Best Stocks Under 5 Dollars: February 2020
If you’re investing on a small budget, you can appreciate the value of cheap stocks. The best stocks under 5 dollars are a great place to start for many new investors. They’re cheap enough that most investors can afford to buy a round lot of 100 shares. You won’t pay any more than 500 dollars for a lot of any of the best stocks under 5 dollars, so they’re perfect for new traders.
Be sure to check out this article for more low-cost options, and the best stocks for under 10 dollars offer even more great picks for everyday traders. Stocks under 5 dollars or those that trade under $5 per share are also referred to as penny stocks. Learn more about penny stocks in this page.
Many blue-chip stocks are too expensive for most retail investors. A thousand bucks will only get you about 5 shares of Apple (AAPL). You could buy 200 shares of a five-dollar stock for the same price, and if share prices went up by only one dollar you would net a 200-dollar gain. Therefore, in our hypothetical Apple trade, share prices would have to make a 40-dollar move to net you the same gains as low-priced stocks.
Top 5 Picks: Stocks Under 5 Dollars
To get you started on your investing journey, we’ve listed our top-5 low priced penny stock picks. These stocks are high-risk high-reward assets, so remember to consult a professional financial advisor before making any investments. All of our best stocks for under 5 dollars are also based in the United States.
Agenus Inc. (AGEN)
Agenus is a clinical-stage immuno-oncology firm. Basically, the firm focuses on developing cancer treatments that activate the immune system to fight cancer. In addition to cancer treatments, Agenus is developing a variety of vaccines.
Like most small-cap biotech firms in the industry, Agenus is not profitable just yet, but there’s a sign that the future looks bright. The firm has collaboration agreements with several notable biotech firms, and it’s also working with Gilead Sciences (GILD) sciences to develop immuno-oncology therapies.
Though Agenus isn’t turning a profit just yet, shares are trading for about three times sales; relatively cheap for an up-and-coming biotech firm. We’re not the only ones who like this one, Zack’s recently upgraded AGEN to a buy. It currently has a $520 million market cap, so AGEN could be worth keeping an eye on.
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Workhorse Group Inc. (WKHS)
If you’re looking for a promising small-cap electric vehicle stock to buy, Workhorse Group may be worth a look. Workhorse is an up-and-coming electric vehicle company that produces commercial EVs and electric aircraft, like helicopters and drones.
This EV stock got a big boost in May when the company entered into an agreement to purchase an assembly plant in Lordstown, Ohio from General Motors. The company planned to announce the buy along with a $700 million investment in another part of Ohio. But they got an early Twitter shoutout from Trump after the deal hit the newswires.
The stock gained 214% on the news, a dramatic reaction to say the least, but it may have been overdone. Workhorse is a minority partner in the deal and they’re still looking to raise capital. Under the terms of the deal, GM formed a separate entity, called Lordstown Motors Corp.(LMC), to facilitate the purchasing of the plant. Workhorse intends to license its IP and technology to LMC as part of a joint effort to manufacture a new electric pickup truck, the Workhorse W-15. Workhorse CEO Duane Hughes says licensing the company’s technology entails “minimal engineering and no production expense.”
However, the Trump bump didn’t last. The stock lost over 20% of its value in one session after posting a huge loss on earnings. Shares bottomed around the 200-day SMA and have been on a steady uptrend since. The company is losing a lot of money, but the company has a decent backlog of orders and just raised an additional $25 million in a private funding round.
According to the latest earnings call, Workhorse is a finalist for a lucrative contract from the United States Postal Service’s next-generation delivery vehicle program. The USPS contract is worth approximately $6.3 billion, over 25 times Workhorse’s current market cap of $226.43 Million. Landing that large of a deal would be a huge catalyst for the stock, but it’s far from a sure thing. Interestingly, Hughes said in the call, “we do view the Lordstown plant as a potential game-changer in that [USPS] contract.”
Workhorse is facing a lot of uncertainties, but a small position now could pay off big time if they manage to land that multi-billion-dollar USPS deal. Keep an eye on this one.
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Histogenics Corp. (HSGX)
Last April, this micro-cap biotech stock jumped when the company announced a stock-for-stock merger with privately-held Ocugen. Upon closing, Ocugen stockholders will become the majority owners of the newly formed company, which will also operate under Ocugen leadership.
When news of the merger broke, Histogenics shares rallied as much 71.78%. The news helped the stock breakout of a funk that saw company share prices dip down as low as 8-cents-per-share. Share prices more than doubled since then, even breaking above $0.30 per share for a few sessions. After a prolonged consolidation around $0.17, HSGX is up over 15% from its August 15th close with over 2.5 times more trading volume than average.
Peculiarly, the move was not accompanied by any news, so traders looking to buy should be cautious. This stock does have some things going for it, however. The Ocugen merger could create a few more catalyst headlines for this biotech stock before the deal closes. Histogenix was trading for $2.80 per share just last year. It’s highly unlikely that share prices will get back to those prices, but there is still a significant amount of potential short-term upside in the stock.
Plug Power Inc. (PLUG)
This company manufactures hydrogen, fuel cell systems, and other alternative energy technologies for material handling and stationary power applications in North American and Europe. Its primary products are proton exchange membrane (PEM) fuel cell and fuel processing technologies.
The company released its Q2 2019 earnings report on August 6th. Plug Power beat consensus estimates on both top and bottom-line earnings in the second quarter. The company beat revenue estimates by over 8% and posted smaller-than-expected losses for the quarter.
Share prices in the market began sliding in June after they failed to sustain a breakthrough past $2.60. The slide sent prices tumbling as low as $2.00, then last week’s earnings report gave this energy stock a kick in the pants. However, it’s unclear if the stock has enough momentum to sustain the move. Shares traded with below-average volume during the recent move.
PLUG is on the right track. Revenues are growing and losses are narrowing. Its guidance range for 2019 revenue provided last November was $235 million to $245 million. In the last 12 months, four Wall Street analysts have issued ratings and price targets for PLUG. Prior to this quarter, Plug Power missed on its previous two earnings reports. Hopefully, this quarter’s double-line beat will mark a turning point for the energy stock.
Best Stocks Under 5 Dollars: Credibility Check
Pay attention to market capitalization. Generally, stocks with market caps below $500 million tend to be more volatile. In addition, it’s also important to consider which exchange lists the stock.
OTC markets have less stringent listing requirements than NASDAQ or NYSE, so it’s important to pay attention to exchanges when considering a trade or buy. Most stocks under 5 dollars are not in the S&P 500 or other major indices.
Finding The Best Stocks Under 5 Dollars
To find your own 5-dollar stocks, use a stock screener. Most brokers have a stock screener built into their trading platforms. Screeners are a great tool for finding new trade opportunities to buy.
Screening tools help investors sort through stocks and find the ones that meet their criteria. It’s like a search engine for stocks. Finviz has a free screening tool that offers tons of features and works well enough for most retail traders. You can also search for buy recommendations.
Best Stocks Under 5 To Buy: Expect Volatility
Even the best stocks under 5 dollars are not a sure thing. Small-cap stocks are even more volatile, so you have to keep a close watch on your positions in the market when trading stocks this cheap. For more interesting stocks, read here.
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