In this article, we will look at the Top 10 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.
With that, let’s take a look at the top 10 penny stocks that will skyrocket.
A close-up of a stock market ticker displaying the company’s stocks.
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).
Top 10 Penny Stocks That Will Skyrocket
10. Lotus Technology Inc. (NASDAQ:LOT)
Price: $1.58
Analyst Upside Potential: 153.16%
Number of Hedge Fund Holders: 11
Lotus Technology Inc. (NASDAQ:LOT) is a leading international luxury electric vehicle company that focuses on manufacturing and selling high-end electric vehicles. It manufactures premium electric vehicles for everyday use, expanding beyond traditional sports car offerings. Moreover, it invests heavily in research and development for next-generation automotive technologies, including electrification and intelligent driving systems.
On March 13, Lotus Technology Inc. (NASDAQ:LOT) announced that it has established a strategic partnership with CaoCao Mobility through its autonomous driving division Lotus Robotics. CaoCao Mobility is a leading ride-hailing service provider in China. The collaboration focuses on launching an innovative intelligent mobility platform for robotaxis, marking a significant milestone in the ride-hailing industry. As a result, Robotaxis equipped with Lotus Robotics autonomous driving systems has begun pilot operations in Suzhou and Hangzhou, showcasing reliability with over 13,545 kilometers of unmanned driving without human intervention.
Moreover, in fiscal 2024, the company delivered 12,065 vehicles, representing more than 70% year-over-year growth. China was one of the biggest contributors as it accounted for more than 25% of the deliveries during the year. With an analyst upside potential of more than 153%, Lotus Technology Inc. (NASDAQ:LOT) is one of the top penny stocks that will skyrocket.
9. BigBear.ai Holdings, Inc. (NYSE:BBAI)
Price: $2.98
Analyst Upside Potential: 101.68%
Number of Hedge Fund Holders: 13
BigBear.ai Holdings, Inc. (NYSE:BBAI) specializes in artificial intelligence-powered decision intelligence solutions. It delivers AI and machine learning technologies for decision intelligence, using tools like computer vision, anomaly detection, and predictive analytics to provide insights and manage risks. The company serves both public and private sectors including US defense and intelligence agencies, and border protection and transportation security, among others.
BigBear.ai Holdings, Inc. (NYSE:BBAI) demonstrated significant financial and operational progress in 2024 while addressing challenges in profitability. It grew its fiscal fourth quarter revenue by 8% year-over-year to reach $43.8 million. Moreover, the company also secured significant contracts, including a $165 million US Army production contract. As a result, its backlog expanded to $418 million by the end of 2024, reflecting a 2.5x increase compared to the previous year.
On March 10, BigBear.ai Holdings, Inc. (NYSE:BBAI) announced that it has been awarded a 3.5-year, $13.2 million sole-source contract by the US Department of Defense to modernize the ORION Decision Support Platform. It will enhance and maintain ORION DSP, which provides automated force management and advanced data analytics capabilities to the department. Analysts see more than 101% upside for the stock, making it one of the top penny stocks that will skyrocket.
