11 Best Quality Penny Stocks to Buy According to Hedge Funds

6. Arko Corp. (NASDAQ:ARKO)

Revenue CAGR in the last 5 years: 20.21%

Net profit margin: 0.17%

Number of Hedge Fund Holders: 21

​​​Arko Corp. (NASDAQ:ARKO) is among the largest operators of convenience stores and fuel wholesalers in the US. The company manages a diverse portfolio of over 25 regional store brands, including Fas Mart, E-Z Mart, and ExpressStop, and operates across four segments: retail (fuel and merchandise sales to consumers), wholesale (fuel supply to third-party dealers), fleet fueling (proprietary cardlock locations and fuel card programs), and GPM Petroleum (fuel supply to the company’s own retail and wholesale sites). The company’s large scale and stable performance across business cycles make it one of the best penny stocks to buy.

Arko Corp. (NASDAQ:ARKO) delivered results near the midpoint of their annual guidance in 2024, despite facing challenging macro conditions characterized by persistent inflation and constrained consumer spending. The company’s fourth quarter adjusted EBITDA was $56.8 million compared to $61.8 million in the prior year period, while full-year 2024 adjusted EBITDA reached $248.9 million versus $276.3 million in 2023. The company made significant progress on its dealerization program, converting more than 150 retail stores to dealer sites in 2024, with approximately 100 more stores expected to be converted by the end of Q1 2025.

Going forward, Arko Corp. (NASDAQ:ARKO) expects total company adjusted EBITDA for 2025 to be in the range of $233 million to $253 million, with the dealerization program expected to generate an annualized benefit exceeding $20 million to combined wholesale and retail segment operating income. The company is implementing strategic initiatives, including the “Fueling America’s Future” campaign, which offers customers up to $2 off per gallon for up to 20 gallons when purchasing value promotions inside stores. Additionally, ARKO has completed more than 800 tobacco back bar refreshes and saw a 200-basis point improvement in gross margin for the OTP category.