In this article, we will look at the 15 Best Penny Stocks to Buy According to Billionaires.
Can Small-Cap Stocks Overtake Large-Caps in 2025?
On February 14, Morningstar released a report on its outlook for small-cap stocks in 2025. The research highlighted the potential for small-cap stocks to outperform in 2025, driven by favorable macroeconomic conditions, valuation discounts, and sector-specific opportunities.
The report noted that small-cap companies are more sensitive to short-term interest rate movements due to their capital structure. When central banks cut rates, debt servicing costs for these firms decrease, improving their financial position and potentially leading to better performance. Historically, interest-rate cuts have been associated with positive returns in the small-cap segment. Quoting an example of Australia, the report highlighted that the Reserve Bank of Australia (RBA) has recently shifted to a dovish stance, with interest-rate cuts expected in 2025. This anticipated reduction of up to 0.75% by year-end could renew investor interest in Australian small caps.
Moreover, currently, small-cap stocks are trading at significant discounts compared to large-cap counterparts. As per the report, such valuation gaps have historically preceded strong price appreciation for small caps, especially when market sentiment improves. If we look internationally the small and mid-cap equities are trading at a Price/Earnings ratio of 16.4x compared to 19.2x for the MSCI World Index. Morningstar believes that If small and mid-cap valuations revert to their historical premium over the broader market, they could trade at a P/E of 20.2x. Therefore, projections indicate that small caps are set to experience higher earnings growth than large caps in 2025, offering robust returns for investors seeking growth opportunities. In addition, the report noted that the global reshoring trend, where multinational corporations bring supply chains back to domestic markets, is also expected to benefit small caps operating locally. This shift could also spur mergers and acquisitions, as larger firms seek smaller businesses to capitalize on reshoring benefits.
Lastly, periods of heightened market concentration have historically led to outperformance by small caps. The current market climate suggests that this trend might continue, rewarding investors who focus on smaller, agile companies.
With that let’s take a look at the 15 best penny stocks to buy according to billionaires.
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Our Methodology
To curate the list of 15 best penny stocks to buy according to billionaires we used the Finviz stock screener and Insider Monkey’s Q4 2024 billionaires database. Using the screener we aggregated a list of penny stocks (trading below $5) and sorted the list by market capitalization. Next, we ranked the stocks in ascending order of the number of billionaire investors. Additionally, we have also added the hedge fund sentiment around each stock, as of Q4 2024.
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).
15 Best Penny Stocks to Buy According to Billionaires
15. VinFast Auto Ltd. (NASDAQ:VFS)
Price: $3.28
Number of Hedge Fund Holders: 5
Number of Billionaire Investors: 1
Total Value of Billionaire Holdings: $162,586
VinFast Auto Ltd. (NASDAQ:VFS) is a Vietnamese multinational automotive manufacturer specializing in electric vehicles, e-scooters, and e-buses. The company targets markets in North America, Europe, and the Middle East. In the fiscal third quarter of 2024, the company delivered 21,912 electric vehicles, reflecting a 66% increase quarter-over-quarter and 115% year-over-year increase. In addition, E-Scooter deliveries also grew 44% quarter-over-quarter, reaching 18,894.
As a result of increased deliveries the revenue for the quarter reached $511.6 million, reflecting a 49.3% increase year-over-year. Moreover, due to the increased demand for affordable electric vehicles, VinFast Auto Ltd. (NASDAQ:VFS) plans to add a new completely knocked down factory in Ha Tinh, Vietnam focusing on VF 3 and VF 5. VinFast Auto Ltd. (NASDAQ:VFS) is one of the best penny stocks to buy according to billionaires.
14. Banco Santander (Brasil) S.A. (NYSE:BSBR)
Price: $4.61
Number of Hedge Fund Holders: 6
Number of Billionaire Investors: 3
Total Value of Billionaire Holdings: $1,331,081
Banco Santander (Brasil) S.A. (NYSE:BSBR) operates as a universal bank in Brazil, offering comprehensive financial services through two primary segments including Retail and Wholesale. The Retail segment provides services to individuals and small/medium-sized businesses. Whereas, the Wholesale segment provides financial services to larger companies and capital markets.
On February 12, Goldman Sachs upgraded Banco Santander (Brasil) S.A. (NYSE:BSBR) from Sell to Neutral and raised the price target from $4.20 to $4.70. The upgrade reflects cautious optimism about the bank’s financial stability, though tempered by conservative growth expectations. The firm projects a return on investment of 17% in 2025 and 2026, signaling consistent profitability despite macroeconomic challenges. Moreover, it also noted that the bank’s conservative lending strategy is expected to keep loan growth below competitors, prioritizing risk management over aggressive expansion. Banco Santander (Brasil) S.A. (NYSE:BSBR) is one of the best penny stocks to buy according to billionaires.
13. Telefónica, S.A. (NYSE:TEF)
Price: $4.70
Number of Hedge Fund Holders: 8
Number of Billionaire Investors: 5
Total Value of Billionaire Holdings: $4,239,587
Telefónica, S.A. (NYSE:TEF) is a Spanish multinational telecommunications conglomerate operating in Europe and Latin America. It provides a comprehensive suite of communication and digital services including Fixed-line and mobile telephony, Cloud hosting, cybersecurity, and more.
In the fiscal fourth quarter of 2024, the company noted that they are prioritizing high-quality markets including Spain, Brazil, Germany, and the UK. These are the markets where the company holds a strong position. Moreover, it also aims to expand 5G technology and take 70% global coverage by 2026. Financially speaking, Telefónica, S.A. (NYSE:TEF) generated €2.6 billion in free cash flow, representing a 14% year-on-year growth, exceeding its guidance of over 10% growth. In addition, the revenue grew by 5.4% in Q4, driven by strong commercial momentum across its markets. On February 12, Barclays raised the firm’s price target on the stock to EUR 4.70 from EUR 4.60 and kept an Equal Weight rating on the shares. It is one of the best penny stocks to buy according to billionaires.
12. Lloyds Banking Group plc (NYSE:LYG)
Price: $3.67
Number of Hedge Fund Holders: 11
Number of Billionaire Investors: 5
Total Value of Billionaire Holdings: $22,794,321
Lloyds Banking Group plc (NYSE:LYG) is a UK-based financial services provider focused on retail and commercial customers. The company operates through the Retail Division, Commercial Banking Division, and Insurance, Pensions & Investments Division. It also operates several subsidies including Lloyds Bank, Halifax, Bank of Scotland, and Scottish Widows, leveraging distinct customer segments.
On March 4, Alvaro Serrano from Morgan Stanley upgraded Lloyds with a Buy rating and a £0.90 price target. Serrano noted that Morgan Stanley forecasts 6% NII growth in 2025 and 9% in 2026, driven by higher deposit yields and liability repricing. Moreover, Early 2025 data suggests Lloyds will exceed its £13.5 billion NII guidance for 2025. In addition, the analyst also highlighted that Lloyds Banking Group plc’s (NYSE:LYG) hedging strategy, which initially locked in low yields, is expected to unwind by 2026, boosting margins further. The stock was held by 5 billionaire investors in Q4 2024, making it one of the best penny stocks to buy according to billionaires.
11. Enel Chile S.A. (NYSE:ENIC)
Price: $3.40
Number of Hedge Fund Holders: 15
Number of Billionaire Investors: 6
Total Value of Billionaire Holdings: $17,894,620
Enel Chile S.A. (NYSE:ENIC) is a leading Chilean electricity utility company that operates through three core segments including generation, distribution, and other energy-related services. Its notable projects include the Los Cóndores Hydroelectric Plant.
The company has made significant financial and strategic progress in 2024, driven by improved operational performance, renewable energy expansion, and proactive measures to address regulatory and climate challenges. During fiscal 2024, the hydro generation increased by 12% in 2024 compared to the previous year, adding 1.5 terawatt-hours of electricity. This was supported by favorable hydrological conditions, including El Nino in 2023 and a strong rainy season in 2024. As a result, its total electricity generation reached 24.6 terawatt-hours in 2024, a 2% increase from 2023. Moreover, energy sales grew by 8%, reaching 33.4 terawatt-hours, driven by increased sales to regulated customers and free clients. Enel Chile S.A. (NYSE:ENIC) is held by 6 billionaire investors making it one of the best penny stocks to buy according to billionaires.
10. BRF S.A. (NYSE:BRFS)
Price: $3.18
Number of Hedge Fund Holders: 16
Number of Billionaire Investors: 7
Total Value of Billionaire Holdings: $64,303,180
BRF S.A. (NYSE:BRFS) is a multinational Brazilian food processing company specializing in protein products and processed foods. The company operates through multiple business segments and brands. Its operations are segmented into geographic regions including Brazil, Latin America, the Middle East and North America, Africa, and others.
On February 27, Barclays analyst Benjamin Theurer maintained a Buy rating on the stocks with a price target of $5.00. BRF S.A. (NYSE:BRFS) achieved record-breaking financial performance in 2024, driven by operational efficiency, strategic execution, and market leadership. The company grew its revenue by 14% year-over-year to reach R$61.4 billion, which is the highest in its history. The processed products led the revenue with innovations and expanded launches boosting sales. Moreover, the company also experienced an increased customer base of 327,000 customers with improved shelf-space allocation and adherence to pricing strategies. Looking ahead, management has allocated R$3.3 billion to growth initiatives, including the acquisition of 50% of Gelprime to enter the gelatin/collagen segment. It is one of the best penny stocks to buy according to billionaires.
9. NIO Inc. (NYSE:NIO)
Price: $4.90
Number of Hedge Fund Holders: 20
Number of Billionaire Investors: 7
Total Value of Billionaire Holdings: $86,783,830
NIO Inc. (NYSE:NIO) is a Chinese premium electric vehicle manufacturer focused on high-end smart electric vehicles and innovative mobility solutions. Its popular models include ES8, ES6, EC6, and ET7. The company has been focused on becoming a distinguished player in the electric vehicle industry through technological innovation.
During the fiscal third quarter of 2024, NIO Inc. (NYSE:NIO) maintained its position as the top player in China’s BEV segment. The company delivered 61,855 vehicles and held a 48% market share. In addition, it also achieved a vehicle margin of 13.1%, indicating improved profitability due to efficient cost-cutting. The company is ramping up its supply chain to cater monthly production of 20,000 units. On the other hand, it is also developing its charging infrastructure and now has around 2,700 battery-swapping stations internationally. It is one of the best penny stocks to buy according to billionaires.
8. B2Gold Corp. (NYSE:BTG)
Price: $2.96
Number of Hedge Fund Holders: 19
Number of Billionaire Investors: 7
Total Value of Billionaire Holdings: $158,756,957
B2Gold Corp. (NYSE:BTG) is an international gold producer that operates mines and advanced development projects around the world. Some of its operating mines include Fekola Mine which produces over 400,000 ounces annually and Masbate Mine which produces around 200,000 ounces annually.
In the fiscal fourth quarter of 2024, the company produced 186,001 ounces of gold, this production was aided by strong performance from the Masbate and Otjikoto mines. Moreover, on February 20, analyst Brian Quast from BMO Capital maintained a Buy rating on the stock while keeping the price target at C$7.00. Quast likes the fact that B2Gold Corp. (NYSE:BTG) gold production levels were in line with the expectations. He believes this indicates a reliable production base for the company. Moreover, the cash operating cost of the company was also within the expected range which indicates that management is efficient in cost cutting. It is one of the best penny stocks to buy according to billionaires.
7. Banco Bradesco S.A. (NYSE:BBD)
Price: $2.15
Number of Hedge Fund Holders: 18
Number of Billionaire Investors: 7
Total Value of Billionaire Holdings: $218,772,271
Banco Bradesco S.A. (NYSE:BBD) operates as a diversified financial services provider in Brazil and internationally. It offers a range of banking and non-banking products including deposits, loans, credit cards, and cash management.
In the fiscal fourth quarter of 2024, the company delivered a recurring net income of R$5.4 billion reflecting a 37% year-over-year increase. Moreover, it also grew its loan portfolio by 12% during the same time driven by micro, small, and medium enterprises. Banco Bradesco S.A. (NYSE:BBD) has been focused on strategic restructuring and operational shifts. It worked on improving its digital presence as a result during the quarter, 99% of transactions occurred through digital channels. Moreover, the bank closed its physical branches to support investment in its digital venture. The stock was held by 7 billionaires in Q4 2024, making it one of the best penny stocks to buy according to billionaires.
6. Wipro Limited (NYSE:WIT)
Price: $3.07
Number of Hedge Fund Holders: 18
Number of Billionaire Investors: 8
Total Value of Billionaire Holdings: $52,843,466
Wipro Limited (NYSE:WIT) is an international technology services and consulting company that operates through IT services and IT product segments. The company serves clients across financial services, healthcare, manufacturing, retail, and telecommunications. It emphasizes digital transformation, operational efficiency, and innovation through partnerships with leading technology providers.
During the fiscal third quarter of 2025, the company’s IT Service revenue came in above the guidance but showed a 0.7% year-over-year decline in constant currency. More notably, operating margins expanded to 17.5% reaching 12 quarter-high driven by cost optimization and improved execution. Wipro Limited (NYSE:WIT) is prioritizing AI leadership and reported securing wins in silicon engineering and cross-industry managed services. Moreover, around 50,000 employees of the company now hold advanced AI certifications. The next quarter’s outlook reflects cautious optimism, however, the company plans to remain focused on AI innovation and margin sustainability. It is one of the best penny stocks to buy according to billionaires.
5. Gerdau S.A. (NYSE:GGB)
Price: $2.94
Number of Hedge Fund Holders: 17
Number of Billionaire Investors: 8
Total Value of Billionaire Holdings: $69,505,732
Gerdau S.A. (NYSE:GGB) is a Brazil-based multinational steel producer that specializes in long steel products and recycled scrap metal processing. It manufactures steel using mini-mills, integrated mills, and direct reduced iron plants, with 71% of its output derived from recycled scrap metal. The company operates across the Americas, with key facilities in Brazil, the US, Canada, and other Latin American countries.
In fiscal 2024, Gerdau S.A. (NYSE:GGB) had a challenging quarter due to inflationary pressure and high interest rates in Brazil. As a result, its steel shipments during Q4 2024 decreased 3.9% year-over-year to 2.7 million tonnes. Moreover, the net sales also declined 3.2% during the same time. However, on the bright side, the company achieved BRL 1.5 billion in savings through cost-reduction initiatives, enhancing operational efficiency compared to 2023.
Looking ahead, Gerdau S.A. (NYSE:GGB) expects improved demand coming from North America, driven by construction and infrastructural projects. The stock was held by 8 billionaires in Q4 2024, making it one of the best penny stocks to buy according to billionaires.
4. Ambev S.A. (NYSE:ABEV)
Price: $2.30
Number of Hedge Fund Holders: 22
Number of Billionaire Investors: 9
Total Value of Billionaire Holdings: $480,645,533
Ambev S.A. (NYSE:ABEV) is a Brazilian multinational beverage company focused on beer production and non-alcoholic beverages. It is one of the largest brewers in Latin America by sales volume and owns two of the world’s top 10 beer brands including Skol and Brahma. The company operates in 18 countries in the Americas.
Ambev S.A. (NYSE:ABEV) demonstrated resilient financial performance in Q4 2024 despite operational challenges. Its total volumes were offset by soft demand in Argentina and adverse weather in Brazil, which impacted production. This resulted in total volumes falling by 3.2% year-over-year. However, regardless the company grew its net revenue by 35.2% year-over-year driven by pricing strategies and premiumization efforts.
In addition, the Adjusted net profit also grew by 7.5% during the same time supported by Normalized EBITDA growth of 9.7% and improved financial results. Ambev S.A. (NYSE:ABEV) consolidated EBITDA has grown by 37% over five years, underscoring its ability to navigate macroeconomic headwinds while expanding margins. It is one of the best penny stocks to buy according to billionaires.
3. Grab Holdings Limited (NASDAQ:GRAB)
Price: $4.40
Number of Hedge Fund Holders: 57
Number of Billionaire Investors: 9
Total Value of Billionaire Holdings: $743,797,721
Grab Holdings Limited (NASDAQ:GRAB) operates as a super-app that provides three main services including mobility, deliveries, and digital financial services. It serves over 700 cities in eight Southeast Asian countries.
On March 10, Analyst Alicia Yap of Citi maintained a Buy rating on the stock with a price target of $6.25. The analyst noted that although Indonesia has proposed a holiday bonus rule for ride-hailing drivers that has caused recent stock volatility, however, this cost is already reflected in the company’s 2025 EBITDA guidance of $440 million to $470 million. Yap further highlighted that Grab Holdings Limited (NASDAQ:GRAB) can adapt to regulatory changes, this reinforces its long-term growth trajectory in Southeast Asia’s super app market.
In the fiscal fourth quarter of 2024, the company grew its revenue by 17% year-over-year. The growth was driven by On-Demand GMV growth. The On-Demand GMV growth increased by 20%, indicating more users across all its services. It is one of the best penny stocks to buy according to billionaires.
2. Lumen Technologies, Inc. (NYSE:LUMN)
Price: $4.87
Number of Hedge Fund Holders: 44
Number of Billionaire Investors: 10
Total Value of Billionaire Holdings: $223,189,499
Lumen Technologies, Inc. (NYSE:LUMN) operates as a facilities-based technology and communications company focused on delivering integrated network, cloud, security, and collaboration solutions. The company maintains a global fiber network and operates one of the world’s most connected internet networks, supporting hybrid networking and edge computing needs.
On February 12, Wells Fargo analyst Eric Luebchow upgraded the stock to Equal Weight from Underweight, with a price target of $5. The analyst noted that the potential sale of Lumen’s Quantum Fiber unit could generate free cash flow accretion and reduce debt, creating a near-term upside catalyst. As a result of this free cash flow generation capability, Luebchow found it challenging to maintain an Underweight rating on the stock.
Moreover, Lumen Technologies, Inc. (NYSE:LUMN) bounced back in the fiscal fourth quarter of 2024. It reported a net income of $85 million, which is a stark improvement from a $1.995 billion net loss in Q4 2023. In addition, the company has secured $8.5 billion in PCF deals in 2024, including partnerships with Microsoft, Amazon, Google Cloud, and Meta to support AI-driven data demands. The stock was held by 10 billionaire investors in Q4 2024, making it one of the best penny stocks to buy according to billionaires.
ClearBridge Small Cap Strategy stated the following regarding Lumen Technologies, Inc. (NYSE:LUMN) in its Q3 2024 investor letter:
“Stock selection in the communication services sector was a significant detractor during the period, largely due to not owning Lumen Technologies, Inc. (NYSE:LUMN), which provides products and services including dark fiber, edge cloud services and internet protocol, among others. The company, which began the quarter with a $1.1 billion market cap, skyrocketed after it signed agreements with Microsoft and Corning to use its network and technologies to support their AI data center buildouts, resulting in a nearly 350% return and ending the quarter with a $7.2 billion market cap. However, despite this meteoric rise, we believe that the company remains a highly risky asset with a significantly leveraged balance sheet, and one not suitable for our focus on high-quality, long-term compounders.”
1. Lucid Group Inc (NASDAQ:LCID)
Price: $2.09
Number of Hedge Fund Holders: 24
Number of Billionaire Investors: 10
Total Value of Billionaire Holdings: $229,700,347
Lucid Group Inc (NASDAQ:LCID) is an American automotive and technology company specializing in luxury electric vehicles, EV powertrains, and battery systems. The company is known for its Lucid Air, which is a luxury sedan that offers impressive range and performance.
During fiscal 2024, the company delivered 10,241 cars, making it one of the best years. This was a stark improvement of 71% year-over-year, driven by strong demand for the Lucid Air luxury sedan. In addition, its production was also in line with the guidance of 9,000 as the company produced 9,029 vehicles during the year. The Lucid Air became the top-selling EV in its class in the US during H2 2024, even outperforming some gas-powered competitors in its segment. As a result of this impressive performance, Lucid Group Inc (NASDAQ:LCID) exceeded the Q4 2024 revenue forecasts by 17% and reached $234.5 million during the quarter.
Lucid Group Inc (NASDAQ:LCID) aims to double production to around 20,000 vehicles in 2025, leveraging the Gravity SUV’s ramp-up and improved operational efficiency. It is the best penny stock to buy according to billionaires.
While we acknowledge the potential of Lucid Group Inc (NASDAQ:LCID) 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 LCID 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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