and value creation and it is evident from its solid free cash flow generation. Cash flow from operating activities and free cash flow grew by approximately BRL 1.3 billion (1 BRL = US$0.18) each.
Ambev S.A. (NYSE:ABEV) was held by 14 hedge funds in the first quarter and the stakes amounted to $166.139 million. First Eagle Investment Management is the largest shareholder of the company and has a position worth $775.509 million, as of March 31.
2. Nordic American Tankers Limited (NYSE:NAT)
Share Price as of June 27: $4.13
Number of Hedge Fund Holders: 18
Nordic American Tankers Limited (NYSE:NAT) is a Bermuda-based tanker company that is engaged in acquiring and chartering double-hull tankers. In the first quarter, 18 hedge funds held positions in Nordic American Tankers Limited (NYSE:NAT) and their stakes amounted to $20.25 million. As of March 31, Two Sigma Advisors is the most dominant shareholder in the company and has a position worth $8.57 million.
The global crude oil tanker market is robust with constrained supply and increasing tonne-mile demand for crude oil transportation. Nordic American Tankers Limited (NYSE:NAT) has profited from this factor due to its fleet of Suezmax tankers to meet global shipping demands efficiently. In the first quarter of 2024, the company reported a strong financial performance with a net profit of $15.1 million. It is evidence that the company is able to generate consistent earnings amidst market volatility. Moreover, the company generated $37.6 million in cash from operating activities.
On the Street, the stock sports a consensus Buy rating and analysts’ 1-year median price forecast implies an upside of 36% from current levels. The stock is trading at 8.75 times its forward earnings, a 20% discount to its sector and a 43% discount to its 5-year historical average. Considering analysts expect earnings to grow by 6% this year, NAT is not expensive relative to peers and its historical average.
1. TETRA Technologies, Inc. (NYSE:TTI)
Share Price as of June 27: $3.42
Number of Hedge Fund Holders: 23
TETRA Technologies, Inc. (NYSE:TTI) is a global energy services company with two main divisions. The Completion Fluids & Products segment provides clear brine fluids, additives, and ultra-pure zinc bromide for various industries, including oil, gas, and battery technology. The Water & Flowback Services segment focuses on water management, frac flowback, and production well testing for oil and gas operators. TETRA Technologies takes the top spot on our list of best NYSE penny stocks to buy.
TETRA Technologies, Inc. is set to capitalize on a prolonged upcycle in offshore and deepwater activities. The company’s strategic investments in capacity expansions are expected to yield significant returns. The Completion Fluids & Products segment is projected to maintain its upward trajectory with high-margin products and expanding global operations. The company’s proprietary TETRA PureFlow ultra-pure zinc bromide also positions it advantageously in the growing battery technology market, which guarantees diversified revenue streams.
Moreover, analysts estimate a 107% year-over-year increase to TETRA Technologies, Inc.’s (NYSE:TTI) EPS in 2024 and the company is trading at 11.7x its estimated 2024 earnings, which provides an attractive entry point to investors. Wall Street is also quite bullish on the stock as 6 analysts keep a Buy rating on the stock with an average price target of $7.42, representing an upside of 117% from the current levels, as of June 27.
According to our database, 23 hedge funds had stakes worth $63.15 million in TETRA Technologies, Inc. as of the first quarter. Tontine Asset Management is the most prominent shareholder of the company with 4.8 million shares worth $21.3 million as of Q1.
While we acknowledge the potential of TTI, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Read Next: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These 10 Stocks in June.
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