In this article, we discuss the 7 best rising penny stocks to invest in along with the impact of recent Federal Reserve rate cuts on small-cap stocks.
Fed’s Rate Cut Sets the Stage for a Strong Q4
In an episode of Market Storylines on the Inside the Icehouse Podcast feed by Intercontinental Exchange, Jay Woods, Chief Global Strategist at Freedom Capital Markets, discussed Fed rate cuts and the Q4 outlook. Woods discussed the latest Fed rate cut and said that the market absorbed the rate cuts quite positively, with the S&P 500 reaching new all-time highs.
Woods mentioned that, historically, when markets hit new highs in September, the fourth quarter tends to perform well, especially in election years. As the fourth quarter approaches, he highlighted that sectors such as real estate, utilities, and industrials have led the market in the third quarter, while technology has lagged. However, it may rebound in Q4.
Woods also emphasized the importance of upcoming economic data, including the ISM manufacturing report, jobless claims, and the U.S. unemployment report, which will give insight into the labor market and the potential impact of the rate cuts.
Small and Mid-Cap Stocks Set for Major Gains
Ryan Dietrich, Chief Market Strategist at Carson Group, joined Yahoo Finance for an interview on September 29, where he expressed optimism about the stock market’s future. He believes the rate cut was necessary and should have been smaller earlier.
He mentioned that the labor market is showing signs of slowing, with initial jobless claims at a four-month low, and forward earnings for the S&P 500 improving. However, he does not foresee a recession.
Dietrich highlighted that historically, rate cuts near market highs have been followed by strong market performance, with an average annual return of around 14%. He thinks the broader market could see 12-15% gains in the next year, while small and mid-cap stocks might outperform with over 20% returns. His firm is especially focused on mid-cap stocks, which tend to perform well after rate cuts.
While the upcoming election may cause some volatility, especially in October, Dietrich remains confident that markets will stabilize afterward, as they usually react better once uncertainty passes. He expects a strong end-of-year rally and advises investors to remain diversified and take advantage of any market weakness.
With that, we look at the 7 Best Rising Penny Stocks To Invest In Now.
7 Best Rising Penny Stocks To Invest In Now
Our Methodology
For this article, we used stock screeners to identify over 60 stocks under $5 with a 1-month share price gain of over 10%, as of September 30. The best rising penny stocks are listed in ascending order of their hedge fund sentiment, which was taken from Insider Monkey’s database of over 900 elite hedge funds.
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).
7 Best Rising Penny Stocks To Invest In Now
7. New Gold Inc. (NYSE:NGD)
1-Month Stock Price Performance: 26.92%
Number of Hedge Fund Holders: 21
New Gold Inc. (NYSE:NGD) is an intermediate gold mining company engaged in the exploration and operation of mineral properties across Canada. It is focused primarily on gold, silver, and copper deposits. The company ranks 7th among our best rising penny stocks to invest in.
It has established itself with key assets such as the Rainy River mine in Northwestern Ontario and the New Afton project in South-Central British Columbia.
In the second quarter, New Gold (NYSE:NGD) reported production figures that met expectations, as it produced 68,598 ounces of gold and 13.6 million pounds of copper. The performance led to a strong cash flow from operations amounting to $100 million, alongside a free cash flow of $20 million.
The positive cash flow situation shows its financial health and marks a sustained period of free cash flow generation since the beginning of the year. Over the first half of 2024, gold production accounted for 42% of the company’s guidance midpoint, while copper production represented 49%, which aligned well with prior forecasts.
New Gold (NYSE:NGD) expects production to increase in the near future, and all-in-sustaining costs are projected to decrease in the latter part of the year. The company remains on track to meet its 2024 consolidated production goals, aiming for 310,000 to 350,000 ounces of gold and 50 to 60 million pounds of copper. The operational efficiency and strong cash flow generation suggest a solid financial foundation for future growth.
6. The RealReal, Inc. (NASDAQ:REAL)
1-Month Stock Price Performance: 33.74%
Number of Hedge Fund Holders: 21
The RealReal, Inc. (NASDAQ:REAL) runs an online marketplace and is engaged in the resale of luxury items in the United States. It provides a diverse range of products, including women’s and men’s fashion, jewelry, and watches. Its client base is made up of conscious consumers seeking high-quality goods at more accessible prices.
It has a member base exceeding 37 million and 13 retail locations. It has successfully sold over 40 million items, which establishes it as a key player in the luxury resale sector. The company takes its place on our list of the best rising penny stocks to invest in now.
In the second quarter, the company demonstrated strong performance with a revenue of $144.93 million, which showed a year-over-year increase of 10.8%. The revenue beat market estimates by over $5 million.
Although the company reported a non-GAAP loss per share of $0.13, it still managed to surpass estimates by $0.01. It is important to know that net loss improved by $76 million compared to the previous year, and adjusted EBITDA rose by $46 million, further emphasizing the operational improvements being made.
The second quarter also saw a 4% increase in gross merchandise value (GMV). Analysts are optimistic about the company’s potential for growth, particularly following strategic changes implemented by new CEO John Koryl over the past 18 months.
On September 16, Northland initiated coverage of The RealReal, Inc. (NASDAQ:REAL) with an Outperform rating and a $6 price target. The firm mentioned that the company’s strategy changes have “completely changed REAL‘s trajectory,” and show the significant shifts in operations that are expected to translate into enhanced financial performance.
The firm called the company a leading digital marketplace in the expanding luxury resale market, which is set for further growth as consumers increasingly value sustainability and quality.
According to our database, 21 hedge funds held stakes in The RealReal (NASDAQ:REAL) in the second quarter, with positions worth $169.455 million. Woodson Capital Management is the biggest shareholder in the company and has a position worth $16.747 million as of Q2.
5. B2Gold Corp. (NYSE:BTG)
1-Month Stock Price Performance: 13.07%
Number of Hedge Fund Holders: 22
B2Gold Corp. (NYSE:BTG) is a Canadian mining company that specializes in the exploration and production of gold. The company has positioned itself as a leading low-cost gold producer, boasting substantial operations in several countries, including Mali, Namibia, and the Philippines.
In 2023, it expanded its portfolio by acquiring the Goose Project in Nunavut, Canada, and re-established its 100% ownership of the Gramalote Project in Colombia. Construction at the Goose Project is on track, with the first gold expected by mid-2025.
On September 12, B2Gold (NYSE:BTG) provided an update on its Goose Project and confirmed that construction is on track for initial gold production in the second quarter of 2025, with a ramp-up to full production expected by the third quarter of the same year. The company expects an annual output of about 310,000 ounces of gold during the first five years of operation.
The company has also recently reached an agreement with the State of Mali regarding the Fekola Complex, which includes the Fekola Mine and the nearby Fekola Regional area, located about 20 kilometers away. The State will quickly provide the necessary permits for Fekola Regional and approve the underground project at Fekola.
The goal of developing Fekola Regional is to boost production and extend the mine’s life. It could provide higher-quality saprolite material and could lead to an extra 80,000 to 100,000 ounces of gold each year. The haul road and required mining facilities are already finished, which will allow mining to start once the permits are issued, with initial gold production expected in early 2025.
Moreover, B2Gold (NYSE:BTG) has set aside $10 million for its 2024 exploration program, which will involve 20,000 meters of drilling to find more high-grade mineral deposits and further extend the mine’s life.
According to Insider Monkey’s database, the company’s shares were held by 22 hedge funds with positions worth $132.613 million in Q2. This makes the company take its place on our list of 7 best rising penny stocks.
4. Allogene Therapeutics, Inc. (NASDAQ:ALLO)
1-Month Stock Price Performance: 15.94%
Number of Hedge Fund Holders: 23
Allogene Therapeutics, Inc. (NASDAQ:ALLO) is a company focused on developing and commercializing advanced cancer treatments through genetically engineered allogeneic T-cell therapies. It specializes in CAR T cell therapy and seeks to revolutionize how certain blood cancers are treated.
A key product, UCART19, is designed for both children and adults suffering from CD19 positive B-cell acute lymphoblastic leukemia. In addition to UCART19, it is advancing other CAR T cell therapies, including cemacabtagene ansegedleucel, which targets a similar protein to treat large B-cell lymphoma.
It is currently undergoing a Phase 1b clinical trial for chronic lymphocytic leukemia, further expanding Allogene Therapeutics, Inc.’s (NASDAQ:ALLO) portfolio in the blood cancer segment. Additionally, the company is actively testing ALLO-715 and ALLO-605, both targeting multiple myeloma, which are also in Phase 1 clinical trials.
As of June 30, it reported a cash position of $444.6 million in cash, cash equivalents, and investments. The financial strength is important for funding ongoing operations and clinical trials, with expectations that this cash runway will support activities into the second half of 2026.
Moreover, the company maintains its guidance and sees a decrease of approximately $200 million in cash reserves throughout 2024.
Lastly, Allogene Therapeutics, Inc. (NASDAQ:ALLO) has a consensus Buy rating from 18 analysts. The average price target of $9.50 represents an upside of 226.46% to the stock’s current price, as of September 27.
3. Butterfly Network, Inc. (NYSE:BFLY)
1-Month Stock Price Performance: 32.77%
Number of Hedge Fund Holders: 23
Butterfly Network, Inc. (NYSE:BFLY) is a digital health company that focuses on point-of-care ultrasound (POCUS) technology, which seeks to make medical imaging more accessible and affordable for healthcare providers. It ranks 3rd on our list of best rising penny stocks to invest in now.
The company’s flagship products, the Butterfly iQ and Butterfly iQ+, use unique Ultrasound-on-Chip technology, which allows for whole-body imaging with a single handheld probe that connects to mobile devices. Additionally, the Butterfly Blueprint serves as an integrated ultrasound platform, which improves clinical workflows within healthcare settings.
On September 10, Lake Street initiated coverage of Butterfly Network (NYSE:BFLY) with a Buy rating and a $3 price target. The company made waves in the market with the launch of its first-generation iQ handheld ultrasound probe, which received FDA clearance in 2017.
Priced at $1,999, this device was significantly more affordable than competing handheld POCUS probes at that time, costing up to 80% less. Although earlier models were sometimes criticized for image quality, the recent release of the iQ3 has changed perceptions. It achieves image quality that matches low-end cart systems, which has increased its credibility among medical specialists.
Butterfly Network (NYSE:BFLY) is on track for a strong performance in 2024, driven by the successful introduction of the iQ3. Following its strong first quarter to date, the company reported record revenue of $21.5 million in the second quarter, a year-over-year 16% increase. It also managed to significantly reduce its net loss by 45% and cut net cash used in operations by 62%.
2. Grab Holdings Limited (NASDAQ:GRAB)
1-Month Stock Price Performance: 15.96%
Number of Hedge Fund Holders: 34
Grab Holdings Limited (NASDAQ:GRAB) operates a versatile super-app that integrates ride-hailing, food delivery, and digital payment services. The platform serves a wide range of customers across eight Southeast Asian countries, including key markets like Singapore, Malaysia, Indonesia, and Vietnam.
The company’s approach has made it a significant player in the region, allowing users to access multiple services seamlessly through a single app. It is one of the best rising penny stocks to invest in now.
In the second quarter, it reported significant performance metrics, achieving a record high of 41 million Monthly Transacting Users. The figure highlights the growing popularity and utility of the platform among consumers.
The company also experienced impressive growth in its on-demand gross merchandise value (GMV), which rose 18% year-over-year on a constant currency basis, reaching new heights. It was fueled by a 22% increase in on-demand transactions, which points to strong demand for its services and an effective cross-utilization of its various offerings.
Grab Holdings’ (NASDAQ:GRAB) liquidity position remains strong, with cash reserves totaling $5.6 billion by the end of the second quarter, up from $5.3 billion in the previous quarter. The increase in liquidity is partly due to a significant rise in customer deposits within its banking segment, which climbed to $730 million from $479 million.
Such growth boosts financial stability and provides resources for further investments and expansion. Additionally, the company reported net cash liquidity of $5.3 billion, compared to $5.0 billion previously, which shows its ongoing profitability. The company has reaffirmed its full-year revenue guidance for 2024, projecting a range of $2.70 billion to $2.75 billion.
1. TeraWulf Inc. (NASDAQ:WULF)
1-Month Stock Price Performance: 29.32%
Number of Hedge Fund Holders: 37
Topping our list of best rising penny stocks is TeraWulf Inc. (NASDAQ:WULF), a digital asset technology company. It is focused on the operation of Bitcoin mining facilities in the United States.
The company has facilities in New York and Pennsylvania. It runs its own mining operations and offers hosting services to third-party clients. The infrastructure it has developed is significant as it features 600 megawatts of owned and scalable resources that support both current Bitcoin mining and the possibility of future expansion into alternative computing hosting.
37 hedge funds tracked by Insider Monkey held positions in the stock valued at $227.158 million in the second quarter.
On September 4, Needham analyst John Todaro initiated coverage of the stock with a Buy rating and a $6 price target. According to Todaro, the company is positioned to be an early entrant in bringing online high-performance computing (HPC) facilities exceeding 100 megawatts.
It could be a game changer, as HPC is expected to grow rapidly, providing an attractive and stable margin business for miners who have excess power capacity. The forecasted revenue for the company in 2026 is striking, with projections of $610 million, of which $350 million could stem from HPC.
In a recent update for August, TeraWulf (NASDAQ:WULF) reported mining 184 Bitcoins, averaging about 5.9 Bitcoins daily. The output reflects a 100% year-over-year increase in self-mining capacity, which now stands at around 10.0 exahashes per second (EH/s).
The company operates two key facilities, the Lake Mariner site with 195 megawatts, and the Nautilus Cryptomine Facility, which has 50 megawatts. Its operational hash rate averaged 8.2 EH/s in August, which shows effective demand response strategies and performance optimizations designed to enhance profitability.
While we acknowledge the potential of TeraWulf Inc. (NASDAQ:WULF) 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 timeframe. If you are looking for an AI stock that is more promising than WULF but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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