The few weeks leading to President Donald Trump’s inauguration were the merriest for investors. A lot of money piled into the stock market, which saw the broad market index gain 2.74% in the last week of the inauguration. But all of that happened to be an ephemeral episode.
The S&P 500 has been down 4.13% in the past five days, and this is not the only index in red this week. The tech-heavy Nasdaq composite has pulled back 6.86% in the past five days, and so has the Dow, although it has a smaller margin of 1.31%. In fact, all of the indices are on pace for their worst week this year, with the Nasdaq and the S&P looking to record the worst week in five months.
What is interesting is that the same reason sentiment was hugely positive at the opening of the year is also one of the main factors driving the volatile market. Early in February, Trump said he would use tariffs to compel the US’s neighbors (Canada and Mexico) and its largest trading partner (China) to help them address immigration and drug issues. The tariffs on China went into effect on February 4, and those on the neighbors are scheduled to begin implementation on March 4, 2025. Investors were hoping that this threat would fizzle out, but a recent post on Trump’s Truth Social account indicates the opposite.
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The problem is that even the threat of tariffs is enough to throw the market into a frenzy. Investors are not wrong to panic because experts agree that the tariffs will soften the economy. According to Erica York, vice president of federal tax policy at the Tax Foundation, the tariffs will inflict pain on the US economy.
York says: “It means incomes and returns to shareholders in the US economy are lower instead, because if businesses have to eat those higher costs, it means they have less to pay their workers. It means they have less to hire and expand employment, or less to invest. So no matter what channel the price impact takes, it’s Americans who are hurt by the tariffs.”
And this situation has created an environment where the market appears irrational. According to Jay Hatfield, CEO of Infrastructure Capital Advisors, “We’re in a stalled, range-bound, slightly irrational market as we wait for policy clarity.”
The economic softening resulting from the tariffs is made worse by a softer-than-expected consumer confidence reading. According to the latest release, US consumer confidence dropped sharply in February 2025. In fact, The Conference Board’s Stephanie Guichard notes, “In February, consumer confidence registered the largest monthly decline since August 2021.” Add to that the disappointing retail sales data and a jump in jobless claims, and you have a properly rattled stock market.
The problem with a broadly underperforming market, as indicated by all the indices being in the red for the better part of the past 30 days, is that investors tend to undervalue some shares that deserve a better valuation. But this is not always a bad thing because it opens up potential opportunities.
In a recent interview, Bank of America’s Marci McGregor said that “volatility can open up potential growth opportunities as some investments become more reasonably priced, aligning with value stock strategies.” At the same time, penny stocks are likely to make huge moves in a volatile market, according to Timothy Sykes, a long-time penny stock trader.
If investors’ worries about the health of the US economy continue to mount, the market’s subdued sentiment is likely to continue. In other words, there’s never been a more apt time to consider a combination of value and penny stocks—value penny stocks.
A portfolio manager studying various stocks and other securities on a tablet.
Our Methodology
To make the list of the 8 best-value penny stocks to invest in now, we used a screener to identify stocks trading under $5 per share with forward P/E ratios of less than 20, as of March 3. We further looked for stocks with a positive upside potential of over 30% based on analysts’ consensus price targets. Finally, we ranked the companies based on hedge fund sentiment using Insider Monkey’s database of 1008 elite hedge funds’ holdings at the end 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).
8 Best Value Penny Stocks to Invest in Now
8. Companhia Energética de Minas Gerais – CEMIG (NYSE:CIG)
Price as of March 3: $1.86
Forward P/E ratio: 7.41
Analysts upside potential: 39.78%
Number of hedge fund holders: 12
Companhia Energética de Minas Gerais – CEMIG (NYSE:CIG) is one of the major electricity concessionaires in Brazil. It generates, transmits, distributes, and commercializes electric energy and natural gas. CEMIG is the fourth-largest electricity company in Brazil in terms of revenue.
On February 26, 2025, Companhia Energética de Minas Gerais – CEMIG (NYSE:CIG) announced that it had acquired Empresa de Transmissão Timóteo-Mesquita S.A. (ETTM) from Grupo Fram Capital for 30.0 million reals ($5.1 million), although the transaction is not yet effective. This move allows CEMIG to boost its transmission network and future revenues. The company is doing well in revenues, having generated 3.28 billion reals ($556.03 million) in net profits in Q3 2024. And this income is likely to improve given the company’s recent moves focused on modernizing its infrastructure (including the ETTM acquisition).
Companhia Energética de Minas Gerais – CEMIG (NYSE:CIG) is also diversifying operations into renewable energy to align with its ESG objectives. The company has solid institutional backing from 12 hedge funds, and analysts predict a 39.78% upside potential. This indicates that the current $1.86 per share price is unlikely to last long.
7. Baytex Energy Corp. (NYSE:BTE)
Price as of March 3: $2.26
Forward P/E ratio: 10.80
Analysts upside potential: 59.29%
Number of hedge fund holders: 16
Baytex Energy Corp. (NYSE:BTE) is a Canadian oil company that operates mainly in North America. It primarily invests in exploration and development projects and is known for disciplined capital allocation and operational excellence.
Late last year, Baytex Energy Corp. (NYSE:BTE) revealed the sale of its Kerrobert Thermal Asset for approximately $150 million. The transaction should close in the current quarter. This move will help the company to simplify operations and focus on more profitable assets. The proceeds of the sale will go a long way to help fund the 2025 budget. In this budget, the company intends to spend $1.0 billion to maintain production between 145,000 and 150,000 barrels of oil equivalent per day. This focus on cash flow over aggressive growth implies that Baytex prioritizes stability.
Operationally, the company is strong. The latest figures show that Baytex finally managed to turn a corner: the company reported a net income of CAD 185 million ($127.89 million) in Q3 2024 and CAD 220 million ($152.09 million) in free cash flow. This contrasts sharply with the CAD 264.97 million ($183.08 million) net loss reported in the same quarter in the previous year. The company also expects free cash flow to improve in the upcoming financial results, which explains why it deserves a spot on this list.
6. B2Gold Corp. (NYSE:BTG)
Price as of March 3: $2.66
Forward P/E ratio: 6.07
Analysts upside potential: 41.35%
Number of hedge fund holders: 19
B2Gold Corp. (NYSE:BTG) produces gold from mines in Mali, the Philippines, and Namibia. The Vancouver, Canada-headquartered company not only mines the precious metal but also develops and explores gold mining opportunities worldwide.
Recently, the company announced a positive preliminary economic assessment (PEA) for the Antelope deposit at the Otjikoto mine in Namibia. The PEA demonstrates strong project economics with an after-tax NPV of $131 million (at a 5% discount rate) and an impressive IRR of 35%. This deposit is expected to contribute roughly 65,000 ounces of gold annually over a five-year mine life, potentially boosting Otjikoto’s overall production to about 110,000 ounces per year when combined with the processing of existing low-grade stockpiles.
Overall, B2Gold Corp.’s (NYSE:BTG) operations are robust. The company’s latest operational performance update indicates booming production. In Q4 2024, it outputted 186,001 ounces of gold, for a total annual production of 804,778 ounces. The company maintained tight control over costs, with Q4 consolidated cash operating costs at $968 per ounce and all-in sustaining costs at $1,668 per ounce.
Several growth initiatives are also in motion. The Goose Project, which is the company’s largest initiative in recent years, is on track to begin producing gold in Q2 2025. There is also the recent $460 million convertible note issuance that underscores market confidence in the company’s long-term strategy. This is sufficient evidence that the current share price of $2.66 is an anomaly and that B2Gold Corp.’s (NYSE:BTG) true potential is not fully reflected in the market.
5. Fortuna Mining Corp. (NYSE:FSM)
Price as of March 3: $4.32
Forward P/E ratio: 5.04
Analysts upside potential: 31.71%
Number of hedge fund holders: 19
Fortuna Mining Corp. (NYSE:FSM) is a Canadian precious metals mining company with five operating mines in Argentina, Burkina Faso, Côte d’Ivoire, Mexico, and Peru. The company primarily produces gold and silver with lead and zinc as by-products. It has an additional preliminary economic assessment stage project (Diamba Sud Gold Project) located in Senegal.
Fortuna Mining Corp. (NYSE:FSM) has been realigning its portfolio, recently announcing the sale of its non-core San Jose Mine in Mexico. This divestment, expected to close in Q1 2025, allows the company to focus on higher-value opportunities within its portfolio. The San Jose Mine, which had been scheduled to begin a progressive closure process in early 2025, was once one of the 12 largest primary silver producers in the world but is no longer considered a core asset. The transaction includes $6 million in staged payments, the potential for an additional $11 million upon certain conditions, and a 1% net smelter royalty for a 5-year term.
Meanwhile, Fortuna Mining Corp. (NYSE:FSM) is delivering strong operational results. It reported a record production of 455,958 gold equivalent ounces for 2024, including 369,637 ounces of gold and 3.7 million ounces of silver. The company projects a slight decrease in production for 2025, but this won’t dent its revenues.
Lina Thomas, an analyst at Goldman Sachs Research, predicts that the price of gold will climb by 8% to $3,100 a troy ounce by the end of 2025. This prediction is underpinned by “higher-than-expected demand for gold from central banks, which have been increasing their reserves of the commodity since the freezing of Russian central bank assets in 2022.” Put simply, Fortuna’s revenues can still increase substantially despite reduced production. This is why Fortuna Mining Corp. (NYSE:FSM) is one of the Best Value Penny Stocks to Invest in Now.
4. Ambev SA (NYSE:ABEV)
Price as of March 3: $2.07
Forward P/E ratio: 12.25
Analysts upside potential: 48.31%
Number of hedge fund holders: 22
Ambev SA (NYSE:ABEV) is one of Brazil’s largest companies and a major player in the beverage industry across the Americas. It is a subsidiary of Anheuser-Busch InBev, which is the world’s largest brewer by volume. The company produces and distributes beer, carbonated soft drinks, and other non-alcoholic beverages in Latin America.
Despite challenging market conditions, Ambev’s financials are robust. The fourth quarter of 2024 adjusted net profit increased 7.5% year-over-year to 5.02 billion reals ($874.63 million). The company posted this impressive performance despite a 3.2% decline in total volumes due to softer market conditions in Argentina and adverse weather in Brazil. It also managed to grow its organic net revenue by 4.2% to 27.04 billion reals ($4.71 billion), with growth occurring across most business units.
In addition to the traditional operational areas, Ambev SA (NYSE:ABEV) is aggressively entering the digital space, and the gamble is paying off. According to management:
“We continued to evolve on our digital transformation, expanding the availability and usage of BEES, our B2B digital platform, across our main operations and improving convenience to our consumers through Zé Delivery, our DTC platform in Brazil. By the end of 2024, BEES was live in eight of our top ten markets, with 1.3 million monthly active buyers and more than 88% of our gross revenue transacted through the platform. On the DTC front, Zé Delivery reached 9 million buyers, translating into over 66 million orders (a 10% increase compared to 2023).”
This financial and operational robustness is why Ambev SA (NYSE:ABEV) is among the top five on our list of the Best Value Penny Stocks to Invest in Now.
3. New Gold Inc. (NYSE:NGD)
Price as of March 3: $2.72
Forward P/E ratio: 8.27
Analysts upside potential: 36.03%
Number of hedge fund holders: 26
New Gold Inc. (NYSE:NGD) is an intermediate mining company that operates two core producing assets in Canada. It produces both gold and copper and intends to build a world-class diversified intermediate gold operation in Canada.
The latest financials indicate that the company is at its strongest in terms of production. The company revealed that Q4 2024 was its strongest in terms of production, with 80,438 ounces of gold and 14.5 million pounds of copper. This represents increases of 2% and 20% respectively over the prior-year period. Despite slightly missing its updated consolidated gold production guidance with 298,303 ounces for the full year, the company delivered impressive cost discipline with all-in sustaining costs of $1,239 per gold ounce, below the bottom end of the 2024 guidance range. This cost discipline enabled the company to generate $85 million in free cash flow for 2024 while continuing to invest in growth projects.
In addition, New Gold Inc. (NYSE:NGD) reached commercial production at New Afton’s C-Zone and the first ore from Rainy River underground, both ahead of schedule. So, the company has a solid balance sheet and it is doing better than ever operationally. But the share price has barely moved past $2.5 over the past five years. This means the market is yet to fully register the opportunity that New Gold Inc. (NYSE:NGD) presents.
2. Kosmos Energy Ltd (NYSE:KOS)
Price as of March 3: $2.81
Forward P/E ratio: 3.76
Analysts upside potential: 82.21%
Number of hedge fund holders: 27
Kosmos Energy Ltd (NYSE:KOS) is a full-cycle deepwater oil and gas exploration and production company. The company owns assets with production in Ghana, Equatorial Guinea, and the US Gulf of Mexico, as well as significant natural gas projects off the coasts of Mauritania and Senegal.
Kosmos Energy Ltd (NYSE:KOS) recently achieved a major milestone: the Greater Tortue Ahmeyim (GTA) LNG project offshore Mauritania and Senegal produced its first gas in December 2024 and its first LNG in February 2025. Once fully commissioned, the project is expected to produce around 2.3 million tons of LNG per annum. This breakthrough positions the region to become a strategic LNG production hub in West Africa.
In its fourth quarter 2024 results, Kosmos’ revenue came in at $398 million and the company generated $176 million in cash from operating activities. The company has a forward P/E ratio of just 3.76—well below industry averages—and analysts project an 82.21% upside from its current price of $2.81. Even better, Kosmos Energy Ltd (NYSE:KOS) is pursuing a disciplined capital allocation strategy (a 50% reduction in capital expenditure for 2025), and it recently transitioned from development to cash flow generation. This is the reason why this stock is in the top five of our list of Best Value Penny Stocks to Invest in Now.
1. Transocean Ltd. (NYSE:RIG)
Price as of March 3: $2.95
Forward P/E ratio: 18.15
Analysts upside potential: 66.10%
Number of hedge fund holders: 38
Transocean Ltd. (NYSE:RIG) drills offshore oil and gas wells for customers worldwide. The company specializes in ultra-deepwater and harsh environment drilling and owns and operates one of the most advanced drilling fleets in the industry.
In February 2025, Transocean Ltd. (NYSE:RIG) reported fourth-quarter results, revealing that contract drilling revenues reached $952 million and adjusted EBITDA came in at $323 million. The company’s total backlog stands at an impressive $8.3 billion, offering substantial revenue visibility into 2026. This financial stability is bolstered by recent customer activity, with multiple clients exercising well options that added approximately $175 million to Transocean’s backlog in a single quarter.
Transocean Ltd. (NYSE:RIG) recently executed the first two 20K subsea completions in industry history, giving it a competitive edge in a sector slowly recovering from the COVID-19 shock and the recession that followed.
While we acknowledge the potential of Transocean Ltd. (NYSE:RIG) 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 RIG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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