In this article we take a look at it The 11 Best NYSE Penny Stocks to Buy Now.

Small and medium-sized companies are most affected by economic developments and interest rates. As the Federal Reserve cuts interest rates and the economy heads for a soft landing, the focus is slowly shifting to penny stocks, which remain well-positioned to get a boost from an improving macro economy.

After years of market dominance by large-cap stocks, it's time to fully embrace the small-cap rotation. That's the view of Scott Chronert, U.S. equity strategist at Citi, who believes small-cap stocks offer an affordable way to invest in value and are well-positioned to generate long-term value.

READ ALSO: The 10 Worst-Performing Growth Stocks in 2024 and the 8 best micro-cap stocks to buy, according to analysts.

“Overall, investors could pay a much lower multiple for a similar growth profile in the future,” he wrote. “Given the post-pandemic specifics, lack of a true cycle and secular trends supporting executives, we still want to own some large cap winners, but increasingly see small/mid cap as an attractive alternative to the other 493,” he said. “On the other hand, we feel more comfortable looking down in search of fundamental winners and thematic expressions.”

Although small- and mid-cap stocks have posted above-average, double-digit gains over the past year, they are looking increasingly attractive amid a change in monetary policy. The Federal Reserve begins easing its monetary policy, making it easier for such companies to borrow money to expand their business. With its long-term prospects looking positive, investors are starting to take note of its low valuation.

Likewise, the Russell 2000 ETF, which consists primarily of small and mid-cap companies, is up 13%, compared to a 22% gain for the S&P 500, confirming the huge potential for gains in penny stocks.

“We continue to believe these stocks have been unfairly penalized (or ignored) as we believe there is a mismatch between the fundamentals and the relative performance of the group, and that has not changed.” “It's just a question “the time until this group’s fortunes change for the better,” now that central bankers are cutting interest rates. Written BMO analyst research notes for investors.

Likewise, there is an influx of investment in small-cap exchange-traded funds as optimism grows that the companies are reasonably valued and have huge upside potential. According to ETF journalist Dave Nadig in an interview on CNBC, the inflow of money into penny stocks may not necessarily be a rotation of successful growth trades. Instead, it is a diversification move as the focus shifts to a broader year-end presence. The diversification strategy is part of a broader strategy to absorb volatility

“(Investors) are now buying value for the first time in a long time, some of these defensive sectors and small caps. But they haven’t stopped buying the other things either,” Nadig said in an interview on CNBC ETF Edge. “I think this is money coming out of the huge bucket of money markets that we know is out there.”

As large-cap stocks continue to outperform the overall market, the focus of penny stocks is primarily on companies that are profitable. With 40% of small-cap companies in the S&P 500 unprofitable, investors are turning their attention to ETFs that exclude unprofitable companies while optimizing returns in the current bull run.

The focus on penny stocks of profitable companies stems from the historical thesis that small caps often outperform larger companies when the economy is growing under sound macroeconomic conditions. As a result, small-cap companies with exposure to new technologies such as artificial intelligence are becoming the most sought-after companies due to their huge growth potential.

The best NYSE penny stocks to buy right now are also notable for their attractive valuations and the fact that they have a small expected earnings growth differential compared to large-cap companies. The fact that investors have to pay a significantly lower multiple for penny stocks also sets them apart in terms of the risk-return ratio.

Our methodology

We used the Finviz screener to find lists of stocks on the New York Stock Exchange that are trading under $5 as of October 31st. We then selected stocks that analysts are bullish on and expect to generate significant long-term value due to their solid underlying fundamentals. Finally, we sorted the stocks in ascending order based on the number of hedge funds that own shares in them (as of Q2 2024).

At Insider Monkey, we obsess over the stocks hedge funds invest in. The reason is simple: Our research shows that we can outperform the market by mimicking the top stock picks of the best hedge funds. Our quarterly newsletter strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, outperforming its benchmark by 150 percentage points (see more details here).

The Best NYSE Penny Stocks to Buy Now

11. ACCO Brands Corporation (NYSE:ACCO)

Price as of October 31st: $4.97

Number of hedge fund owners: 24

ACCO Brands Corporation (NYSE:ACCO) is a company that manufactures and sells products for schools, offices and the technology sector. They offer things like computer and gaming accessories, planners, and cleaning supplies. Although the company remains profitable, it has come under pressure in 2024, posting a 20% decline year to date. That left it underperforming the S&P 500, which is already up more than 22%.

ACCO Brands Corporation (NYSE:ACCO)'s sentiment has come under pressure, leading to declining sales, and its core business of selling various office and school supplies has been hurt by inflationary pressures. The company delivered mixed third-quarter results that were in line with expectations and supported by improving sales trends. Net sales decreased 6% to $421 million, primarily due to foreign exchange effects. On the other hand, net income totaled $9.3 million, or $0.09 per share. The company is on track to achieve $20 million in full-year cost savings as part of its cost savings program

Primarily thanks to working capital management, ACCO Brands' operating cash flow improved to $95.5 million in the third quarter compared to $70.7 million a year ago. By the end of the third quarter of the previous year, the company's consolidated leverage ratio was 3.8x and fell to 3.5x.

ACCO Brands Corporation's (NYSE:ACCO) long-term outlook also remains positive as the economic environment improves, inflation declines and the Fed cuts interest rates. The Company has implemented a cost management strategy, supported by strategic improvements in infrastructure and operational efficiency, which is expected to result in revenue growth and improved cash flow.

Because the company has increased its dividend payments by an average of 4.9% over the past three years, it remains one of the best NYSE penny stocks to buy right now. ACCO Brands Corporation (NYSE:ACCO) has already declared a dividend of $0.075 per share, which translates to an annual dividend of $0.30 and a yield of 6.24%.

10. Eventbrite Inc. (NYSE:EB)

Price as of October 31st: $3.16

Number of hedge fund owners: 25

Eventbrite Inc. (NYSE:EB) is a company best known for providing an event management platform and ticketing services. The company has only begun to recover after facing significant challenges resulting in movement restrictions at the height of the COVID-19 pandemic. While the stock is down around 70% from its all-time highs, its outlook is showing signs of improving as desire for live experiences increases and inflation declines, boosting ticket sales.

Last year alone, Eventbrite Inc. (NYSE:EB) sold over 300 million tickets to over five million events while inflation was still high. With inflation in major economies falling well below the 4 percent threshold, the company is on the cusp of a booming ticket sales business. The second quarter report was the clearest indicator that the company is once again experiencing robust growth.

Net sales rose 7% to $84.6 million in the quarter, although gross ticket sales fell to $840 million from $890 million in the year-ago quarter. While Eventbrite Inc. (NYSE:EB) lowered its full-year revenue forecast, the company has taken necessary steps to reduce its operating costs, which is one of the ways to increase profit margins. As a result, the company is laying off 11% of its workforce, down 8% in the first half of last year.

Additionally, Eventbrite Inc. (NYSE:EB) took steps to capitalize on the growing live events market despite a decline in ticket volume in the second quarter. Additionally, the company continues to have a solid liquidity position that allows it to invest in technology as it focuses on long-term profitability. Given that the company's revenue has increased over 18% over the past 12 months, it continues to be in a period of robust growth, underscoring why it is one of the best NYSE penny stocks to buy right now.