To find the best undiscovered penny stocks, first take a look at the over-the-counter (OTC) market. Why? Many of the best bargains among penny stocks, or stocks trading for $5 per share or less, can be found among equities that trade OTC.

Smaller and less liquid, institutional investors are less active in the OTC space. This can give individual investors the edge, as stock prices can often fail to fully take into account a stock’s underlying value. Either from company-specific catalysts, or from a “value is its own catalyst” scenario playing out. This creates plenty of opportunity to find and make asymmetric wagers, or situations where upside potential vastly exceeds downside risk.

Having said this, even among penny stocks listed on major markets, you can find names that are both dirt-cheap and under-the-radar. Mainly, among listed penny stocks that are classified as microcap stocks. These are stocks with market capitalizations of $300 million or less.

A mix of OTC and major market-listed names, these are the top seven undiscovered penny stocks to consider buying right now.

Acacia Research (ACTG)

Admittedly, one can argue that Main Street and Wall Street investors have already somewhat discovered Acacia Research (NASDAQ:ACTG). Still, shares in this entity have yet to experience a breakout moment, in terms of market popularity and full price discovery. However, this may be changing.

Acacia Research is a holding company, controlled by investment firm Starboard Value. In prior coverage of ACTG stock, I’ve talked about Acacia’s origins as a net operating loss. And its efforts to monetize these tax loss carryforwards through the acquisition of undervalued companies. After several years of sideways price performance, ACTG has bolted higher so far in 2024. Mostly, due to the unveiling of promising news when Acacia reported its full-year 2023 results back in March.

Realizing gains from a prior investment, and making a big bet on oil and gas, Acacia appears well-positioned to start hitting some big home runs. Best of all, even after a 25% move higher year-to-date, ACTG continues to trade at a discount to book value. As InvestorPlace’s Yiannis Zourmpanos recently pointed out, Acacia has over $400 million in cash on hand, more than enough to plow into its next big deal.

Barfresh Food Group (BRFH)

Barfresh Food Group (NASDAQ:BRFH) has more than doubled over the past month. But it’s still a name one can arguably classify as one of the undiscovered penny stocks. In a nutshell, Barfresh Food Group makes and sells smoothie and juice products. These products are sold primarily to schools, where they are served as part of school lunches.

Due to poor fiscal performance, BRFH stock sank from prices nearing $8 per share in 2022, to as low as $1 per share earlier this year. However, since May, shares have been making an incredible comeback. First, Barfresh bolted higher upon the release of improved results and promising corporate updates. Second, a stock market commentator has recently started to spread the word about BRFH’s upside potential.

As Substack publisher D&A Metropolitan put it in his bull case, the “juice is worth the squeeze” with Barfresh. Experiencing a resurgence in demand from schools, Barfresh could also soon make a move into other sales channels. Per the commentator, this company could be worth between $100 million and $500 million in a few years. Not too shabby, given that, even after the big run up, BRFH has a valuation of less than $50 million.

Butler National (BUKS)

Butler National (OTCMKTS:BUKS) is another one of the undiscovered penny stocks waiting for its next big liftoff moment. In the past, I’ve talked about how this holding company trades at deep value prices. BUKS, with interests in aerospace and casino gaming, trades for only 8.5 times earnings. Meanwhile, both aerospace and casino stocks trade at far greater earnings multiples.

Earlier this year it seemed a spate of management changes in 2023 would kick BUKS stock into high gear. Admittedly, so far there has yet to be any “big moves” strategically, but there have been some signs of progress. Back in February, Butler added two independent directors to its board. One of these directors, Joseph P. Daly, is one of the company’s largest outside shareholders, with a 9% stake.

While not certain, Daly and the other independent directors could be working behind the scenes, to push for the best course of action to drive the next big boost for shares. Butler’s aerospace unit could be a prime target for a strategic acquirer. The same can be said about the company’s casino property as well.

Elite Pharmaceuticals (ELTP)

With Elite Pharmaceuticals (OTCMKTS:ELTP) up five fold over the past year, this is yet another of the undiscovered penny stocks. Don’t be discouraged by the appearance that microcap investors may have caught onto the opportunity with pharma firm. Elite has a catalyst in motion that could drive an even larger amount of market attention.

The ELTP stock catalyst I’m talking about is the company’s key pipeline candidate, a generic anti-rheumatic treatment. Earlier this month, I discussed how this candidate recently received regulatory approval. This paves the way for Elite to monetize this product. Sure, it’s not as if this pharma firm has a blockbuster drug in the making with this candidate.

However, with a total addressable market of $64.3 million, capturing a good share of this market could mean further material improvements to Elite’s sales and profitability. Over the past twelve months, revenue has totaled $47.3 million. Shares could rally on more progress with this catalyst, but that could be only the start. Now back in the high growth fast lane, it wouldn’t be surprising if ELTP made additional moves to raise its profile, such as a stock market uplisting.

Fortitude Gold (FTCO)

Based in Colorado Springs, Colorado, Fortitude Gold (OTCMKTS:FTCO) is a gold producer. The company operates mining properties in the U.S. state of Nevada. Fortitude has a track record of generating steady earnings from its established mining operations. Further, the company also pays out a monthly 4 cent per share dividend to investors.

If FTCO stock were to trade on a major exchange, dividend investors would be all over it. However, since Fortitude Gold shares trade in the OTC market, it has attracted far less attention. This works highly in the favor of those in the know, since at current prices FTCO’s payout gives the stock a forward yield of 11.29%.

That’s not all. As I have pointed out before, there may be big upside potential on the table as well with FTCO. While spot gold prices have pulled back slightly, they remain up by around 20.5% over the past year. Further macro and monetary policy changes could send gold even higher. As is the case with gold miners, high operating leverage suggests the potential for outsized improvements in profitability, on relatively smaller increases in the gold spot price.

Lesaka Technologies (LSAK)

Lesaka Technologies (NASDAQ:LSAK) is a South African fintech firm, specializing in providing payment and other financial services. Its main focus is on the informal economy in its home market, as well in adjacent markets in Southern Africa.

There are two reasons why LSAK stock could go from being one of the undiscovered penny stocks, to garnering a far greater level of market attention. First, as seen in Lesaka’s latest quarterly earnings release, operating results are steadily improving. Recent bolt-on acquisitions could help the company make a full-on move to consistent profitability. Once the company’s fundamentals appear stronger on a screener, this could result in greater investor inflows into shares.

Second, a more macro-related factor could mean more capital is cycled into LSAK shares. Following South Africa’s 2024 General Election, a coalition-style Government of National Unity is being formed. While uncertainty still looms, if the current coalition holds, this should assuage worries about South Africa implementing fiscal policies that are less favorable to business and foreign investment. This could drive further interest in South African stocks. In turn, leading to a greater degree of discovery of LSAK by stateside investors.

Vaso (VASO)

Vaso (OTCMKTS:VASO) is a medtech firm that provides a variety of products and services to the healthcare industry. Through its operating units, the company makes and sells medical equipment, as well as provides managed IT services to healthcare providers.

As an OTC-listed penny stock trading for well under $1 per share, VASO stock remains very much hidden from the radars of most investors. However, Vaso may not stay obscure forever. Why? While still pending, Vaso remains on track to be acquired by Achari Ventures Holdings I (NASDAQ:AVHI), a special purpose acquisition company (SPAC).

Once this deal is completed, AVHI will take on the Vaso name. In effect, this deal serves a a de-facto uplisting for the company. It also provides an opportunity to shake off Vaso’s penny stock reputation. Add in the potential to take AVHI’s war chest of cash, and put it to work via acquisitions, and its easy to see how this could prove to be a successful SPAC transaction. With Vaso trading for only 12.8 times earnings, even a modest amount of multiple expansion could lead to big gains after the de-SPACing.

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Read More: Penny Stocks — How to Profit Without Getting Scammed

On the date of publication, Thomas Niel held ACTG and LSAK. He did not hold (either directly or indirectly) any positions in the other securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.