If you’re a penny stock or small-cap stock trader, then you know it’s rough trading stocks under $5. There’s a lot of volatility with this investment type, so it can be challenging to find the right opportunities on the stock market. That’s why we’re providing you with our picks for the best stocks under $5 to help kickstart your stock trading research.
If you are a new trader unfamiliar with this type of trading, here is a quick primer to get you started.
What You Need to Know about Penny Stocks
Penny stocks can trade on the Over-the-Counter Bulletin Board exchange (OTC), a daily listing of the bidding and asking prices for stocks that are usually too small to meet exchange-listing requirements.
OTC stocks are less regulated than stocks on the NYSE or Nasdaq, which means it can be challenging to know all the details about the company before you invest.
Companies with stocks on the OTC market are not required to be transparent, and often their press releases are hilarious exaggerations, so don’t believe everything you read.
Because of this, it’s best to stick to stocks under $5 that have made their way onto major exchanges like NASDAQ and NYSE.
Penny stocks on these exchanges are less risky and already have met the stringent requirements to get posted in these markets.
It’s still essential to do your research, since not even the best stocks under $5 are safe from a significant downturn.
If we haven’t scared you off yet, it is because you know this: penny stocks and cheap stocks under $5 can mean mammoth returns, or it can mean losing everything in minutes — it’s the Wild, Wild West.
So, if you are ready to ride, here are the best five stocks under $5 right now.
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Best Stocks Under $5 To Buy Now
These picks for the best stocks under $5 can fit in most portfolios.
- Quad/Graphics (NYSE: QUAD)
- Express Inc. (NYSE: EXPR)
Quad/Graphics (NYSE: QUAD)
Quad/Graphics fits into a niche that offers marketing services to businesses.
The company got its start back in 1971 as a commercial printing facility.
From there, it has evolved to work with companies and provide marketing strategies for products and services.
Quad/Graphics is headquartered in Wisconsin but has extended its reach all across the United States.
The company also has an international group that prints and markets in Europe and Latin America.
Most of its business stems from the United States at this time, but a continued push into other regions should grow earnings.
Quad/Graphics has had an increase in share price over the last year and is up over 30% at this time.
It looks to climb back out of penny stock range by growing its footprint, making this a potentially good time to get on board.
Express Inc. (NYSE: EXPR)
Express is a clothing and accessories company with a diverse line of clothing incorporating the latest fashion trends.
The company currently has over 500 retail and factory outlet stores in the United States.
In addition, it also has an online presence to draw in business from other regions.
While primarily focused on its physical spaces in the past, Express is working hard to grow its digital presence.
This follows closely in line with shopping trends towards online sales.
To reduce waste, Express is looking to optimize costs for building rentals and streamline cash flow.
Income and revenue numbers are looking strong and are having a positive effect on shares.
Its stock is seeing a 150% price increase since last year at this time, and Express hopes these changes will push it even higher.
Best Day-Trading Stocks Under $5
- Kiora Pharmaceuticals Inc (NASDAQ: KPRX)
Kiora Pharmaceuticals Inc (NASDAQ: KPRX)
Formerly known as Eyegate Pharmaceuticals, Kiora Pharmaceuticals is all about providing solutions for eye disorders.
The name change comes as the pharmaceutical firm looks to push beyond common eye issues and develop small molecule therapies.
These therapies have the potential to restore vision loss for the rare disease Retinitis Pigmintosa.
While the company works on this new treatment, it already has a series of medications under its belt with injections and eye drops.
Pharmaceutical companies are known to dance around and see large spikes of growth at times.
Kiora certainly fits the bill and can be played accordingly.
The ups and downs of both development and regulation can cause stock prices to jump and fall with one success or failure.
For a penny stock, it has a volume of 12.6 million shares.
This allows for a significant amount of movement on any given day.
Biotech Stocks Under $5
- BioDelivery Sciences International Inc. (NASDAQ: BDSI)
BioDelivery Sciences International Inc. (NASDAQ: BDSI)
BioDelivery Sciences International is looking to make waves with medications that treat chronic conditions.
The company is based out of North Carolina and both develops and distributes drugs to the market.
BELBUCA, a drug to treat chronic pain, was released in 2020.
This drug is a crucial component of BioDelivery Sciences International’s growth and is currently its most significant source of income.
This has not stopped the company from looking for other sources of income.
BioDelivery Sciences International recently acquired neurology drug ELYXYB with hopes of an early 2022 launch.
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ELYXYB is designed to treat chronic migraines.
The company is already profitable, and through this new acquisition is setting itself up for even more growth.
These positive changes mean BioDelivery Sciences International could be on the cusp of a boost in shares.
Best Tech Stocks Under $5
- Boxlight Corporation (NASDAQ: BOXL)
- Waitr Holdings, Inc. (NASDAQ: WTRH)
- NextPlay Technologies (NASDAQ: NXTP)
Boxlight Corporation (NASDAQ: BOXL)
Boxlight Corporation offers innovative and interactive technologies that help children learn in the classroom.
Schools can use these tools to stimulate student engagement and provide fast feedback and instruction as needed.
Boxlight can help educators build the program that works best for their particular classroom through a large selection of products.
The company has expanded its resources throughout the years, acquiring like-minded businesses to help grow its brand.
Boxlight has no shortage of awards and accolades to back up its claims.
Third-quarter financial reports came in strong, and Boxlight has finally started turning a profit on its product line.
With many more innovations on the way, Boxlight looks to continue to grow in this market space for many years to come.
Waitr Holdings, Inc. (NASDAQ: WTRH)
Waitr Holdings is a player in the online on-demand food ordering and delivery game.
The company began in 2013 in Louisiana and quickly acquired competitor Bite Squad to expand its footprint.
Today, Waitr and Bite Squad work to bring delicious morsels to areas of the United States that other delivery services don’t reach.
Orders can be placed either on the website or through a convenient mobile app.
Although revenue is a bit less than expected at present, Waitr is reeling in the net income and earnings per share as reported in Q3.
Waitr saw a spike through the first half of October, but things cooled off once Morgan Stanley announced a 10% interest in the company.
This cold front will likely blow over soon but makes for a great time to pick up your piece of the Waitr pie.
NextPlay Technologies (NASDAQ: NXTP)
NextPlay Technologies is a digital tech and eSports company located in Florida.
While not tied to a specific game or event, the company works to connect gamers, consumers, and advertisers.
Its Hotplay platform is the place where all these people come together.
The company also branches out into travel and fintech, offering opportunities for travel deals and banking solutions.
NextPlay also uses AI and blockchain technology to facilitate custom user experiences.
To continue growing, NextPlay has recently acquired TV company Zappware and digital bank IFEB to cement its place in the industry further.
NextPlay is well-positioned to grow with the gaming industry by staying on top of changes.
This could be the perfect opportunity to get into this space while the stock price is still low.
Best Asian Stocks Under $5
- Lightinthebox Holding Co. Ltd. (NYSE: LITB)
Lightinthebox Holding Co. Ltd. (NYSE: LITB)
Lightinthebox is a Chinese company that markets budget items all over the world.
The retailer offers clothing, gadgets, and home and garden supplies through its immersive online platform.
Launched in 2007, Lightinthebox is quickly gaining popularity as a cheaper way to find products.
To sweeten the pot, the company even sends purchases directly to a consumer’s door no matter where they may be – its site even lists shipping to Antarctica.
Although Lightinthebox has suffered a bit at the hands of supply chain issues and regulatory crackdowns, it is still seeing positive gains in revenue and net income.
Its share prices neared an all-time low over the summer, but they appear to be rising again as investors are getting on board.
This could be the calm before Lightinthebox stock really takes off.
Dividend Stocks Under $5
Dividend stocks are an excellent way to earn some passive income, as they pay out a regular payment to shareholders.
- Telefonica S.A. (NYSE: TEF)
- Pangaea Logistics Solutions Ltd. (NASDAQ: PANL)
Telefonica S.A. (NYSE: TEF)
If you’re looking for a stock under $5 with a gigantic dividend yield, this is one to keep in mind.
This particular stock currently pays out 10.05 percent to its shareholders.
Telefonica is a communications company based in Spain and provides wireless service in Europe and Latin America.
It serves 24 countries and has over 3.5 million customers.
No matter where it goes, the company looks to positively impact progress through helping economic and social development.
Not to rest on its laurels, Telefonica is looking to innovative tech like blockchain to increase capabilities.
Even though it is a penny stock, Telefonica’s presence in many regions makes it a safer investment.
Pangaea Logistics Solutions Ltd. (NASDAQ: PANL)
Pangaea Logistics Solutions is literally carving the way through the waters to provide transportation and logistics services.
The company frequently sails through high ice and controls a majority of the world’s large dry bulk vessels with an ice-class designation.
It has a fleet of roughly 60 ships that can sail to the corners of the globe to deliver a wide variety of dry bulk cargo.
These trips through northern sea routes take less time, less fuel, and result in less carbon dioxide emissions.
Pangaea also boasts production and operation of port and inland projects.
The company’s stock has seen a steady rise since the world shut down back in March of 2020, only starting to fall again in September.
This dip already looks to have stabilized, making this a potentially solid chance to invest.
To add to this positive outlook, Pangaea also has a dividend yield of 3.13%.
Should You Buy Stocks Under $5?
Stocks under $5 can be a great entry point into the trading game.
Many still consider these tickers to be penny stocks, but at the upper end of the spectrum offer more stability than those under $1.
Many stocks in this category can be found on the major exchanges, offering less volatility and more overall structure.
Best of all, the price point is low enough not to be prohibitive to get into.
Those that enjoy surfing the stock market wave can use stocks under $5 for day-trading gains on more volatile picks.
There’s significant money to be had when even a minor increase can have a large impact on share price.
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Where to Buy Stocks Under $5
Stocks under $5 tend to dominate more volatile OTC markets where regulations are slim and reports are often exaggerated.
It’s best to avoid unnecessary variables and invest in stocks that meet the requirements to be posted on NASDAQ or the NYSE.
Platforms like Robinhood and Webull steer clear of over-the-counter markets in favor of these major exchanges.
Newer traders or those looking for a more streamlined approach to trading will likely benefit from Robinhood’s interface.
Investors who want to dig deeper into these markets to find the next big breakout may wish to use Webull’s more complex search algorithms.
No matter which platform you use, be sure to research a ticker before making a purchase.
Best Stocks Under $5: Conclusion
Those are the names we consider hot stocks under $5 across markets right now.
There will be lots of opportunities in the markets ahead but expect volatility.
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