11 Best Penny Stocks with the Highest Upside Potential

Core Insights - The article discusses the 11 best penny stocks with the highest upside potential, highlighting a recent rally in small-cap stocks driven by technology and growth companies, particularly in the semiconductor industry [1][2]. Small-Cap Stock Performance - Small-cap stocks have underperformed the market for over a decade but began to outperform in August 2025, with the industrial and financial sectors contributing significantly to gains [2]. - Over the past decade, small caps have only outperformed the market twice, with a notable performance in 2022 where small caps dropped 18.5%, slightly better than the broader market's 19.4% decline [3]. - In the third quarter of 2025, small-cap stocks are up 8%, outperforming large-cap stocks at 7.8% and mid-caps at 3.9%, with the technology sector being the top contributor [4]. Methodology for Stock Selection - The list of the 11 best penny stocks was curated using the Finviz Stock Screener, CNN, and Insider Monkey's Q2 2025 database, focusing on stocks trading below $5 with expected upside of over 25% [6]. - The strategy of imitating top stock picks from hedge funds has shown to outperform the market, with a reported return of 373.4% since May 2014 [6]. Company Highlights - Tuya Inc. (NYSE:TUYA): - Current price is $2.52 with an analyst upside potential of 26.98%. The company reported a 9.35% year-over-year revenue growth to $80.13 million, exceeding Wall Street estimates [8][10]. - Achieved a 15% year-over-year revenue growth in H1 2025, with a non-GAAP operating profit increase of about 127% [9]. - Clarivate Plc (NYSE:CLVT): - Current price is $3.66 with an analyst upside potential of 36.61%. The company is focusing on growing subscription revenue, aiming for 90% of its revenue to come from subscriptions by 2026 [11][12]. - EBITDA margins are expected to shrink to 41% this year due to asset disposals, with plans to streamline its portfolio by reviewing non-core assets by February 2026 [13].