10 Best Quality Penny Stocks To Buy

In this article, we discuss the 10 best quality penny stocks to buy.

Penny stocks are shares of small companies that usually trade for less than $5 per share. They are often found in smaller or newer businesses and tend to be more volatile and risky because they can rise or fall in value quickly.

Many penny stocks trade on smaller exchanges or over-the-counter (OTC) markets rather than major stock exchanges. While they can offer big rewards if a company grows, they also come with higher risks, as these companies may have unstable finances or less information available to investors.

Most penny stocks usually fall under the small-cap stocks category. However, that is not always the case. Some large companies with high market caps have low share prices due to several factors, even though they are well-established and stable. The most common reason is share dilution.

When a company issues a large number of shares, its share price can be low, even if the company is worth billions overall. We have some companies on our list that fall into the category. This does not necessarily mean the company is struggling or risky like typical penny stocks but the low share price is due to the way its shares are distributed rather than poor performance or instability.

Sustainable Growth Expected in Small Caps Amidst Market Shifts

On July 26, Nathan Moser, Managing Director and Senior Portfolio Manager at Impax Asset Management joined Schwab Network and discussed some long-term possibilities around small-cap stocks. He discussed the recent changes in small-cap stocks and highlighted the positive shift.

He noted that after years of struggles, the recent rise in small caps seems more sustainable, which is driven by strong inflows into ETFs and passive investment vehicles. Moser believes the market’s current move could last for years, despite some short-term volatility, and encouraged buying on any market dips.

Moser pointed out that sectors like regional banks, real estate, and housing have performed well, most likely because investors believe that the Federal Reserve may delay or avoid a recession. He said that the recent rise is just the beginning and compared it to the early stages of a baseball game, with more room for growth in the small-cap sector.

He said, “We’re in the first inning of this move, in my opinion.” However, he advised to keep focus on high-quality, profitable companies due to the risks associated with lower-quality stocks in small caps.

With that, we look at the 10 Best Quality Penny Stocks To Buy.

10 Best Quality Penny Stocks To Buy

10 Best Quality Penny Stocks To Buy

Our Methodology

For this article, we identified 30 quality penny stocks trading under $5, as of September 3. The stocks we identified are profitable, have real sales, and are expected to remain profitable in the future as well. We narrowed down the list to 10 stocks most widely held by institutional investors. We listed the stocks in ascending order of their hedge fund sentiment.

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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

10 Best Quality Penny Stocks To Buy

10. Gilat Satellite Networks Ltd. (NASDAQ:GILT)

Stock Price as of September 3: $4.44

Number of Hedge Fund Holders: 10

Gilat Satellite Networks Ltd. (NASDAQ:GILT) is a key player in the global satellite communications sector and offers a wide range of advanced technology solutions. The company specializes in providing comprehensive satellite-based broadband communications, catering to a variety of needs from commercial to defense applications.

Its portfolio includes high-performance satellite terminals, Satellite On-the-Move (SOTM) antennas, Solid State Power Amplifiers (SSPA), and Block Upconverters (BUC), as well as integrated ground systems and cybersecurity services.

The broad range of offerings allows the company to deliver reliable, secure solutions for mission-critical operations across multiple industries, including defense, aerospace, broadcast, government, and critical infrastructure.

In Q2, Gilat Satellite (NASDAQ:GILT) reported a significant increase in revenue, reaching $76.6 million, a 13% rise compared to the same period in 2023. The company also saw its adjusted EBITDA grow by 10%, amounting to $10.1 million. The growth was largely driven by a surge in its defense business, especially following the acquisition of DataPath, which has significantly strengthened its revenue stream.

A significant development for the company was its announcement of acquiring Stellar Blu Solutions in the second quarter. Stellar Blu is recognized for its innovative electronically steerable antennas for the in-flight connectivity market. The acquisition, expected to close around the start of the fourth quarter, is projected to contribute between $120 million and $150 million in revenue by 2025. Once Stellar Blu reaches its production targets, its EBITDA margin is anticipated to exceed 10%. For the fourth quarter of 2024 alone, Stellar Blu is estimated to generate between $25 million and $35 million in revenue.

Gilat Satellite (NASDAQ:GILT) has reiterated its revenue guidance for 2024, forecasting between $305 million and $325 million, which represents an 18% increase at the midpoint compared to the previous year. The company anticipates GAAP operating income to fall between $15 million and $19 million, with adjusted EBITDA expected to be between $40 million and $44 million, which represents a 15% growth at the midpoint.

The company continues to secure significant contracts. In early September, the company received over $12 million in orders from a major satellite operator to expand their global SATCOM network using Gilat’s SkyEdge Family of VSAT Platforms. The contract is set to be fulfilled within the next 12 months.

The company is making substantial strides in expanding its market presence and enhancing its product offerings. With a strong financial performance, strategic acquisitions, and a solid pipeline of contracts, the company is well-positioned for continued growth and success in the industry. The company takes its place among our best quality penny stocks to buy.

As of the second quarter, 10 hedge fund managers had invested in Gilat Satellite (NASDAQ:GILT) and the stakes amounted to $9.121 million. The largest stakeholder among them is Renaissance Technologies with a position valued at $4.82 million, as of June 30.

9. BRF S.A. (NYSE:BRFS)

Stock Price as of September 3: $4.35

Number of Hedge Fund Holders: 10

BRF S.A. (NYSE:BRFS) stands out as a major force in the global food industry and one of Brazil’s largest food processors. The company, established in 1934 through the merger of Sadia and Perdigão, has built a strong presence in the market by raising, producing, and processing poultry and pork.

It also produces a range of other products including fresh meat, processed goods, pasta, margarine, and pet food. Operating across over 150 countries, the company has a portfolio of more than 30 recognized brands such as Sadia, Perdigão, and Qualy.

Its operational footprint is extensive, with over 103 distribution centers and 40 production facilities spread across Brazil and several international locations, including the United Arab Emirates, the Netherlands, and Malaysia. Serving over 300,000 customers and handling more than 500 million deliveries each month, the company demonstrates a significant reach and operational scale.

According to our database, 10 hedge funds held stakes in BRF S.A. (NYSE:BRFS) in the second quarter, with positions worth $135.525 million. Polunin Capital is the biggest shareholder in the company and has a position worth $72.1 million as of Q2.

BRF S.A. (NYSE:BRFS) has shown strong growth in Q2, marking the sixth consecutive quarter of increased profitability. The company achieved a margin of 17.6% and saw revenue rise by 22.3% compared to the same period last year. The growth is attributed to a 5.4% increase in volumes sold, a 16.0% rise in average prices, and favorable effects from the exchange rate on international revenues.

In the domestic market, the company achieved an adjusted EBITDA of R$1.076 billion (1 BRL = US$ 0.18 as of September 3) with a 15.7% margin, showing a 6% year-over-year increase. The company expanded its market presence by adding 10,400 new points of sale, bringing its total to 302,000 customers, which is a 3.6% increase from the previous quarter.

Internationally, it experienced a 17% rise in revenue, supported by a nearly 5% increase in volume and a more than 10% improvement in realized pricing. The performance was driven by stronger pricing in the halal/Gulf region and an enhanced mix of processed food products. The company’s net profit reached R$1.1 billion, and its free cash flow surged to R$1.7 billion, more than double the amount recorded in the previous quarter.

Additionally, BRF S.A. (NYSE:BRFS) has been active in returning value to its shareholders. On August 14, the company approved the acquisition of up to 17 million additional shares as part of its share buyback program, which is set to continue until October 7, 2025. The move is evidence of the company’s commitment to enhancing shareholder value. It is among our best quality penny stocks to buy.

8. Ring Energy, Inc. (NYSE:REI)

Stock Price as of September 3: $1.72

Number of Hedge Fund Holders: 11

Ring Energy, Inc. (NYSE:REI) is an independent exploration and production company with a strong focus on oil and natural gas activities, primarily in the Permian Basin. This region, known for its significant oil output, contributes nearly half of the U.S. daily production, making it a key area for energy development. It takes the 8th spot on our list of the best quality penny stocks to buy.

The U.S. Energy Information Administration (EIA) forecasts that crude oil output in the Permian Basin will average approximately 6.3 million barrels per day in 2024, representing an almost 8% rise compared to 2023. The company targets high-value formations in the Northwest Shelf and Central Basin Platform of West Texas, areas renowned for their oil and liquid-rich reserves.

In the second quarter, the company reported net income of $22.4 million, which is equal to to $0.11 per diluted share, while adjusted net income came in at $23.4 million, or $0.12 per diluted share. The company’s total sales volumes reached 19,786 barrels of oil equivalent per day (BOEPD), marking a 4% increase from the previous quarter and surpassing its guidance. The performance is a clear-cut sign of the company’s ability to exceed production expectations and manage its operations efficiently.

The growth in sales volumes was driven by oil production, which averaged 13,623 barrels per day, a 2% rise from the first quarter. The achievement was 3% above the midpoint of guidance and 2% higher than the high end of expectations.

Ring Energy’s (NYSE:REI) strong production figures have translated into substantial financial benefits. In the first half of 2024, the company generated $37 million in adjusted free cash flow, despite facing lower realized prices for its non-oil production.

This marked a 60% increase in free cash flow compared to the previous year, largely driven by the acquisition of Founders, which closed in August 2023. Furthermore, during the second quarter, the company successfully drilled and completed 11 wells, meeting its guidance and demonstrating its operational capability.

At a stake value of $11.084 million, 11 hedge funds held positions in Ring Energy (NYSE:REI) in Q2. As of June 30, AQR Capital Management is the top shareholder in the company and has a position worth $6.04 million.

7. Mizuho Financial Group, Inc. (NYSE:MFG)

Stock Price as of September 3: $4.23

Number of Hedge Fund Holders: 12

One of the best quality penny stocks, Mizuho Financial Group, Inc. (NYSE:MFG) is a major player in Japan’s financial sector with a wide-ranging offering of services and a strong international presence. Operating through its key subsidiaries, Mizuho Bank, Mizuho Trust & Banking, and Mizuho Securities, the company delivers comprehensive financial solutions that include traditional banking, securities trading, asset management, and trust services.

In Q2, 12 hedge funds had investments in Mizuho Financial (NYSE:MFG), with positions worth $19.74 million. Alkeon Capital Management is the top investor in the company and has a stake worth $9.5 million, as of June 30.

In the first quarter of the fiscal year, the company reported an 18% increase in profit, largely due to the favorable shift away from negative interest rates. The change has improved profit margins on lending activities. It achieved a net profit of 289 billion JPY (1 Japanese Yen = US$ 0.0069 as of September 3), up from 245 billion JPY in the same quarter the previous year.

The positive performance was driven by an increase in the loan and deposit rate margin, which rose to 0.85% from 0.76% year-over-year.

The company has maintained its forecast for a record full-year profit of 750 billion JPY for the 12 months ending in March 2025. The outlook is supported by the bank’s strong financial foundation and ongoing improvements in its lending margins. The company’s substantial asset base, totaling 292 trillion JPY across its subsidiaries, reflects its financial strength and capacity for continued growth.

Mizuho Financial (NYSE:MFG) is also committed to returning value to shareholders, with a forecasted annual cash dividend per share of 115 JPY for the fiscal year 2024. It represents a 10 JPY increase from the previous year and marks the fourth consecutive year of rising dividends. The dividend growth is possible because of the company’s stable earnings and strong financial performance, which provide an attractive return for investors.

6. Companhia Energética de Minas Gerais – CEMIG (NYSE:CIG)

Stock Price as of September 3: $2.04

Number of Hedge Fund Holders: 13

Companhia Energética de Minas Gerais – CEMIG (NYSE:CIG) is a leading player in Brazil’s energy sector with a strong portfolio that spans the generation, transmission, distribution, and commercialization of electricity.

It was established in 1952 and since then, the company has expanded its reach to become one of Brazil’s largest integrated energy companies, with operations in 24 states and the Federal District. It also participates in natural gas distribution and energy efficiency through its subsidiary, Efficientia.

The company operates an extensive energy infrastructure, including 60 hydroelectric plants, 7 wind farms, and 1 photovoltaic plant. Additionally, its transmission network stretches nearly 5,000 kilometers. With stakes in 83 generation projects across 10 states, 44 of which it wholly owns, the company’s broad involvement in energy production signifies its significant role in the sector.

In Q2, Companhia Energética (NYSE:CIG) reported a 7% increase in net revenue, totaling R$9.43 billion (1 BRL = US$ 0.18 as of September 3). The company also achieved a recurring EBITDA of R$1.9 billion, marking a 2% year-over-year increase.

The growth is supported by a strong operating cash flow of R$3.45 billion for the first half of the year, which points to the company’s ability to comfortably manage its debts, fund investments, and distribute dividends. By the end of the period, it had R$2.99 billion in cash and equivalents, which supports its financial stability.

Significant investments in renewable energy are a key aspect of the company’s growth strategy. In the first half of 2024 alone, it invested R$2.45 billion, a 43.1% increase from the previous year. The commencement of operations for photovoltaic solar plants in June 2024, with the Eduardo Soares and Jusante plants approaching full commercial operation, marks a significant expansion into renewable energy sources.

Additionally, Companhia Energética’s (NYSE:CIG) Gasmig subsidiary has started the Centro-Oeste Project, which involves constructing 300 kilometers of pipeline with a budget of R$780 million. For 2024, the company plans to invest R$6.2 billion, with R$2.4 billion already allocated. The company’s investment plan for 2024-2028 includes R$35.6 billion, focusing on modernizing and maintaining the electric distribution system and other regulated investments.

The company’s strong financial performance, substantial investment in renewable energy, and ongoing infrastructure projects highlight its capacity for growth and continued success in Brazil’s energy sector.

Companhia Energética (NYSE:CIG) was held by 13 hedge funds in the second quarter and the stakes amounted to $63.51 million. Polunin Capital is the top shareholder of the company and has a position worth nearly $30 million as of Q2.

5. RLX Technology Inc. (NYSE:RLX)

Stock Price as of September 3: $1.68

Number of Hedge Fund Holders: 14

RLX Technology Inc. (NYSE:RLX) is a China-based company that is a leading player in the e-vapor industry. Through its subsidiaries and a variable interest entity, the company focuses on developing, manufacturing, and selling e-vapor products. Its operations span the entire supply chain, from production to offline distribution as the company aims to provide high-quality, compliant products for adult smokers.

The company targets consumers with varying income levels through its new product lines. In China, the introduction of the mega-sized Daqian series, featuring 6-ml and 10-ml pods at more affordable prices than its flagship Infinity pods, provides value-conscious consumers with cost-effective alternatives. This move helps the company grow stronger in its home market by meeting the rising demand for affordable products while maintaining good quality.

For international markets, RLX (NYSE:RLX) has launched the RELX Pod Pro series, which offers up to 1,000 puffs per pod, nearly double the capacity of standard pods, which delivers a better value for consumers in regions with different economic conditions. The company tailors its product lines to meet the specific needs of different income groups, which broadens the company’s market appeal and puts it in a stronger competitive position across global markets.

RLX (NYSE:RLX) reported its Q2 results on August 16. While the company’s revenue missed the analyst estimates by a slight margin, the revenue showed a nearly 66% increase at $86.3 million. Its EPS of $0.02 was in line with the estimates and was up 100% year-over-year.

Analysts see the company stock in a positive light as all 4 analysts that have covered the stock maintain a Buy-equivalent rating with an average price target of $2.76. It represents over 64% upside to the company’s stock at current levels on September 3.

In the second quarter, 14 hedge funds had stakes worth $60.8 million in RLX (NYSE:RLX). As of June 30, Wildcat Capital Management is the company’s most prominent stakeholder with 18.046 million shares worth $33.2 million. This brings the company to the 5th position on our list of best penny quality penny stocks to buy.

4. Safe Bulkers, Inc. (NYSE:SB)

Stock Price as of September 3: $4.86

Number of Hedge Fund Holders: 15

Safe Bulkers, Inc. (NYSE:SB) is a global company that offers marine dry-bulk transportation services, specializing in the shipment of commodities such as grain, coal, and iron ore across the world. The company has 46 vessels with 4.6 million deadweight tonnage (total weight-carrying capacity).

At its latest earnings call, Loukas Barmparis, President of Safe Bulkers (NYSE:SB) mentioned the company’s competitive edge in the industry. He mentioned that 25% of the global fleet is over 15 years old and increasingly uncompetitive due to environmental regulations.

On the other hand, the company has modernized its fleet, with 10 Phase 3 vessels delivered since 2022 and 22 vessels undergoing environmental upgrades. With 85% of its fleet built in Japan and an average fleet age of 9.9 years, it is well-positioned to remain competitive.

The company is benefiting because fewer new dry bulk ships are being built right now. Since fewer ships will be available, there will be less competition, which should help keep shipping rates high or even increase them in the near future. This could lead to better profits for the company.

In the second quarter, Safe Bulkers (NYSE:SB) reported an EPS of $0.17 and a revenue of $78.5 million, which was up 11.2% year-over-year. Moreover, analysts expect a nearly 38% year-over-year increase in its earnings per share in 2024. The company is trading at a forward price-to-earnings ratio of 5.8x as of September 3, compared to its industry median of 19.13.

In the second quarter, 15 hedge funds held positions in Safe Bulkers (NYSE:SB), at a combined value of $28.133 million. Renaissance Technologies is the company’s largest shareholder with 3.31 million shares worth over $19.267 million. It is the 4th best quality penny stock to buy on our list.

3. Gerdau S.A. (NYSE:GGB)

Stock Price as of September 3: $3.13

Number of Hedge Fund Holders: 15

Gerdau S.A. (NYSE:GGB) is a Brazilian company that is one of the largest producers of long steel in the Americas, with a presence across multiple countries, including Brazil, the U.S., Canada, and Argentina. The company serves various sectors such as civil construction, automotive, agriculture, and industrial manufacturing.

Gerdau (NYSE:GGB) is also a major recycler that transforms millions of metric tons of scrap into steel each year. It operates through mini-mills, integrated mills, and direct reduced iron plants. It has also expanded into specialty steel production, especially for the global automotive industry, and continues to diversify its operations. It is one of the best quality penny stocks to buy.

In its second quarter, Gerdau (NYSE:GGB) reported EPS of $0.08, which outperformed the estimates by $0.01 and revenues of $2.94 billion. In the first half of 2024, the company invested BRL 1.2 billion (1 BRL = US$0.18) in capital expenditures, with a significant portion aimed at growth and competitiveness. Moreover, at its earnings call, management said that it has a strategic plan to reduce costs by BRL 1.5 billion by early 2025. This could improve the company’s operational efficiency and profitability.

Analysts also see significant upside for Gerdau (NYSE:GGB) as it has been covered by 11 analysts with an average price target of $4.50. The average price target represents an upside of nearly 44% from its current levels on September 3.

In the second quarter, 15 hedge funds owned Gerdau (NYSE:GGB) shares worth $131.161 million. Contrarian Capital holds 20.3 million shares of the company, worth $66.9 million, and is the most significant shareholder of the company, as of June 30.

2. Ambev S.A. (NYSE:ABEV)

Stock Price as of September 3: $2.27

Number of Hedge Fund Holders: 18

Ambev S.A. (NYSE:ABEV), a prominent beverage company based in Brazil, plays a key role in the Latin American market and is part of the global brewing giant Anheuser-Busch InBev. With operations spanning 18 countries across the Americas, it offers a broad product range that includes well-known beer brands such as Skol, Brahma, and Budweiser, alongside popular soft drinks like Guaraná Antarctica and Soda Antarctica.

In Q2, 18 hedge funds held stakes in Ambev S.A. (NYSE:ABEV), with positions worth $197.147 million. As of the second quarter, First Eagle Investment Management is the most significant shareholder in the company and has a position worth $635.790 million. It is among our best quality penny stocks to buy.

In the third quarter, Ambev S.A. (NYSE:ABEV) reported a 6.1% increase in revenues compared to the previous year, reaching BRL 20 billion (1 BRL = US$ 0.18 as of September 3). The company also posted an EPS of R$0.15. The revenue growth shows strong performance across its various segments, particularly in Brazil.

The beer segment in Brazil exceeded expectations with a 7% year-over-year revenue increase, driven by a 3% rise in sales volumes. Similarly, the Central America and Caribbean (CAC) division saw a 3% growth in volume, which is a sign of the company’s strong presence in these regions.

The company’s premium and super-premium brands, including Corona, Spaten, and Original, have experienced impressive volume growth in the low teens. The Budweiser family also contributed to high-teens volume growth in the core plus segment. Additionally, core brands like Brahma and Antarctica showed resilience with a modest volume increase in the low single digits. The consistent performance across different product categories shows the company’s ability to cater to diverse consumer preferences.

The company is also making strides in digital innovation. Its BEES Marketplace, a B2B e-commerce platform, has continued to grow, with gross merchandise value increasing by 32% year-over-year. This platform is designed to support small and medium-sized retailers, enhancing their ability to compete in the market.

Meanwhile, Zé Delivery, its beverage delivery service, has expanded its coverage and generated over 16 million orders, marking a 13% increase from the previous quarter.

1. Ferroglobe PLC (NASDAQ:GSM)

Stock Price as of September 3: $4.28

Number of Hedge Fund Holders: 30

Ferroglobe PLC (NASDAQ:GSM), a prominent global manufacturer of silicon metal, specialty alloys, and ferroalloys, is currently positioned for significant growth. The company’s diverse product range includes essential materials like ferrosilicon for steelmaking and manganese alloys for steel deoxidizing and desulfurizing.

The company also produces silica fume, which enhances the strength and durability of high-performance concrete. The company’s reach is extensive and diverse as it serves a broad spectrum of fast-evolving markets such as solar energy, electronics, automotive, consumer products, construction, and energy.

In Q2, it reported a non-GAAP EPS of $0.13, which beat expectations by $0.08. The company achieved revenues of $451.05 million, which surpassed forecasts by $25.5 million. The results are a sign of strong operational efficiency and financial health. The company’s adjusted EBITDA for the quarter reached $58 million. The company’s EBITDA margins increased from 7% in the first quarter to 13% in the second quarter, driven by higher sales volumes, improved pricing, and reduced production costs.

Dr. Marco Levi, Ferroglobe’s (NASDAQ:GSM) CEO, noted that the company performed well across various areas during the quarter. Sales increased by 15%, and adjusted EBITDA more than doubled from the previous quarter. A key achievement was the restart of its French operations in April, which boosted production of silicon metal and manganese-based specialty alloys. This operational revival has contributed to the overall increase in volumes and improved financial outcomes.

The company also made significant progress in its U.S. ferrosilicon trade case, where the Department of Commerce imposed substantial anti-dumping and countervailing duties on Russian ferrosilicon imports. This decision, announced in June, is expected to benefit Ferroglobe’s (NASDAQ:GSM) U.S. ferrosilicon business starting in early 2025 by reducing competition from lower-priced imports.

Additionally, the company is advancing in the EV sector. Its testing of Coreshell nanocoating technology for silicon-rich anodes has shown promising results, which places the company well in a good position to capitalize on the growing demand for high-performance EV batteries. It tops our list of the best quality penny stocks to buy.

In the second quarter, 30 hedge funds held positions in Ferroglobe (NASDAQ:GSM) and their stakes amounted to $164.590 million. As of June 30, Hosking Partners is the most dominant shareholder in the company and has a position worth $48.8 million.

Ave Maria Focused Fund stated the following regarding Ferroglobe PLC (NASDAQ:GSM) in its fourth quarter 2023 investor letter:

“Ferroglobe PLC (NASDAQ:GSM) was added to the portfolio in the fourth quarter. Ferroglobe is a leading manufacturer of silicon metal, which is a critical input for hundreds of industrial and consumer applications. It was formed via a merger of two companies, but the integration initially went poorly, causing a decline in the company’s stock price. New management was brought in to rectify the situation. The new team successfully completed the integration, which lowered the ongoing costs of the operations and eliminated the company’s debt. Going forward, regulations in the United States and Europe should dramatically increase the production of solar panels. Silicon metal is an irreplaceable input for solar panels, and this new demand for silicon metal will make Ferroglobe’s revenue less cyclical. Now that Ferroglobe has a fortress balance sheet, management has room to enact a large share repurchase initiative. At the time of the initial investment, the Fund was able to purchase Ferroglobe for almost half the replacement cost of its assets. The Fund exited positions in Nvidia, Tyler Technologies, and Valvoline, in part, to fund the Ferroglobe purchase and increase the position sizes of some existing holdings.”

While we acknowledge the potential of Ferroglobe PLC (NASDAQ:GSM) to grow, 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 the stocks on our list but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

Read Next: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.

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