We recently published a list of Top 10 Penny Stocks That Will Skyrocket. In this article, we are going to take a look at where Kosmos Energy Ltd. (NYSE:KOS) stands against other best stocks to penny stocks that will skyrocket.
Is It a Good Time to Diversify Your Portfolio With Small Caps?
On March 21, Jason D. Pride, Chief of Investment Strategy & Research at Glenmede, and Stephen DeNichilo Senior Portfolio Manager at Federated Hermes appeared on a CNBC interview to talk about the favorable sectors in the market. Jason noted that the market needs to calm down on the Magnificent Seven, as this category has been one of the most concentrated sectors in history. He believes that this above-par level of concentration will lead the Magnificent Seven down, similar to what the market saw back in 1999 and the 20s.
This high level of concentration tells a lot about the future performance and as far as the Magnificent Seven stocks are concerned, Jason does not see the future performance coming from this sector. He argues that the future performance will come from sectors that are not too concentrated at the moment such as the small-cap and pretty much the other 493 stocks in the S&P 500. Investors should be looking at diversifying their portfolios as this is the environment where investors should own the risk and the small caps to get better gains moving forward.
In addition, Stephen further added to the discussion by mentioning that to understand the stock market today investors need to look at this basic idea that a stock only moves higher if there are people who want to buy it from you at a better price. Therefore, if everyone already owns the same stocks then there is no one left to buy it at a better price. Stephen noted that the market is currently in an extremely volatile situation where nobody knows the rules of the market. This is due to the series of headlines related to tariffs, inflation, and interest rates. This situation makes it tough for already expensive companies to predict an encouraging outlook. On the other hand, if we look at the small-cap companies and other less concentrated sectors of the market, these stocks are highly undervalued as compared to their history. Stephen says that fast forwarding to 6 to 12 months from today the market will be in a lower interest rate and more confident environment, which is the best-case scenario for small caps to rally.
Our Methodology
To compile the list of the top 10 penny stocks that will skyrocket we used the Finviz stock screener and CNN as our sources. Using the screener we aggregated a list of penny stocks (trading between $1 and $5) with more than 50% analyst upside potential. After sorting the list by market capitalization we cross-checked the upside potential for each stock using CNN and selected companies with more than 100% upside. Lastly, we ranked the stocks based on the number of hedge fund holders as of Q4 2024, sourced from Insider Monkey’s database. Please note that the data was recorded on March 21, 2025.
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).
A drilling platform in the middle of the ocean, showing the oil and gas exploration process.
Kosmos Energy Ltd. (NYSE:KOS)
Price: $2.25
Analyst Upside Potential: 143.90%
Number of Hedge Fund Holders: 27
Kosmos Energy Ltd. (NYSE:KOS) is an independent, full-cycle oil and gas exploration and production company specializing in deepwater operations along the offshore Atlantic Margins. The company has operations in Ghana, Equatorial, Mauritania, Senegal, and the United States Gulf of Mexico. On February 25, Wall Street analyst Matthew Smith from Bank of America Securities reiterated a Buy rating on the stock, with a price rating of $6.
The analyst highlighted that the company is approaching a significant FCF inflection, driven by the first cargo from the Tortue project, which has shown promising early production data. This is complemented by a substantial reduction in capital expenditures, leading to projected FCF yields of 20% in 2025 and increasing to 35% in 2026. Smith also noted that the discussion about future phases of the Tortue project indicates potential for further expansion, despite possible capital expenditure pressures. The Kosmos Energy Ltd. (NYSE:KOS) long reserve life and robust resource base provide a stable foundation for continued operations. Moreover, analysts expect more than 140% upside for the stock, making it one of the top penny stocks that will skyrocket.
Overall, KOS ranks 5th on our list of penny stocks that will skyrocket. While we acknowledge the potential of KOS 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 KOS 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.
