In this article, we will take a detailed look at 11 Best Fundamentally Strong Penny Stocks to Buy Now.
Fundamentally strong penny stocks can represent highly attractive investment opportunities, primarily because they tend to be underfollowed companies operating outside the radar of most institutional investors and prominent sell-side analysts. Due to limited coverage, these stocks often remain hidden gems with significant untapped potential, making them ideal candidates for investors seeking outsized returns through diligent research and stock picking. Unlike speculative penny stocks, those supported by solid financial fundamentals – such as solid revenue growth, positive profitability, manageable debt levels, and robust performance even during economic slowdowns – indicate higher quality and reduced downside risk. Research consistently suggests that investing in undervalued, fundamentally strong small-cap or micro-cap (which are usually penny stocks) companies can generate superior long-term performance, largely because the market eventually recognizes and appropriately values their underlying quality.
READ ALSO: 12 Best Fundamental Stocks to Buy Now
While fundamentally strong penny stocks can offer compelling upside, exposure to them should be carefully timed, as their performance tends to be cyclical and highly sensitive to broader market sentiment. Historically, penny stocks have outperformed during periods of economic recovery, early bull markets, and risk-on environments. In contrast, during times of heightened volatility, tightening monetary policy, or flight-to-safety phases, these stocks often underperform due to their perceived risk and lower liquidity. That’s exactly what has been happening in the last 2 months since the inauguration of the new US administration – the small cap sector (as proxied by ETFs) has reached a new 5-year low on a relative basis vs. the broad market in March 2025 as the Trump 2.0 tariff turmoil has caused significant declines in valuations. Even the Federal Reserve Chair Jerome Powell recognizes the unstable outlook as he used the word “uncertainty” 16 times in his press conference last week.
As the reputable Yardeni Research boutique has put it,
“Markets continue to suggest that economic growth outside of the US is increasingly likely to improve while downside risks to US growth are rising.”
As a result, US stock valuation multiples are falling closer to their international counterparts. We believe this evolution has created opportunities for the most courageous investors willing to take a contrarian stance – the stock valuations suggest weakness, all while economic indicators reveal that the backbone of the US economy is still strong. For reference, the labor market remains strong, with no meaningful spike in jobless claims, which reinforces our belief that consumers remain strong. Likewise, business activity (as proxied by PMI) remained elevated in March, and employment surged. With a healthy consumer and industrial sector, the odds are that the upcoming months will not bring any meaningful economic slowdown, which is now becoming increasingly anticipated by analysts.
With that being said, the key takeaway for readers is that small caps, and particularly penny stocks, could become favored again, as the new batch of economic indicators suggests a strong economy going forward. Moreover, the recent 10% correction in the US stock market valuations offers more affordable opportunities to seek entry points. In this context, we believe that fundamentally strong penny stocks should be preferred by investors, as their higher quality and resilience raise the odds that they will deliver a satisfactory performance and outperform the broad market.
A closeup of investor hands holding a small-cap investment security.
Our Methodology
To find fundamentally strong penny stocks we used Finviz to filter for stocks with a stock price below $5.00, with at least 10% revenue growth in the last 3 years. Then we manually selected companies with stable businesses, established product lines, and a demonstrated history of performing well even during economic slowdowns. Finally, we compare the list with our Q4 2024 proprietary database of hedge funds’ ownership and include in the article the top 11 stocks with the largest number of hedge funds that own the stock.
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).
11. Ring Energy, Inc. (NYSEAMERICAN:REI)
Number of Hedge Fund Holders: 11
Ring Energy, Inc. (NYSEAMERICAN:REI) is an independent oil and gas exploration and production company focused on the development of conventional and unconventional reserves in the Permian Basin of Texas and New Mexico. The company primarily targets low-cost, high-margin oil production from mature vertical wells and horizontal drilling in legacy fields, such as the Central Basin Platform and the Northwest Shelf. REI’s operations are centered on maximizing recovery and extending the life of proven assets through enhanced recovery techniques and disciplined capital deployment. Its revenue is predominantly derived from crude oil, with natural gas and NGLs as secondary products.
Ring Energy, Inc. (NYSEAMERICAN:REI) delivered a strong performance in Q4 2024, with total sales growing 8% over 2023 to reach a record 19,648 barrels of oil equivalent per day, while oil sales grew 6% to 13,283 barrels of oil per day. The company reduced YoY all-in cash operating costs on a per BOE basis by 2% and improved drilling efficiency by completing 13 more wells in 2024 than the prior year for slightly less capital. For 2024, REI spent $151.9 million on drilling and completing 21 horizontal wells and 22 vertical wells, along with various infrastructure upgrades. The company successfully reduced its debt by $40 million in 2024 and $70 million since the Founders’ acquisition in August 2023, exiting the year with $385 million in debt and approximately $217 million in liquidity.
Ring Energy, Inc. (NYSEAMERICAN:REI) grew proved reserves by 4.4 million barrels of oil equivalent to 134.2 million barrels, with a PV10 value of approximately $1.5 billion at year-end 2024. Looking ahead to 2025, management anticipates average annual sales of 21,000 barrels of oil equivalent per day and 13,900 barrels of oil per day, representing 7% and 5% increases respectively, with a capital spending midpoint of $154 million. The company’s strategy remains focused on maximizing free cash flow generation, maintaining disciplined capital spending, and allocating cash flow to debt reduction. With 11 hedge funds owning the stock, REI is one of the best fundamental stocks to buy now.
10. Paysign, Inc. (NASDAQ:PAYS)
Number of Hedge Fund Holders: 12
Paysign, Inc. (NASDAQ:PAYS) is a fintech company that provides payment solutions, card programs, and digital banking services. Its offerings include prepaid debit cards, payment processing, and integrated software platforms tailored for specific markets such as pharmaceutical co-pay assistance, clinical trials, donor compensation, and corporate incentives. PAYS’ platform enables clients to manage and distribute funds efficiently while offering end users access to card-based and mobile financial services. The company generates revenue through transaction fees, program management, and interchange income. PAYS ranked fourth on our recent list of 10 Oversold Software Stocks to Buy According to Analysts.
Paysign, Inc. (NASDAQ:PAYS) demonstrated strong financial performance in the latest reported Q3 2024, with total revenues reaching $15.3 million, representing a 23% increase compared to the same period in 2023 and a 6.5% increase from the prior quarter. The company’s adjusted EBITDA rose 20.6% to $2.8 million, with gross margins improving significantly to 55.5%, up 440 basis points from the previous year. The patient affordability business emerged as a major growth driver, with revenue growing 219% YoY to $3.3 million, and claims processed increasing by 430% compared to the same period last year. The company finished the quarter with 66 patient affordability programs and expects to onboard several programs from both new and existing clients, including a new cornerstone account from one of the world’s largest pharmaceutical companies.
Paysign, Inc. (NASDAQ:PAYS) maintains a strong financial position with $10.3 million in unrestricted cash and zero debt, despite using $360,000 for share repurchases during the quarter. Looking forward, management expects total revenues for the year to be between $56.5 million to $58.5 million, reflecting YoY growth of 20% to 24%, with full-year gross profit margins expected between 54% and 55%. With 12 hedge funds owning the stock, PAYS is one of the best fundamental stocks to buy now.
9. FutureFuel Corp. (NYSE:FF)
Number of Hedge Fund Holders: 14
FutureFuel Corp. (NYSE:FF) is a US-based manufacturer of diversified chemical products and biofuels. The company operates through two segments: Chemicals and Biofuels. The Chemicals segment produces custom and performance chemicals used in various applications such as agrochemicals, detergents, and polymers, serving both contract and proprietary customers. The Biofuels segment primarily focuses on the production and sale of biodiesel and related co-products, utilizing feedstocks such as vegetable oils and animal fats. FF’s operations are vertically integrated, with manufacturing facilities supporting both segments.
FutureFuel Corp. (NYSE:FF) experienced significant financial challenges in Q3 2024, reporting a net loss of $1.2 million or $0.03 per diluted share, compared to a net income of $2.8 million in the same period of 2023. The company’s revenues declined substantially by 56% to $51.1 million compared to $116.8 million in the previous year. This decline was primarily attributed to lower sales volumes in the biofuel segment, amounting to $41,015, largely due to production issues and equipment supplier delays that affected biodiesel inventory building. The chemical segment faced a market-driven slowdown with increased margin pressure due to sluggish demand in end-use markets, while the biodiesel segment experienced margin and RIN pricing contraction.
Despite these challenges, FutureFuel Corp. (NYSE:FF) maintained a strong cash position with $133,398 in cash and cash equivalents as of September 30, 2024, though this was lower than the $219,444 reported at the end of 2023. Looking forward, the company anticipates potential improvement once there is more clarity around the IRA 45Z or Clean Fuel Production Credit. Notably, within the chemical segment, there are encouraging signs with robust activities continuing with key customers on future business development programs as the company invests to support future growth. With 14 hedge funds owning the stock, FF is one of the best fundamental stocks to buy now.
8. Bit Digital, Inc. (NASDAQ:BTBT)
Number of Hedge Fund Holders: 14
Bit Digital, Inc. (NASDAQ:BTBT) is a digital asset company primarily engaged in the mining of bitcoin and other cryptocurrencies. The company operates a fleet of specialized computing equipment, known as miners, hosted by third-party data centers in North America. BTBT focuses on environmentally conscious mining practices, incorporating sustainable energy sources such as hydroelectric, solar, and wind power into its operations. In addition to mining, the company is expanding into areas like digital asset staking and Web3 infrastructure.
The year 2024 was transformational for Bit Digital, Inc. (NASDAQ:BTBT), with revenues growing exponentially by 141% and adjusted EBITDA reaching $73 million. The company’s HPC business experienced significant growth, evolving from one customer at the start of 2024 to over 20 customers by early January 2025, contributing over 40% of full-year revenue and more than half of Q4 revenue. The acquisition of Enovum marked a strategic advancement, vertically integrating data center operations and bringing in an experienced team and strong customer base. The company launched WhiteFiber, their new HPC platform integrating GPU cloud services and data center operations, with cloud services becoming their largest revenue generator by the second half of 2024, producing $13 million in Q4 revenue.
Bit Digital, Inc. (NASDAQ:BTBT)’s development pipeline has expanded significantly, now totaling 510 megawatts including 156 megawatts under exclusive LOI, with sites in both Canada and the US. While maintaining Bitcoin mining operations, the company is prioritizing investments in HPC, with mining accounting for 54% of revenue in 2024, down from 98% in 2023. The company is shifting away from equity financing through ATM offerings at current stock levels, focusing instead on securing non-dilutive financing options, particularly for its data center and cloud operations. With 14 hedge funds owning the stock, BTBT is one of the best fundamental stocks to buy now.
7. VAALCO Energy, Inc. (NYSE:EGY)
Number of Hedge Fund Holders: 16
VAALCO Energy, Inc. (NYSE:EGY) is an independent energy company engaged in the exploration, development, and production of crude oil and natural gas. The company’s primary operations are located offshore West Africa, with a focus on the Etame Marin block offshore Gabon, where it has operated for over two decades. EGY also holds assets in Equatorial Guinea and has expanded through mergers and acquisitions to diversify its portfolio. Its production is predominantly oil, and the company emphasizes low-cost, high-margin projects. The company operates under production-sharing contracts and licenses, working with host governments and joint venture partners.
VAALCO Energy, Inc. (NYSE:EGY) achieved record operational and financial results in 2024, including increased adjusted EBITDAX of $303 million and record production of nearly 25,000 working interest barrels equivalent per day. The company’s SEC proved reserves grew 57% YoY to 45 million BOE, while 2P CPR reserves increased to 96.1 million BOE. EGY completed the Svenska acquisition in April 2024, which has already seen a 1.8x payback on the initial investment by year-end 2024. The company is executing significant development projects across its portfolio, including a drilling campaign in Gabon starting in Q3 2025, an FPSO refurbishment project in Cote d’Ivoire, and additional drilling in Egypt and Canada.
VAALCO Energy, Inc. (NYSE:EGY) expects production and sales to be lower in 2025 due to the Cote d’Ivoire field shutdown but anticipates a material increase in 2026 when the FPSO returns to service and the full impact of the Gabon drilling campaign is realized. The company has secured a new revolving credit facility with an initial commitment of $190 million, expandable to $300 million, to support its development capital programs. EGY remains committed to returning cash to shareholders, having returned $83 million through dividends and share buybacks over the past two years. With 16 hedge funds owning the stock, EGY is one of the best fundamental stocks to buy now.
6. DocGo Inc. (NASDAQ:DCGO)
Number of Hedge Fund Holders: 17
DocGo Inc. (NASDAQ:DCGO) is a technology-driven mobile health services provider offering on-demand medical care outside traditional clinical settings. The company delivers services such as urgent care, chronic condition management, preventative care, and medical transportation through a network of mobile clinicians supported by a proprietary digital platform. DCGO contracts with healthcare systems, governments, and enterprise clients to provide scalable healthcare delivery solutions, often at patients’ homes or workplaces. Its logistics platform enables real-time scheduling, routing, and documentation, enhancing operational efficiency.
DocGo Inc. (NASDAQ:DCGO)’s 2024 financial results show a company in transition, with a shift away from migrant-related programs toward its core mobile health services. While full-year revenue slightly declined to $616.6 million from $624.2 million in 2023, the company improved its profitability metrics, with adjusted gross margin rising to 34.6% and adjusted EBITDA reaching $60.3 million. However, the fourth quarter was notably impacted by an accelerated wind-down of migrant-related contracts, leading to a $7.6 million net loss and a steep drop in adjusted EBITDA to $1.1 million. DCGO attributed these declines to unexpected program closures and increased investment in its payer-focused verticals, including higher staffing and operational costs to support future growth.
Looking ahead, DocGo Inc. (NASDAQ:DCGO) is leaning into strategic expansion, particularly through its care gap closure programs, which now serve over 700,000 patients – a massive leap from 2,000 just a year prior. The company has secured multiple new contracts with hospitals and government agencies and made technology and personnel investments to support scaling. While 2025 revenue guidance remains unchanged at $410–$450 million, EBITDA margin expectations were revised downward from 8–10% to approximately 5% due to ongoing investment. Despite short-term margin compression, management is confident these strategic moves will drive long-term, sustainable growth and a transition to higher-quality recurring revenue streams. With 17 hedge funds owning the stock, DCGO is one of the best fundamental stocks to buy now.
5. Vivid Seats Inc. (NASDAQ:SEAT)
Number of Hedge Fund Holders: 19
Vivid Seats Inc. (NASDAQ:SEAT) is an online ticket marketplace that facilitates the buying and selling of tickets for live events, including sports, concerts, theater, and other entertainment experiences. The company operates as a resale platform, connecting fans with third-party sellers offering tickets across a wide range of venues and price points. SEAT provides a proprietary technology platform, mobile app, and customer loyalty program to enhance the user experience and drive engagement. Revenue is generated primarily through service fees on ticket transactions.
In the latest Q4 2024, Vivid Seats Inc. (NASDAQ:SEAT) delivered $200 million in revenues, representing a 1% YoY increase, while adjusted EBITDA was $33 million, down 5% YoY. For the full year 2024, the company achieved $776 million in revenues, up 9% YoY, and $151 million in adjusted EBITDA, showing a 7% increase YoY. The company’s loyalty program demonstrated strong performance, with enrolled members making repeat orders 2-3x more frequently than non-enrolled customers, and repeat orders reaching 61% of total orders.
Looking ahead to 2025, Vivid Seats Inc. (NASDAQ:SEAT) expects marketplace GOV to be between $3.7 billion to $4.1 billion, revenues between $730 million to $810 million, and adjusted EBITDA between $110 million to $150 million. The company has maintained strong financial flexibility with approximately 1 turn of LTM net leverage and expectations of continued cash generation. Notable strategic developments include the successful integration of Vegas.com, which is yielding synergies through cross-listing and cross-selling, and the launch of European operations starting with the UK market. While facing increased competitive intensity in the market, management maintains a cautious outlook for early 2025 but expects to return to growth in the second half of the year. With 19 hedge funds owning the stock, SEAT is one of the best fundamental stocks to buy now.
4. The E.W. Scripps Company (NASDAQ:SSP)
Number of Hedge Fund Holders: 20
The E.W. Scripps Company (NASDAQ:SSP) is a media enterprise focused on television broadcasting, national media, and content production. The company operates a portfolio of local TV stations across major US markets, affiliated with networks such as ABC, NBC, and CBS. Through its Scripps Networks division, it owns national media brands including Court TV and Scripps News, and also operates a range of multicast and over-the-air television networks. SSP produces and distributes original content and leverages both traditional and digital platforms. The company ranked eighth on our recent list of 12 Best Broadcasting Stocks to Buy Right Now.
The E.W. Scripps Company (NASDAQ:SSP) reported strong Q4 and full-year 2024 results, achieving significant progress in debt reduction and performance improvement for Scripps Networks. The company successfully reduced its leverage ratio to 4.8x by year-end, nearly a full turn below the end of 2023. In the Networks division, the company has taken steps to improve margins by 400 to 600 basis points in 2025, including significant cost reductions in Scripps News and other divisional expenses. The Local Media division achieved record political advertising revenue, almost 30% higher than the 2020 presidential election year revenue, with more than 80% of these dollars coming from only 6 states. The company’s sports strategy has proven successful, with ION’s sports inventory commanding advertising rates more than 2x its nonsports inventory.
The E.W. Scripps Company (NASDAQ:SSP) has executed binding commitments to refinance its revolving credit facility and term loans, managing to increase its blended cost of debt by less than 1% despite the elevated rate environment. Through these refinancing efforts, SSP will have retired or extended the maturity of up to $1.5 billion of debt. The company has also made progress in real estate monetization, completing $20 million in transmission tower sales and reaching an agreement for a $40 million sale of their television station building in West Palm Beach. With 20 hedge funds owning the stock, SSP is one of the best fundamental stocks to buy now.
3. Arko Corp. (NASDAQ:ARKO)
Number of Hedge Fund Holders: 21
Arko Corp. (NASDAQ:ARKO) is a convenience store operator and fuel retailer in the United States, operating through its primary subsidiary, GPM Investments. The company operates a network of company-operated stores and dealer locations under multiple regional and national brands. ARKO’s business segments include retail, wholesale, and fleet fueling, offering convenience products, prepared foods, and motor fuels. It sources fuel from major oil companies and independent refiners and sells it through both owned and third-party sites.
Arko Corp. (NASDAQ:ARKO) faced a challenging year in 2024 amid persistent inflation and constrained consumer spending, delivering results near the midpoint of their annual guidance. The company made significant progress in its transformation plan, notably exceeding targets in its dealerization program by converting more than 150 retail stores to dealer sites in 2024, with approximately 100 more stores planned for conversion by the end of Q1 2025. The dealerization program is expected to generate an annualized benefit exceeding $20 million to combined wholesale and retail segment operating income, with additional opportunity from G&A expense reduction.
In response to evolving customer preferences, Arko Corp. (NASDAQ:ARKO) launched strategic initiatives including the “Fueling Americas Future” campaign, offering customers up to $2 off per gallon for up to 20 gallons when purchasing value promotions inside stores. The company’s loyalty program showed strong performance, with enrolled members spending an average of $104 per month, nearly 60% more than non-enrolled customers, and visiting stores about 3 more times per month. Looking ahead to 2025, management expects total company adjusted EBITDA to be in the range of $233 million to $253 million, assuming a retail fuel margin of $0.395 to $0.415 per gallon and mid-teen percent operating profit growth in the Wholesale segment. With 21 hedge funds owning the stock and strong guidance ahead, ARKO is one of the best fundamental stocks to buy now.
2. Kosmos Energy Ltd. (NYSE:KOS)
Number of Hedge Fund Holders: 27
Kosmos Energy Ltd. (NYSE:KOS) is an independent oil and gas exploration and production company focused on offshore assets in key regions including West Africa, the US Gulf of Mexico, and Latin America. The company’s portfolio includes both producing assets and high-impact exploration opportunities, with core operations in Ghana, Equatorial Guinea, and the Gulf of Mexico. KOS specializes in deepwater and ultra-deepwater projects, operating under production-sharing contracts and licenses in partnership with national oil companies and other operators. The company ranked 8th on our recent list of 10 Most Oversold Penny Stocks to Buy According to Analysts.
Kosmos Energy Ltd. (NYSE:KOS) has positioned itself with a unique portfolio of world-scale oil and gas assets, characterized by a growing 2P reserve life of more than 20 years. The company’s oil assets feature low operating costs and high cash margins, while gas assets are positioned to deliver growth in revenue with increasing margins. For 2025, KOS expects increased production and reduced capital expenditure to drive an attractive free cash flow yield, with total CapEx expected to fall significantly from over $800 million in 2023-2024 to $400 million in 2025, representing a reduction of over 50%.
Kosmos Energy Ltd. (NYSE:KOS) is targeting a reduction in annual overhead of around $25 million by the end of 2025, primarily through reducing contractors and external consultants. A significant milestone was achieved with the GTA project, which saw the first gas production in the late fourth quarter of 2024 and the first LNG production in early February 2025, with the first cargo lifting expected shortly. The company’s financial strategy prioritizes debt paydown until reaching a leverage goal of below 1.5x at mid-cycle oil prices, after which they will balance cash between further debt reduction and shareholder returns. Year-end 2024 reserves of 530 million barrels of oil equivalent represent a reserve-to-production ratio of 22 years, which significantly differentiates KOS from its peers. Including the extensive resource base, the reserve life extends to nearly 30 years, highlighting substantial organic growth potential for sustained cash generation. With 27 hedge funds owning the stock, KOS is one of the best fundamental stocks to buy now.
1. Berry Corporation (NASDAQ:BRY)
Number of Hedge Fund Holders: 28
Berry Corporation (NASDAQ:BRY) is an independent upstream energy company engaged in the development and production of onshore oil reserves, primarily in California and the western United States. The company focuses on conventional, low-decline, long-lived oil assets, using thermal recovery techniques such as steam injection to enhance production. BRY also operates a well-servicing and ancillary equipment business that supports its own operations and third-party customers.
Berry Corporation (NASDAQ:BRY) delivered strong financial and operational results in 2024, generating $292 million in adjusted EBITDA, a 9% increase over 2023. The company maintained production levels at 25,400 barrels of oil equivalent per day, near the top of their guidance range. BRY has sustained total production levels over the past 6 years, outperforming the 35% decline in California statewide oil production during that period. The company achieved significant success with its thermal diatomite reservoir in California, unlocking the potential for 115 additional sidetrack wells over the next few years.
In Utah’s Uinta Basin, Berry Corporation (NASDAQ:BRY) is advancing its horizontal well development program, with initial wells showing promising results of 1,900-2,000 barrels of oil equivalent per day in peak production. The company has identified approximately 200 potential horizontal well locations in the Uinta Basin. BRY’s year-end 2024 total proved reserves were 107 million barrels of oil equivalent with a PV-10 value of $2.3 billion at SEC pricing. Looking ahead to 2025, management plans to sustain production YoY and drill approximately 50 gross wells, with increased capital allocation to Utah operations.
Overall Berry Corporation (NASDAQ:BRY) ranks first on our list of the 11 fundamentally strong penny stocks to buy now. While we acknowledge the potential of BRY as an investment, 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 BRY 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
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
