We recently compiled a list of the 11 Best Fundamentally Strong Penny Stocks to Buy Now. In this article, we are going to take a look at where Bit Digital, Inc. (NASDAQ:BTBT) stands against the other fundamentally strong penny stocks.
Fundamentally strong penny stocks can represent highly attractive investment opportunities, primarily because they tend to be underfollowed companies operating outside the radar of most institutional investors and prominent sell-side analysts. Due to limited coverage, these stocks often remain hidden gems with significant untapped potential, making them ideal candidates for investors seeking outsized returns through diligent research and stock picking. Unlike speculative penny stocks, those supported by solid financial fundamentals – such as solid revenue growth, positive profitability, manageable debt levels, and robust performance even during economic slowdowns – indicate higher quality and reduced downside risk. Research consistently suggests that investing in undervalued, fundamentally strong small-cap or micro-cap (which are usually penny stocks) companies can generate superior long-term performance, largely because the market eventually recognizes and appropriately values their underlying quality.
READ ALSO: 12 Best Fundamental Stocks to Buy Now
While fundamentally strong penny stocks can offer compelling upside, exposure to them should be carefully timed, as their performance tends to be cyclical and highly sensitive to broader market sentiment. Historically, penny stocks have outperformed during periods of economic recovery, early bull markets, and risk-on environments. In contrast, during times of heightened volatility, tightening monetary policy, or flight-to-safety phases, these stocks often underperform due to their perceived risk and lower liquidity. That’s exactly what has been happening in the last 2 months since the inauguration of the new US administration – the small cap sector (as proxied by ETFs) has reached a new 5-year low on a relative basis vs. the broad market in March 2025 as the Trump 2.0 tariff turmoil has caused significant declines in valuations. Even the Federal Reserve Chair Jerome Powell recognizes the unstable outlook as he used the word “uncertainty” 16 times in his press conference last week.
As the reputable Yardeni Research boutique has put it,
“Markets continue to suggest that economic growth outside of the US is increasingly likely to improve while downside risks to US growth are rising.”
As a result, US stock valuation multiples are falling closer to their international counterparts. We believe this evolution has created opportunities for the most courageous investors willing to take a contrarian stance – the stock valuations suggest weakness, all while economic indicators reveal that the backbone of the US economy is still strong. For reference, the labor market remains strong, with no meaningful spike in jobless claims, which reinforces our belief that consumers remain strong. Likewise, business activity (as proxied by PMI) remained elevated in March, and employment surged. With a healthy consumer and industrial sector, the odds are that the upcoming months will not bring any meaningful economic slowdown, which is now becoming increasingly anticipated by analysts.
With that being said, the key takeaway for readers is that small caps, and particularly penny stocks, could become favored again, as the new batch of economic indicators suggests a strong economy going forward. Moreover, the recent 10% correction in the US stock market valuations offers more affordable opportunities to seek entry points. In this context, we believe that fundamentally strong penny stocks should be preferred by investors, as their higher quality and resilience raise the odds that they will deliver a satisfactory performance and outperform the broad market.
A team of technicians working on a server of bitcoin mining equipment in a data center.
Our Methodology
To find fundamentally strong penny stocks we used Finviz to filter for stocks with a stock price below $5.00, with at least 10% revenue growth in the last 3 years. Then we manually selected companies with stable businesses, established product lines, and a demonstrated history of performing well even during economic slowdowns. Finally, we compare the list with our Q4 2024 proprietary database of hedge funds’ ownership and include in the article the top 11 stocks with the largest number of hedge funds that own the stock.
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).
Bit Digital, Inc. (NASDAQ:BTBT)
Number of Hedge Fund Holders: 14
Bit Digital, Inc. (NASDAQ:BTBT) is a digital asset company primarily engaged in the mining of bitcoin and other cryptocurrencies. The company operates a fleet of specialized computing equipment, known as miners, hosted by third-party data centers in North America. BTBT focuses on environmentally conscious mining practices, incorporating sustainable energy sources such as hydroelectric, solar, and wind power into its operations. In addition to mining, the company is expanding into areas like digital asset staking and Web3 infrastructure.
The year 2024 was transformational for Bit Digital, Inc. (NASDAQ:BTBT), with revenues growing exponentially by 141% and adjusted EBITDA reaching $73 million. The company’s HPC business experienced significant growth, evolving from one customer at the start of 2024 to over 20 customers by early January 2025, contributing over 40% of full-year revenue and more than half of Q4 revenue. The acquisition of Enovum marked a strategic advancement, vertically integrating data center operations and bringing in an experienced team and strong customer base. The company launched WhiteFiber, their new HPC platform integrating GPU cloud services and data center operations, with cloud services becoming their largest revenue generator by the second half of 2024, producing $13 million in Q4 revenue.
Bit Digital, Inc. (NASDAQ:BTBT)’s development pipeline has expanded significantly, now totaling 510 megawatts including 156 megawatts under exclusive LOI, with sites in both Canada and the US. While maintaining Bitcoin mining operations, the company is prioritizing investments in HPC, with mining accounting for 54% of revenue in 2024, down from 98% in 2023. The company is shifting away from equity financing through ATM offerings at current stock levels, focusing instead on securing non-dilutive financing options, particularly for its data center and cloud operations. With 14 hedge funds owning the stock, BTBT is one of the best fundamental stocks to buy now.
Overall BTBT ranks 8th on our list of the 11 best fundamentally strong penny stocks to buy now. While we acknowledge the potential of BTBT 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 BTBT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
