On March 11, Kevin Mahn, President and CIO of Hennion & Walsh Asset Management, joined CNBC’s ‘Closing Bell Overtime’ for a discussion on the recent dramatic stock market moves. Mahn compared the current stock market ups and downs to March Madness, but instead of happening on basketball courts, it’s happening in the stock market. He attributed the pullback and increased volatility to investor concerns. These include fears of an economic slowdown, a potential recession, tariffs, overspending on AI, and other uncertainties. Despite these challenges, Mahn expressed optimism about market leadership. He pointed out that sectors like consumer discretionary and IT were performing well year-to-date. He observed value stocks outperforming growth stocks and international markets surpassing US markets, which emphasized the importance of diversification beyond large-cap tech stocks.
Mahn was asked about sentiment among retail investors in light of recent volatility. He acknowledged that after two consecutive years of over 25% returns, many investors were unprepared for this level of market turbulence. While double-digit returns may not be realistic for 2025, Mahn advised investors to remain committed to their long-term financial goals rather than attempting to time the market. He raised a critical question about whether the Fed would intervene if the economic slowdown worsened. Mahn predicted three rate cuts totaling 25 basis points this year but noted that inflation and economic conditions would dictate Fed policy.
Methodology
We used the Finviz stock screener to compile a list of the top penny stocks (share price under $5). We then selected the 10 cheap stocks with a forward P/E ratio under 15 that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.
Note: All data is sourced as of March 11.
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).
10 Cheap Penny Stocks to Buy According to Hedge Funds
10. Cosan (NYSE:CSAN)
Forward P/E Ratio as of March 11: 12.45
Share Price as of March 11: $4.92
Number of Hedge Fund Holders: 14
Cosan (NYSE:CSAN) is a Brazilian conglomerate that operates across diverse sectors. These include fuel distribution, logistics, and infrastructure. Through its various segments like Raízen, Compass, and Rumo, it is involved in everything from ethanol production and natural gas distribution to railway logistics and agricultural property management. It has a global presence spanning multiple continents.
In 2024, the company reported an EBITDA under management of ~30 billion Brazilian Reals. However, this positive EBITDA was offset by a net loss of 900 million Brazilian Reals for the year. This negative earnings result was attributed to the depreciation of the Brazilian Real and the devaluation of the company’s shares. Despite the net loss, the company’s corporate net debt stood at 23.4 billion Brazilian Reals at the end of 2024, with a debt service coverage ratio of 1.1.
Despite the net loss, Cosan (NYSE:CSAN) reported an increase in dividends and interest on capital received, which reached 4.3 billion Brazilian Reals in 2024. Operationally, Rumo achieved record levels in transported volumes and tariffs during the Q4 2024. Rumo is a major Brazilian railway logistics company and a significant revenue driver for Cosan (NYSE:CSAN). The company’s management plans to further improve its capital structure through additional strategic transactions in 2025.
9. Hafnia Ltd. (NYSE:HAFN)
Forward P/E Ratio as of March 11: 5.96
Share Price as of March 11: $4.03
Number of Hedge Fund Holders: 15
Hafnia Ltd. (NYSE:HAFN) is a major player in the oil product tanker industry. It owns and operates a fleet of 200 vessels across various segments and facilitates the global transportation of refined oil products, vegetable oils, and chemicals. It serves a diverse clientele and provides comprehensive shipping services.
The company’s product tanker operations delivered record-breaking results in the first nine months of 2024. Hafnia Ltd. (NYSE:HAFN) earned $1.36 per share, which was an improvement from the previous year’s performance. This surge in profitability was fueled by strong Time Charter Equivalent (TCE) earnings, which reached $1,157.7 million and translated to an average TCE of $36,330 per day. Time Charter Equivalent (TCE) earnings represent the average daily revenue a vessel earns after deducting voyage expenses. It provides a standardized measure of profitability.
For the Q3 2024 alone, the company reported a $0.42 EPS. The company’s fleet, which consists of over 130 vessels, continues to operate efficiently. Hafnia Ltd. (NYSE:HAFN) is also implementing a share buyback program of up to $100 million, which demonstrates its commitment to shareholder value.
8. Fortuna Mining Corp. (NYSE:FSM)
Forward P/E Ratio as of March 11: 6.07
Share Price as of March 11: $4.74
Number of Hedge Fund Holders: 19
Fortuna Mining Corp. (NYSE:FSM) is a precious and base metal mining company with operations across multiple continents. It explores and extracts silver, lead, zinc, and gold from mines in Argentina, Burkina Faso, Côte d’Ivoire, Mexico, Peru, and Senegal. It manages its diverse portfolio through distinct operational segments.
The company’s Seguela gold mine in West Africa was a major driver of its 2024 success. The mine produced 137,781 ounces of gold in its first full year. In Q4 2024 alone, Seguela produced 35,244 ounces, which was a 1% sequential increase. The All-In Sustaining Costs (AISC) were well-managed, at $1,376 per ounce for the quarter and $1,153 per ounce for the year. AISC represents the total expenses associated with producing an ounce of gold, which includes mining, processing, and ongoing capital expenditures.
The company projects gold production to reach 160,000 to 180,000 ounces by 2026. This increase will be accompanied by a further reduction in AISC, which is targeted to be between $1,260 and $1,390 per ounce. To support this growth, Fortuna Mining Corp. (NYSE:FSM) is investing $8.5 million to expand the tailings storage facility, which will ensure capacity until 2029. $51 million is being invested in mineral exploration and new project development, with a focus on high-value targets like Kingfisher and Sandbird Deep at the Seguela mine camp.
7. Clarivate (NYSE:CLVT)
Forward P/E Ratio as of March 11: 6.46
Share Price as of March 11: $4.33
Number of Hedge Fund Holders: 20
Clarivate (NYSE:CLVT) is a global information services provider that delivers critical data, analytics, and solutions across academia, government, life sciences, healthcare, and intellectual property. It operates through distinct segments and empowers organizations worldwide with resources that range from scientific research platforms and library management tools to patent and trademark services.
The company is shifting its Academic and Government (AMG) segment to a subscription-only model, with a focus on ProQuest ebooks and digital collections. This move will increase recurring revenue and improve predictability. By the end of 2025, one-time transactional sales of ebooks, digital collections, and print books will be phased out. This transition will increase the AMG portfolio’s recurring revenue to 90%. Through this step, the company expects to reduce volatile transactional revenue by ~$200 million. The company-wide recurring revenue mix is expected to rise from 80% to 87%.
Clarivate (NYSE:CLVT) is implementing its Value Creation Plan (VCP) to drive growth. This includes improving sales execution and accelerating product innovation through AI. The company is also streamlining its portfolio and recently completed the divestiture of ScholarOne and Valleypad.
Earlier last year, Cove Street Capital Small Cap Value Fund found Clarivate (NYSE:CLVT) as a strong investment opportunity because of its solid business model. Here’s what it said in its Q2 2024 investor letter:
“We also added a position in Clarivate Plc (NYSE:CLVT), a data services provider that operates across academic research, intellectual property, and life sciences. We came to the investment from cross-work in another holding, Research Solutions (ticker: RSSS). Ultimately this company sucks in data from participants in the industry, aggregates it, and provides value added services and tools back to those industry participants. The power is in providing customers access to the aggregate. This was a private equity roll-up of a bunch of different data assets that paid too little attention to product innovation, leading to a period of stagnating growth and repeatedly missing guidance. The business of selling many tools and services on a pile of fixed cost assets (data) remains tremendous as can be seen by Clarivate’s mid-to-high 30% EBITDA margins and strong returns on invested capital. With new management and board members in place and 18 months of an “investment cycle” under their belt, we view the risk/reward of CLVT to be favorable at these levels, with a strong upside case if they can reinvigorate growth to their target levels.”
6. Hain Celestial Group Inc. (NASDAQ:HAIN)
Forward P/E Ratio as of March 11: 7.74
Share Price as of March 11: $4.48
Number of Hedge Fund Holders: 22
Hain Celestial Group Inc. (NASDAQ:HAIN) manufactures and markets organic and natural products. It offers a range of goods from infant formula and plant-based beverages to personal care items and teas. It caters to consumer needs through various distribution channels, which include supermarkets, e-commerce, and specialty stores, under well-known brands like Earth’s Best and Celestial Seasonings.
The company’s Baby and Kids segment is supported by its Earth’s Best brand and is experiencing a strong resurgence with a 29% year-over-year increase in formula consumption during the FQ2 2025. Earth’s Best snacks and cereals saw double-digit consumption growth. 83% of Earth’s Best dairy formula shoppers remain brand loyal and seek their preferred formula at other retailers if it’s unavailable at one. Ella’s Kitchen, which is the UK’s leading baby food brand, also contributed to this positive performance. Distribution grew by low single digits, while sales in partnered stores increased by high single digits.
The company anticipates continued growth in the Baby and Kids segment driven by additional distribution gains, increased e-commerce marketing, and innovative product launches, which include a self-feeding platform. Hain Celestial Group Inc. (NASDAQ:HAIN) is focused on regaining its leadership in the organic infant formula market, using Earth’s Best’s established brand recognition.
Choice Equities Capital Management has been optimistic about the company due to its improved financials and strong growth potential. It stated the following regarding Hain Celestial Group Inc. (NASDAQ:HAIN) in its Q3 2024 investor letter:
“The Hain Celestial Group, Inc. (NASDAQ:HAIN) – Hain Celestial Group is a recent addition to the portfolio. Since taking the helm in January 2023, CEO Wendy Davidson has been instrumental in driving the company’s transformation. Davidson has simplified the business by divesting non-core brands, focusing on higher-margin, core products, and implementing effective cost-saving measures. These initiatives have already led to noticeable improvements in operational efficiency, lower working capital needs, margin expansion, and a more consistent and desirable brand portfolio, positioning the company for attractive sustainable growth. As a result of these efforts, which have positioned the company well for several dollars of free cash flow per share in coming years, Hain Celestial Group now has lower leverage than most of its peers and stronger top and bottom-line growth prospects, yet the company trades at a highly discounted multiple on a forward-looking view. A more detailed internal memo has been attached for existing investors.”
5. ACCO Brands Corp. (NYSE:ACCO)
Forward P/E Ratio as of March 11: 4.8
Share Price as of March 11: $4.82
Number of Hedge Fund Holders: 27
ACCO Brands Corp. (NYSE:ACCO) designs, manufactures, and markets an array of consumer, school, technology, and office products. It operates through its Americas and International segments and offers everything from note-taking and filing solutions to gaming accessories and workspace machines. These are distributed under well-known brands like Five Star, Kensington, and Mead.
The company’s Technology Accessories segment stood out as a growth driver in 2024. It was fueled by new product introductions and the international expansion of its gaming accessories business. This growth helped mitigate overall sales declines. In Q4 2024, overall sales declined by 8% year-over-year, but the Technology Accessories segment grew. The company plans to innovate and develop new products within this category to offset potential declines in other categories. For instance, office products are experiencing headwinds due to changing work habits.
ACCO Brands Corp. (NYSE:ACCO) reported full-year free cash flow of $132 million, which was in line with the company’s outlook. It’s now implementing a multi-year cost reduction program, which targets $100 million in savings by the end of 2026. For 2025, the company expects comparable sales to decline 1% to 5%, and adjusted EPS to be in the range of $1.00 to $1.05 per share.
4. Goodrx Holdings Inc. (NASDAQ:GDRX)
Forward P/E Ratio as of March 11: 11.47
Share Price as of March 11: $4.49
Number of Hedge Fund Holders: 27
Goodrx Holdings Inc. (NASDAQ:GDRX) provides a digital platform that empowers consumers to compare prescription drug prices and access savings in the US. Beyond price comparison, it offers subscription services, pharma manufacturer solutions, and telehealth services through GoodRx Care. It serves both individual consumers and pharmacy benefit managers.
The company’s Manufacturer Solutions segment surged by 26% year-over-year in 2024 and generated $107.2 million. This is attributed to the expansion of integrated access solutions, brand point-of-sale discount programs, and the launch of e-commerce capabilities at the company. The number of partnered brands increased from 150 in 2023 to 200+ in 2024. The brand point-of-sale discount program saw the number of signed brands nearly triple from the beginning of 2024 to 78 by year-end.
Goodrx Holdings Inc. (NASDAQ:GDRX) is using its platform to offer integrated access solutions. This allows pharmaceutical manufacturers to connect with a large pool of qualified consumers for co-pay and patient support programs. The launch of e-commerce capabilities, starting with Opill, has opened new avenues for direct-to-patient engagement. The shift from media-based partnerships to integrated platform partnerships, exemplified by the Pfizer collaboration, is also a focus for the company.
3. American Axle & Manufacturing Holdings Inc. (NYSE:AXL)
Forward P/E Ratio as of March 11: 10.25
Share Price as of March 11: $4.59
Number of Hedge Fund Holders: 28
American Axle & Manufacturing Holdings Inc. (NYSE:AXL) designs and manufactures driveline and metal forming technologies for a range of vehicles. Operating through its Driveline and Metal Forming segments, it provides essential components for electric, hybrid, and internal combustion vehicles. It serves markets across North America, Asia, Europe, and South America.
The company’s driveline business focuses on the components that transfer power from a vehicle’s engine or motor to its wheels and enables movement. This business is securing long-term stability through strategic contract wins, particularly in its next-generation full-size truck axles and power transfer units (PTUs). Recently, American Axle & Manufacturing Holdings Inc. (NYSE:AXL) announced a contract extension to supply PTUs for Ford’s Maverick and Bronco Sport, which builds upon previous contracts and totals over $10 billion in lifetime revenue for next-generation truck axles.
The company is set to combine with Dowlais and create a leading global driveline and metal-forming supplier. Dowlais is a global engineering group that specializes in automotive driveline technologies and powder metallurgy. This combination is expected to generate ~$12 billion in combined revenue and $300 million in run-rate synergies. The deal is expected to close in the Q4 2025.
2. Commscope Holding Company Inc. (NASDAQ:COMM)
Forward P/E Ratio as of March 11: 3.72
Share Price as of March 11: $4.66
Number of Hedge Fund Holders: 32
Commscope Holding Company Inc. (NASDAQ:COMM) provides infrastructure solutions for communications, data center, and entertainment networks. It operates through three segments: CCS, NICS, and ANS. It delivers a range of products and services, from fiber optic and copper connectivity to indoor cellular solutions and access network equipment.
The expanding data center market directly impacts this company’s Connectivity and Cable Solutions (CCS) segment. In 2024, the CCS segment’s full-year revenue increased by 4.5% year-over-year. Specifically, the enterprise fiber business, which focuses on data center products, generated $623 million in revenue. This was a 73% year-over-year increase.
Q4 2024 saw even more substantial growth, with CCS revenue up 36% as compared to the year-ago period. The enterprise fiber business alone generated $202 million in revenue during this quarter, a 96% increase from the same period in 2023. Commscope Holding Company Inc. (NASDAQ:COMM) is actively investing in expanding its production capacity to meet the growing demand from the data center market, which is projected to grow by over 30% annually. The company is currently in the midst of a capacity expansion that is expected to add $300 million in revenue.
1. Bumble Inc. (NASDAQ:BMBL)
Forward P/E Ratio as of March 11: 8.15
Share Price as of March 11: $4.92
Number of Hedge Fund Holders: 33
Bumble Inc. (NASDAQ:BMBL) provides online dating and social networking applications. It’s known for its women-centric approach in the Bumble app. It also operates Badoo, Bumble BFF, Bumble Bizz, Bumble for Friends, and Geneva, which are a range of platforms for dating, friendship, and community building through subscription and in-app purchase models.
In 2024, Bumble App generated $866 million in revenue, which was a 3% increase from the previous year. The app’s paying user base grew by 290,000 during this period. In Q4 2024, Bumble App revenue was $212 million, which was a 4% decrease year-over-year. However, paying users increased by 5% to 2.8 million. The company is heavily investing in Bumble App’s future through product innovation and ecosystem improvements. Key features being introduced include AI-driven matching, enhanced safety tools like ID Verification, and new engagement features such as Instant Match.
While we acknowledge the growth potential of Bumble Inc. (NASDAQ:BMBL), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BMBL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
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