In this article, we will look at the 10 Hot Penny Stocks to Buy Now.
How Did Small Caps Do In Q4 2024?
On January 2, Royce Investment Partners published their analysis regarding the performance of the small caps during the fourth quarter of 2024. The report highlighted that small-cap stocks, represented by the Russell 2000 Index, achieved a modest gain of 0.3%, marking the second consecutive positive quarter. However, this performance lagged behind large-cap stocks, as the Russell 1000 Index rose by 2.7% in the same period. Francis Gannon, Co-Chief Investment Officer, and Managing Director, pointed out a unique “bowl-shaped” return pattern among US equities in the last quarter of 2024, with the Russell Microcap Index increasing by 5.9% and the Russell Top 50 Index by 5.5%.
Gannon highlighted that while December’s results were disappointing for many stocks, particularly small-cap and micro-cap indexes, the overall year was strong for small-cap performance, with an annual increase of 11.5%. However, on the other hand, this also marked the eighth consecutive year where small-caps underperformed relative to large-caps. Historically speaking the data reveals that the Russell 2000 has only outperformed the Russell 1000 in four of the last twenty years, with a significant underperformance streak noted since 2016. Gannon acknowledged that this is a long period of wait to see small cap leadership but he sees promising signs for the leadership to be just around the corner.
While explaining his bullish sentiment Gannon discussed the dynamics of volatility in the US equity markets. He contrasted large-cap and small-cap stocks’ performance in 2024 and noted that large-cap stocks experienced relatively low volatility throughout the year, as indicated by the CBOE Volatility Index. Apart from a brief spike in early August, large-cap stocks maintained a notably stable performance, mirroring trends observed in 2023. However, on the other hand, small-cap stocks exhibited a slightly different volatility profile. Gannon highlights that historically, about 42% of trading days in the Russell 2000 see price movements of 1% or more. In 2024, this figure was marginally lower at 41%, indicating that small-caps remained somewhat volatile but not significantly. He emphasizes that this trend of volatility is expected to change, predicting a return to more typical levels of volatility across stocks in 2025. He encouraged investors to view increased volatility not merely as a source of fear but as an opportunity for long-term investment strategies.
With that let’s take a look at the 10 hot penny stocks to buy now.
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Our Methodology
To create the list of 10 hot penny stocks to buy now, we used the Finviz stock screener. Using the screener we first aggregated a list of penny stocks (price between $1-$5) and then sorted it in ascending order of their 6-month performance. Next, we ranked these stocks based on the number of hedge fund holders, in ascending order, sourced from Insider Monkey’s Q4 2024 database. Please note that the data was collected on February 20, 2025.
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 363.5% since May 2014, beating its benchmark by 208 percentage points (see more details here).
10 Hot Penny Stocks to Buy Now
10. reAlpha Tech Corp (NASDAQ:AIRE)
Price: $1.80
6-Months Performance: 46.34%
Number of Hedge Fund Holders: 1
reAlpha Tech Corp (NASDAQ:AIRE) uses artificial intelligence to make the process of buying a home easier and more affordable. It offers a platform where homebuyers can purchase properties without paying traditional commission fees, which can be quite high. The company has also developed various AI tools that help users throughout the home buying process such as Claire, an AI real estate agent available 24/7 to answer questions and guide users through buying a home, and Market Insights, which provides detailed property data and market insights, helping buyers make informed decisions.
reAlpha Tech Corp (NASDAQ:AIRE) has been making significant developments. During the fiscal third quarter of 2024, the company announced completing its fifth acquisition. It acquired Be My Neighbor, a mortgage brokerage licensed in 27 states of the US. Moreover, the company also launched its Mobile App called reAlpha Super App. As a result of these developments, the company grew its revenue by a staggering 475% year-over-year and exceeded its previous guidance by 274%. Looking ahead, the company expects to grow revenue by 130% to 190% in the next quarter. It is one of the hot penny stocks to buy now.
9. Jayud Global Logistics Limited (NASDAQ:JYD)
Price: $4.20
6-Months Performance: 483.33%
Number of Hedge Fund Holders: 3
Jayud Global Logistics Limited (NASDAQ:JYD) specializes in providing logistics and supply chain solutions, primarily focusing on freight forwarding and international trade. The company offers various services including air frights, sea frights, land transportation, and warehousing.
The company is expanding its operations. In June 2024, Jayud Global Logistics Limited (NASDAQ:JYD) partnered with Lazbao Group to expand into the Southeast Asian e-commerce market. The agreement aimed to establish chartered air services from the company across Lazbao’s service areas in Southeast Asia. Later, in October, the company further expanded its operations in the United States by acquiring stakes in two logistics facilities in California and a licensed customs brokerage firm in Georgia. These acquisitions are part of Jayud Global Logistics Limited’s (NASDAQ:JYD) efforts to increase its operational presence in the United States and improve its logistics services. As a result of these strategic expansions, the stock has gained more than 480% over the past 6 months, making it one of the hot penny stocks to buy now.
8. Rapid Micro Biosystems, Inc. (NASDAQ:RPID)
Price: $3.64
6-Months Performance: 343.29%
Number of Hedge Fund Holders: 3
Rapid Micro Biosystems, Inc. (NASDAQ:RPID) is a technology company focused on improving manufacturing and quality control processes in the healthcare sector. It does so by providing automation solutions that replace outdated manual testing methods used to check for microbial contamination in healthcare products. Its main product is the Growth Direct system, which automates the testing process for microbial quality control. It allows manufacturers to conduct tests more quickly and accurately right on the production floor, rather than in a separate lab.
On February 12, KeyBanc initiated coverage on the stock with an Overweight rating and a price target of $8. The firm highlighted the company’s Microbial Growth Direct System as a transformative technology in biological manufacturing quality control, noting that it significantly enhances accuracy and efficiency. This system provides digital results in just three to five days, compared to the five to fourteen days required by traditional manual methods.
During the fiscal third quarter of 2023, Rapid Micro Biosystems, Inc. (NASDAQ:RPID) generated $7.6 million in revenue, up 24% year-over-year. This was notable as it marked the eighth consecutive quarter with revenue exceeding management’s guidance. Moreover, the company placed seven Growth Direct systems across North America, Europe, and Asia Pacific, representing the strongest placement quarter since Q3 2021. It is one of the hot penny stocks to buy now.
White Brook Capital Partners stated the following regarding Rapid Micro Biosystems, Inc. (NASDAQ:RPID) in its Q4 2024 investor letter:
“Rapid Micro Biosystems, Inc. (NASDAQ:RPID) was entered in early 2025. Given its small size and the focus on middle capitalization stocks in the portfolio, the Company will be a very small position in the Fund. In early January the Company preannounced fourth quarter 2024 results and announced a collaboration with a large software partner that should help the Company’s sales efforts. The stock is up over 25% this year.”
7. SEALSQ Corp (NASDAQ:LAES)
Price: $3.38
6-Months Performance: 503.57%
Number of Hedge Fund Holders: 4
SEALSQ Corp (NASDAQ:LAES) is a Swiss company that operates in the semiconductor industry. It focuses on Tamper-Resistant Semiconductors, Post-Quantum Technology, and Secure Microcontrollers all of which are essential products for consumer electronics, aerospace and military applications, telecommunication, and more. On February 5, Matthew Galinko analyst at Maxim maintained a Buy rating on the stock with a price target of $6.
SEALSQ Corp (NASDAQ:LAES) has announced a significant integration of WISeAI’s decentralized model into its quantum computing platform. This move aims to enhance the security and transparency of artificial intelligence (AI) systems by leveraging quantum technology. Moreover, according to the company’s unaudited fiscal year 2024 results, its revenue was $11 million, which was less than the $30 million reported in FY23. Management attributed this decline to the transition towards post-quantum semiconductor technologies, with customers shifting from traditional microcontrollers to quantum-resistant solutions and delaying inventory build-up until the new chip release.
SEALSQ Corp (NASDAQ:LAES) believes its current revenue is comparable to its quantum-focused peers. To speed up the development it has also increased its R&D spending by $1.4 million year-over-year, and invested over $5M in 2024. It is one of the hot penny stocks to buy now.
6. Neuronetics, Inc. (NASDAQ:STIM)
Price: $4.70
6-Months Performance: 360.29%
Number of Hedge Fund Holders: 5
Neuronetics, Inc. (NASDAQ:STIM) is a medical technology company that focuses on creating non-invasive treatments for people with mental health disorders, particularly depression. Its main product is the NeuroStar Advanced Therapy System, which uses a technique called transcranial magnetic stimulation. It primarily markets its NeuroStar system to psychiatrists but also reaches out to primary care physicians and pain management specialists.
On January 14, William Plovanic from Canaccord Genuity stated his bullish sentiment about the stock by noting that the preliminary fourth-quarter revenue significantly exceeded his and the market’s expectations, indicating robust growth. Moreover, he also likes the 2025 guidance which suggests a substantial increase in revenue, further supporting his positive outlook. As per Neuronetics, Inc.’s (NASDAQ:STIM) preliminary fourth quarter 2024 results the quarterly revenue was $22.1 million, up from $18.5 million in Q3 2024.
Looking ahead, management expects 12% to 19% year-over-year revenue growth in 2025, based on combined performance after the strategic acquisition of Greenbrook, which was completed in December 2024. It is one of the hot penny stocks to buy now.
5. KULR Technology Group, Inc. (NYSE:KULR)
Price: $2.02
6-Months Performance: 815.91%
Number of Hedge Fund Holders: 6
KULR Technology Group, Inc. (NYSE:KULR) focuses on improving battery safety and efficiency through advanced thermal management technologies. Its technology is used in powering high-consumption industries such as aerospace, defense, and commercial usage. Its products include Thermal Runaway Shields, which protect batteries from overheating, and Automated Battery Testing Systems that ensure the quality and safety of battery cells.
KULR Technology Group, Inc. (NYSE:KULR) is strategically expanding into the AI infrastructure market by focusing on cooling solutions and energy management. It has partnered with EDOM Technology, an NVIDIA Channel Partner, to distribute its KULR Xero Vibe and KULR ONE product lines in Taiwan’s AI supply chain market. This collaboration aims to provide cooling solutions for both server and edge computing devices within the AI ecosystem. Moreover, the company has also secured licensing partnerships, including one with a Japanese corporation, to utilize its KXV technology for data center cooling and HVAC systems.
During the fiscal third quarter of 2024, KULR Technology Group, Inc. (NYSE:KULR) achieved record revenue of approximately $3.19 million. The revenue was driven by an 83% growth in paying customers and a 143% increase in Engineering service revenue. It is one of the hot penny stocks to buy now.
4. Microvast Holdings, Inc. (NASDAQ:MVST)
Price: $2.16
6-Months Performance: 620.00%
Number of Hedge Fund Holders: 12
Microvast Holdings, Inc. (NASDAQ:MVST) is a company that specializes in advanced battery technology. It produces batteries primarily for electric vehicles, such as buses and trucks, as well as for large energy storage systems that help manage electricity supply. The company operates in multiple regions around the world, including Europe, North America, and Asia-Pacific, providing its products to various markets.
Microvast Holdings, Inc. (NASDAQ:MVST) continues to innovate and expand its product offerings, including the introduction of new technologies like silicon-enhanced cells and overhauled lithium iron phosphate energy storage systems. They are also making progress on all-solid-state batteries. During the fiscal third quarter of 2024, the company reported a net income of $13.2 million, a notable turnaround from a loss of $26.2 million in the same quarter the previous year. Moreover, the revenue reached $101.4 million, reflecting a 27% increase year-over-year, driven by strong growth of 212% in the EMEA region. It is one of the hot penny stocks to buy now.
3. Vuzix Corporation (NASDAQ:VUZI)
Price: $3.78
6-Months Performance: 329.55%
Number of Hedge Fund Holders: 13
Vuzix Corporation (NASDAQ:VUZI) designs and makes smart glasses and augmented reality devices. It specializes in wearable technology, particularly smart glasses that allow users to see digital information overlaid on the real world.
The company recently signed a distribution agreement with Evantek Pte Ltd, a system integrator based in Singapore. This partnership is aimed at expanding Vuzix Corporation’s (NASDAQ:VUZI) presence in the Asia Pacific market. It has received and shipped an initial stocking order for its M400 smart glasses to Evantek, marking the start of their collaboration. In addition, during the fiscal third quarter of 2024, the company announced securing a $20 million investment from Quanta Computer, with the first tranche of $10 million already delivered. This funding is intended to support the development and scaling of next-generation AI smart glasses, enhancing Vuzix’s capabilities in the original equipment manufacturer market. It is one of the hot penny stocks to buy now.
2. Sagimet Biosciences Inc. (NASDAQ:SGMT)
Price: $4.10
6-Months Performance: 35.31%
Number of Hedge Fund Holders: 18
Sagimet Biosciences Inc. (NASDAQ:SGMT) is a clinical-stage biopharmaceutical company that creates drugs called fatty acid synthase inhibitors. These drugs aim to treat diseases caused by problems in metabolic pathways, especially those resulting from the overproduction of the fatty acid, palmitate. Their main drug in development is denifanstat, a pill taken once a day that selectively inhibits FASN. It is being developed to treat metabolic dysfunction-associated steatohepatitis.
The company reported advancements during its fiscal third quarter results of 2024. FDA granted Breakthrough Therapy designation to denifanstat for treating non-cirrhotic MASH with moderate to advanced liver fibrosis. This designation was supported by positive data from the Phase 2b FASCINATE-2 trial. Moreover, Sagimet Biosciences Inc. (NASDAQ:SGMT) successfully completed the end of Phase 2 interactions with the FDA for denifanstat’s development in MASH26. This supports the advancement of denifanstat into Phase 3 development.
The company is yet to generate revenues however, as of September 30, 2024, it had approximately $170 million in cash, cash equivalents, and marketable securities, which is expected to support operations through 2025. It is one of the hot penny stocks to buy now as the stock has risen 35.31% over the past 6 months.
1. Butterfly Network, Inc. (NYSE:BFLY)
Price: $4.53
6-Months Performance: 391.85%
Number of Hedge Fund Holders: 26
Butterfly Network, Inc. (NYSE:BFLY) is a pioneering digital health company focused on revolutionizing medical imaging through its innovative, portable ultrasound technology. Its core offering is its Ultrasound-on-Chip technology, which powers its handheld ultrasound devices, including the second-generation Butterfly iQ+ and the third-generation Butterfly iQ3. These devices enable whole-body imaging with a single probe, making ultrasound more accessible and affordable compared to traditional systems.
On January 21, Oppenheimer raised the price target on the firm from $3.5 to $5, while keeping the Overweight rating on the stock. The firm noted that Butterfly Network, Inc. (NYSE:BFLY) is transitioning from merely selling ultrasound devices to becoming an outcomes-based disease-management service provider. This hybrid approach could create substantial revenue opportunities and allow for cross-fertilization across various healthcare settings.
The preliminary Q4 2024 results show that the revenue has grown by around 35% year-over-year. This momentum is anticipated to sustain as the company expands its product offerings and transforms its business model into a service-oriented approach. It is the best hot penny stock to buy now.
While we acknowledge the potential of Butterfly Network, Inc. (NYSE:BFLY) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BFLY 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 Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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