In this article, we will be taking a look at 11 penny stocks that will make you a millionaire.
Why Should You Invest in Penny Stocks?
Penny stocks are often overlooked by most investors. These are the smallest of the small companies operating in the market, and so they typically lose out on being covered in detail by financial reporters and analysts. However, because of this conundrum, many penny stocks end up becoming excellent under-the-radar investments for those investors who don’t mind a bit of risk. This is especially the case for penny stocks operating in the artificial intelligence space today. This isn’t to say that penny stocks offer a sure-shot way of making big profits at all times, though. Since these stocks are of companies that are incredibly small relative to the usual players we hear about in the market news, they are also incredibly risky to invest in – as such, investing in penny stocks is a move that only investors with a tolerance for high-risk, high-reward strategies should make.
In the current market landscape, there may be more room to consider investing in smaller companies. This is because of the potential September rate cut from the Fed. Financial professionals are considering this potential cut to be a catalyst for the growth of smaller companies in the market, which have been largely left ignored over the past two years since the Fed’s policy has been so tight. So a rate cut in September may actually result in an overall growth cycle emerging for smaller players in the market.
Read Also: 7 Most Popular AI Penny Stocks Under $5 and 10 Best Technology Penny Stocks to Invest In Right Now.
How’s The Market Looking For Smaller Stocks Today?
On August 21, Tom Lee, co-founder of Fundstrat Global Advisors, joined CNBC’s “Closing Bell Overtime” to discuss this very development. He noted that as the Fed is starting to normalize its policy and as merger activity in the US is beginning to accelerate, smaller companies are becoming increasingly more poised to benefit. Lee also added that there’s a misconception in the market that smaller companies are growing, or at least have the tendency to, grow slower than bigger companies. In fact, he noted that the small cap index has a median earnings growth that is almost 700 basis points faster than the broader market index, while top-line growth is almost 400 basis points faster. Lee also said the following:
“For small caps to rise 40% means that the P/E, the median Russell 2000 stock goes from 10x to 14x. So, it’s not asking the market to provide some magic and a huge re-evaluation… [With small-caps] you’re getting better growth, lower valuation, and I think the catalyst is now that the market is convinced that the Fed is embarking on a rate cutting cycle.”
According to Lee, money that’s been on the sidelines over the past few years because of the Fed’s rate policy could now potentially funnel into smaller companies because they offer a good risk-reward balance to investors now. Because of these developments, we’ve compiled a list of some of the smallest stocks trading on the market today by going through five months’ worth of articles on Stock Gumshoe, a financial analysis website that offers unique insights into what some call “secret stocks,” which have been going largely ignored by most investors.
Our Methodology
We read Stock Gumshoe articles from April to August of 2024 and then selected the penny stocks that have promising futures ahead of them. The stocks are ranked in ascending order of the number of hedge funds holding stakes in them as of the end of the second quarter of 2024, according to Insider Monkey’s hedge fund data.
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).
11 Penny Stocks That Will Make You A Millionaire
11. GSI Technology, Inc. (NASDAQ:GSIT)
Number of Hedge Fund Holders: 1
GSI Technology, Inc. (NASDAQ:GSIT) is a semiconductor company based in Sunnyvale, California. It offers associative processing unit products focusing on applications using similarity search in visual search queries for e-commerce, computer vision, drug discovery, cyber security, and service markets.
Keith Kohl has teased a stock as being the one that can kill NVIDIA in AI, in his Technology and Opportunity letter. Here are some of Kohl’s comments:
“This company from Sunnyvale developed a patent-protected chip that blows its competitors out of the water. You see, AI apps require almost infinite data-crunching, and this firm’s flagship chip outperforms other chips by a factor of 100 on big-data workloads. And that’s not all. These chips also consume far less power. Take Nvidia’s A100. It devours 400 watts of electricity. However, this firm’s chip runs on only 60 watts. That’s 85% less power consumption. This kind of performance slashes the cost of running AI systems radically and unleashes AI’s true potential. This firm’s customers include tech and defense giants like Lockheed Martin, Cisco, General Dynamics, Honeywell, Nokia, Raytheon, and Rockwell. Yet hardly any retail investors know this company’s name. But that’s all going to change soon because I believe this firm is about to dominate the entire AI sector. Like I said, this could be a replay of Nvidia’s incredible 12,035% surge….”
Stock Gumshoe’s Travis Johnson seems to think that this teaser most aptly relates to GSI Technology, Inc. (NASDAQ:GSIT). For the first quarter of fiscal 2025, GSI Technology, Inc. (NASDAQ:GSIT) reported net revenues of $4.7 million and net income of $1.1 million. This stock is expected to grow immensely and may turn its investors into millionaires because of its patent-protected technology that could give even chip-giant NVIDIA a run for its money.
One hedge fund was long GSI Technology, Inc. (NASDAQ:GSIT) in the second quarter, with a total stake value of $677,000
10. Lantern Pharma Inc. (NASDAQ:LTRN)
Number of Hedge Fund Holders: 4
Lantern Pharma Inc. (NASDAQ:LTRN) is a clinical-stage biotech company based in Dallas, Texas. It focuses on AI, machine learning, and genomic data to streamline the drug development process.
Ray Blanco has teased this stock as one of his top three picks in the Catalyst Trader Newsletter. Here’s the pitch for this stock:
“If you were to invest in only three companies over the next decade, these are the superstars you would want in your portfolio. All three could be up at least 500% in the next year… One of the most promising is only $45 million, and they already have an AI-developed drug rushing through clinical trials, with huge catalysts occurring in the first quarter of 2025.”
Stock Gumshoe seems to think that the $45 million company is most likely Lantern Pharma Inc. (NASDAQ:LTRN), which has three drugs in clinical trials: LP-184, 284, and 300. The company has also entered into several beneficial partnerships, one with Oregon Therapeutics, and another with Starlight Therapeutics.
With all this lined up, Lantern Pharma Inc. (NASDAQ:LTRN) does seem to be an exceptional penny stock play in the biotech sector, especially because of its focus on AI in drug development. In 2023 alone, Lantern Pharma Inc. (NASDAQ:LTRN) ensured the advancement of its radar AI platform, which reached over 60 billion data points in 2023 and is now on the path to reaching over 100 billion data points in 2024.
Four hedge funds held stakes in Lantern Pharma Inc. (NASDAQ:LTRN) in the second quarter, with a total stake value of $610,000. Renaissance Technologies was the most prominent shareholder in the company, holding 81,800 shares.
9. Exscientia Plc (NASDAQ:EXAI)
Number of Hedge Fund Holders: 6
Exscientia Plc (NASDAQ:EXAI) is another biotech player on our list. It is based in the United Kingdom and operates as an AI-driven pharma-tech company that engages in the design and development of differentiated medicines for diseases with high unmet patient needs.
Alexander Green released a stock teaser in The Communique, which is the entry-level newsletter from The Oxford Club, that Travis Johson from Stock Gumshoe believes was alluding to Exscientia Plc (NASDAQ:EXAI). The teaser noted that there are seven stocks set to become the next Magnificent Seven. On the stock that’s thought to be Exscientia Plc (NASDAQ:EXAI), Green commented:
“… a short while ago the French drug giant Sanofi entered into a $283 million partnership with the company. But now they are going bigger. Sanofi recently agreed to pay the company up to $5.2 billion to develop 15 oncology and immunology drugs. The company will receive $100 million up front as well as milestone payments from successful treatments. They also have a collaboration with Merck on three potential “best-in-class” drug targets worth up to $674 million. It signed a major $1.2 billion partnership with Bristol Meyers Squibb.”
Exscientia Plc (NASDAQ:EXAI) is certainly gaining popularity because it’s thought to be leading the charge in treating cancer with AI. The company is expected to hit the $7.5 billion mark in revenue within the next 12 months because of the partnerships Green mentioned in the comment above, and the fact that Exscientia Plc (NASDAQ:EXAI) is lining up massive amounts of funding for its operations through such collaborations so it can have enough free cash annually to turn a profit.
There were six hedge funds long Exscientia Plc (NASDAQ:EXAI) in the second quarter, with a total stake value of $50.9 million. MIC Capital Partners was the largest shareholder in the company, holding 1,542,600 shares.
8. NANO-X IMAGING LTD (NASDAQ:NNOX)
Number of Hedge Fund Holders: 6
NANO-X IMAGING LTD (NASDAQ:NNOX) is a healthcare company based in Israel. It develops a commercial-grade tomographic imaging device with a digital X-ray source and provides teleradiology services.
Travis Johnson has guessed that NANO-X IMAGING LTD (NASDAQ:NNOX) is the company James Altucher was referring to in his stock teaser, found in the Microcap Millionaire newsletter. Here’s what Altucher said about the company:
“Founded by a serial entrepreneur who established more than 20 companies and set up more than 70 patents… has access to 30 million patient record and 500 million medical images. Revenues up 1,000% from two years ago… Steve Cohen from Point72 bought over $3 million worth of the stock just a few months ago. Cathy Wood and Ken Griffin both bought, too, about $3 million each.”
NANO-X IMAGING LTD (NASDAQ:NNOX) has recently been considered a stock with great upside potential, with analysts expecting the stock to rise by 122.2%. This may in some way be related to the company’s connection to AI-giant NVIDIA since NVIDIA owns a partial amount of NANO-X IMAGING LTD (NASDAQ:NNOX) because of an earlier partnership between the two companies.
This stock may also be worth considering because it effectively deploys AI in real-world medical imagining applications. A significant part of the company’s revenue in the second quarter, amounting to about $113,000, was generated through the sales of its AI solutions as well.
There were six hedge funds long NANO-X IMAGING LTD (NASDAQ:NNOX) in the second quarter, with a total stake value of $4.3 million.
7. Bit Digital, Inc. (NASDAQ:BTBT)
Number of Hedge Fund Holders: 8
Bit Digital, Inc. (NASDAQ:BTBT) is an application software company based in New York. It engages in the Bitcoin mining business, and also undertakes treasury management activities.
James Altucher’s Microcap Millionaire newsletter service recently covered Altucher’s five “microcap superstocks.” One of the stocks covered was a crypto tech firm, which was a tiny fraction of the size of other Bitcoin miners since it had a market capitalization of only $300 million and was considered very cheap while having 10x potential. Another positive point for the stock was that it’s begun diversifying its operations.
According to Travis Johnson over at Stock Gumshoe, the Bitcoin Superstock teased in this newsletter is most likely Bit Digital, Inc. (NASDAQ:BTBT). This company is aiming to generate $100 million in AI revenue on an annualized basis, which would mean that it will double its current AI business while building on its 2,000 NVIDIA GPUs in an Icelandic data center. Bit Digital, Inc. (NASDAQ:BTBT) has an immense upside potential of 70.5% as of August 27, according to analysts.
Eight hedge funds were long Bit Digital, Inc. (NASDAQ:BTBT) in the second quarter, with a total stake value of $20.3 million. Intrinsic Edge Capital was the most prominent shareholder in the company, holding 2,690,000 shares.
6. Nano Dimension Ltd. (NASDAQ:NNDM)
Number of Hedge Fund Holders: 8
Nano Dimension Ltd. (NASDAQ:NNDM) is a tech hardware, storage, and peripherals company based in Israel. It provides additive manufacturing, i.e., 3D printing solutions in Israel and internationally.
Another one of the stocks teased by James Altucher as being a “microcap superstock” in his Microcap Millionaire newsletter was an additive manufacturing company that uses 3D printing to create circuit boards for microchips and is making progress in incorporating additive manufacturing within the aerospace, defense, automotive, medical, and telecommunications industries. Here are some of Altucher’s comments on this company:
“Quietly emerging as a dominant player in a new mode of manufacturing, 3D printing… benefits from broken supply chains. 97% of manufacturers expect to use it more over next five years… Revenue is up nearly 2,000% in last four years since 2020. Still only worth about $500 million, sitting on over $800 million in cash… Company and all its assets worth maybe $1 billion, market says it’s worth about $500 million. Someone will figure this out and it will more than double in price, and the revolutionary tech could send it much higher than that. Best chance of 1,000% gains.”
According to Travis Johnson, here Altucher is most definitely talking about Nano Dimension Ltd. (NASDAQ:NNDM). As of this August, this company does have enough cash on the books to attempt an acquisition of its competitor, Desktop Metal, for approximately $180 million. If the deal goes through, Nano Dimension Ltd. (NASDAQ:NNDM) will see a significant increase in its revenues, and it has the potential to turn its investors into future millionaires if it keeps this up.
Eight hedge funds were long Nano Dimension Ltd. (NASDAQ:NNDM) in the second quarter, with a total stake value of $60.4 million.
5. BigBear.ai Inc. (NYSE:BBAI)
Number of Hedge Fund Holders: 9
BigBear.ai Inc. (NYSE:BBAI) is an information technology company based in Columbia, Maryland. It provides AI-powered decision intelligence solutions alongside national security, supply chain management, and digital identity solutions.
Dylan Jovine, in his Behind the Markets newsletter, has teased readers with hints about three small AI players in the defense market. Here are some of his comments on one of these companies and its AI software that is being bought up by major defense companies and the US government:
“It’s not just about selling this AI software to the U.S. Space Force. Remember, the U.S. Pentagon has requested $145 billion to get its troops “AI-ready”… Palantir – one of the biggest defense contractors – bought their AI software on November 15, 2021. L3Harris – another major defense contractor – bought their AI software on May 9, 2023… Amazon Web Services – the biggest cloud computing provider on the planet – bought their AI software on December 11, 2023.”
Stock Gumshoe thinks that this is most definitely in reference to BigBear.ai Inc. (NYSE:BBAI). The company does have partnerships and deals with all of the companies Jovine has referred to and has multiple steady government contracts for the use of its AI software.
While many analysts and investors are skeptical about BigBear.ai Inc.’s (NYSE:BBAI) potential growth, the company’s management has remained optimistic, especially in light of its acquisition of Pangiam. BigBear.ai Inc.’s (NYSE:BBAI) management also noted in their first quarter press release that the company is well-positioned for healthy growth in the year ahead.
We saw nine hedge funds long BigBear.ai Inc. (NYSE:BBAI) in the second quarter, with a total stake value of $408,000.
4. RPC, Inc. (NYSE:RES)
Number of Hedge Fund Holders: 11
RPC, Inc. (NYSE:RES) is an energy company based in Atlanta, Georgia. It provides a range of oilfield services and equipment for oil and gas companies.
In the Penny Options Trader newsletter, Marc Lichtenfeld pitched an energy stock he expects to be incredibly profitable to those who invest in it at the right time. Here are some of his comments:
“It’s NOT an oil producer… a refiner… a pipeline company… or a royalty trust. Rather, :it’s one of the most overlooked – and most profitable – businesses in the sector. From December 30, 2021, to March 30, 2023, sales have nearly tripled. And profits are rising even faster. In the past 15 months alone, profits have gone up 3,757%. And yet, for reasons I’ll soon explain, the stock has remained incredibly cheap at less than $10 per share. In fact, out of the profitable stocks that trade on the S&P 500, only 17 trade at a cheaper valuation than this stock.”
Travis Johnson believes that this is most likely referring to RPC, Inc. (NYSE:RES). If that is true, there may be some value in this company, as Lichtenfeld says. According to RPC, Inc.’s (NYSE:RES) first-quarter earnings call, the company expects to make some attractive acquisitions to increase its scale and bolster its service lines soon, through which it aims to provide a solid return on capital.
In total, 11 hedge funds were long RPC, Inc. (NYSE:RES) in the second quarter, with a total stake value of $50.7 million.
3. SoundHound AI Inc. (NASDAQ:SOUN)
Number of Hedge Fund Holders: 15
SoundHound AI Inc. (NASDAQ:SOUN) is an application software company based in Santa Clara, California. It develops independent voice AI solutions that enable businesses across the automotive, TV, and Internet of Things industries to deliver high-quality conversational experiences to their customers.
In the Live Action War Room, Ross Givens gave a teaser about an “AI wonder stock” that has immense profit potential built-in. Stock Gumshoe thinks that the teaser is most likely about SoundHound AI Inc. (NASDAQ:SOUN). Here are some of Givens’ comments from the newsletter:
“Founded in 2005 by a Canadian computer scientist… It’s moving fast… by leveraging 98 registered patents for cutting-edge voice and sound recognition technology… It’s already lined up a slew of major partnerships with Hyundai, Mercedes Benz, Honda, Pandora, Netflix, and many others. And recently, I noticed some suspicious buying activity… Causing the price to skyrocket by 260% in just 19 days!”
With the AI boom and SoundHound AI Inc.’s (NASDAQ:SOUN) own moves in drawing up new partnerships, investors have become increasingly interested in this stock. However, it must be noted that the company is still very much in a growth phase, so it may be some time before any investor will see magnified returns on their investment in SoundHound AI Inc. (NASDAQ:SOUN) stock.
Despite this, SoundHound AI Inc. (NASDAQ:SOUN) looks like a penny stock worth picking up right now. In its preliminary 2025 guidance, the company noted that it expects over $100 million in revenue, and it does have a history of 50% revenue growth per year since 2021.
SoundHound AI Inc. (NASDAQ:SOUN) was spotted in the 13F holdings of 15 hedge funds in the second quarter, with a total stake value of $7.5 million.
2. Absci Corporation (NASDAQ:ABSI)
Number of Hedge Fund Holders: 17
Absci Corporation (NASDAQ:ABSI) is a biotech company based in Vancouver, Washington. It operates as a data-first generative AI drug creation company that combines AI with scalable wet lab technologies to create biologics for patients.
Alexander Green, in the Oxford Club’s Oxford Microcap Trader newsletter, recently talked about a “tiny” AI stock in which Green made a $100,000 investment. Stock Gumshoe thinks that the stock Green was hinting at was Absci Corporation (NASDAQ:ABSI). Here are some of Green’s comments that were used to make this guess:
“What this company does – that sets it apart from all the biotechs out there – is that it’s using generative AI to find new, effective drugs… it could cut time to create a drug from years to days… It’s groundbreaking technology. It’s no surprise then that the world’s largest AI and healthcare companies are lining up to make partnerships with my #1 microcap.”
Some other clues that were handed out were that the company had partnered with NVIDIA and Merck to design new medicines, with the latter partnership expected to rake in $610 million in upfront revenue. Travis Johnson at Stock Gumshoe believes that this description perfectly fits Absci Corporation (NASDAQ:ABSI). This company presently has partnership deals that represent $900 million in potential revenue plus royalties.
While the stock represents a great growth opportunity, with analysts noting that it has an upside potential of 87.5%, it should be noted that drug discovery is a slow business, even with the involvement of AI. As such, all the partnerships and potential royalty payments lined up for Absci Corporation (NASDAQ:ABSI) may not materialize any time soon – but the potential still exists for this stock to turn its investors into millionaires when the time comes.
We saw 17 hedge funds long Absci Corporation (NASDAQ:ABSI) in the second quarter, with a total stake value of $74.4 million.
1. Sandstorm Gold Ltd. (NYSE:SAND)
Number of Hedge Fund Holders: 20
Sandstorm Gold Ltd. (NYSE:SAND) is a materials company based in Canada. It focuses on acquiring royalties and gold alongside other metals purchase agreements from companies that have advanced-stage operating mines.
Daniela Cambone, in Stansberry’s Commodity Supercycles newsletter, floated a teaser for what was called the number-one gold play for 2024. According to Travis Johnson, this teaser is probably referring to Sandstorm Gold Ltd. (NYSE:SAND). Cambone’s comments were as follows:
“But there’s another company that, we believe, is BY FAR the best gold royalty investment you could make in the world right now. And that’s why this company gives you a realistic chance to make astonishing gains thanks to this incredible business model. It’s led by a man who grew the world’s largest silver royalty outfit into a multibillion-dollar company. This experienced team helped form a brand-new royalty company – which uses the same investor-friendly business model as Franco-Nevada and Royal Gold. They now own royalties on mines in Brazil, Turkey, Mongolia, Argentina, Canada, and the United States, just to name a few.”
According to Johnson, Sandstorm Gold Ltd. (NYSE:SAND) is definitely a gold penny stock that investors should pick up, especially because of its recent moves. In 2022, the company roughly doubled its size by acquiring Nomad Royalty and several other royalty assets. Through this acquisition, Sandstorm Gold Ltd. (NYSE:SAND) not only created a 50% dilution for its existing shareholders, but it also boosted its growth and paved the way for revenue growth in the future. Analysts also note that shares of Sandstorm Gold Ltd. (NYSE:SAND) have an upside potential of 34.4%.
Sandstorm Gold Ltd. (NYSE:SAND) had 20 hedge funds long its stock in the second quarter, with a total stake value of $74.8 million.
While we acknowledge the growth potential of SAND, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than the ones mentioned in 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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