If you’re a penny stock or small-cap stock trader, you know it’s rough trading stocks under $5. There’s a lot of volatility with this investment type, so is it worth the risk? Follow along for a list of the best cheap stocks under $5 to watch out for.
Best Stocks Under 5 Dollars to Watch Out For
Buzzfeed Inc. (NASDAQ: BZFD)
Buzzfeed is an online media site that covers a wide variety of headlines. The company strives to promote and inspire what audiences should buy, watch, or obsess over next. It has five brands specific to certain genres that individuals can plug into.
Buzzfeed’s digital content has reached hundreds of millions of viewers since its inception in 2006. The company has recently been highly optimistic following a couple of significant acquisitions.
In its most recent financial report, BuzzFeed raised sales to $106.7 million, up 20 percent compared to the second quarter of 2021. This includes HuffPost and Complex Networks results from the date of each purchase.
With those investments and the quick integration of Complex Networks, BuzzFeed is positioned to meet the rising demand for brand-safe and culturally appropriate content worldwide.
Copper Mountain Mining Corp. (OTCMKTS: CPPMF)
Copper Mountain Mining Corp. explores, develops, and operates mineral deposits. The company owns 75% of the Copper Mountain mine in British Columbia, where it produces over 80 million pounds of copper per year.
It also explores two copper deposits in Queensland, Australia, with 100% ownership. While searching for copper, Copper Mountain also extracts gold and silver.
In a push for sustainability, Copper Mountain achieved an “A” or “Yes” rating on all TSM protocols last year.
The long exploratory effort at the Copper Mountain Mine ended with successfully commissioning the Trolley Assist project. This seeks to cut carbon emissions at the mine by at least 30%.
Work is now being done to update the mineral reserve and resource estimation with a revised mine plan that will include an expansion study. Plans are moving forward despite the company terminating its CFO in late August.
Copper Mountain Mining’s revenue is down this last quarter alongside operating income. Share prices have not maintained any growth from a year ago but have seen several ups and downs.
The sales of 12.9 million pounds of copper, 5,069 ounces of gold, and 57,600 ounces of silver generated $59 million in revenue during the second quarter of 2022.
As the company grows its business and makes changes at the top, share prices might expand as well.
Lottery.com Inc. (NASDAQ: LTRY)
Lottery.com is the lottery personified on the internet. The company contains mobile and online platforms to allow players worldwide to purchase legal lottery tickets. Over 800 different games from over 40 countries line the site.
This leading technology company continues innovating how the lottery is played while striving to reach new players daily. Lottery.com does so through strategic partnerships like its recent one with AI media company ICARO.
The business shared its first-quarter results, which were a true success. Revenue during the first quarter of 2022 increased by $15.7 million (287%) to $21.2 million.
The selling of LotteryLink credits to a LotteryLink affiliate was the main factor in the rise. Since it allowed the affiliate to buy pre-paid promotional rewards, it could then provide them to customers for buying lottery games and other products.
It doesn’t hurt that Lottery.com’s revenue stream looks solid of late. With so much momentum in place, betting on Lottery.com could land you the jackpot.
Best Stocks to Buy Under $5 with Potential
Energy Services of America Corp. (NASDAQ: ESOA)
Energy Services of America serves the mid-Atlantic region of the United States with natural gas, petroleum, solar, sewer, and more. Founded in 2006, ESOA has its base of operations in Huntington, West Virginia.
The company has four subsidiaries to provide these services to the area. As it lays pipes to meet the needs of communities, ESOA keeps safety and environmental impact at the forefront of all it does. ESOA is having a good year so far, benefitting from a recent rise in share price.
In addition, financial numbers surpassed expectations for 2022’s first two quarters and look to remain strong.
The business just announced its financial results for the first two quarters of the fiscal year. The $585,000 in net profits for the six months ending March 31, 2022, is the first time since 2017 that the year’s first half has started with positive earnings.
As of March 31, the company’s backlog was $120.3 million (unaudited), showing great potential for a solid fiscal year.
Paysafe Ltd. (NYSE: PSFE)
Paysafe has over 20 years of experience in the payment solutions space, covering both online and physical payments. The company is flexible enough to accommodate businesses of all different sizes while offering any payment option the venture needs.
Paysafe also stands out as a leader in security, protecting the money flowing through an organization. In addition, Paysafe works to improve productivity, reduce costs, and develop talent along the way.
Although share prices have been on a decline, financial numbers from the second quarter still exceeded expectations.
Paysafe continues to show its ability in the payment space, even forming a partnership with J.P. Morgan for its core banking needs. In fact, the company released a study regarding the shift of payment methods throughout America.
According to data by Paysafe, 39% of American consumers have permanently altered how they pay since the COVID-19 pandemic started in early 2020. This should put Paysafe in a good position to take advantage of this trend.
Best Cheap Stocks Under $5 in Tech
Blackboxstocks Inc. (NASDAQ: BLBX)
Blackboxstocks is a tool investors can use to peruse the stock market. It has a built-in pre- and post-market scanner that provides real-time quotes alongside multiple news feeds. There’s also a member chat room where users can discuss investment ideas and share thoughts.
A membership also comes with a boot camp that discusses the basics of trading and how to use the service. Blackbox Stocks partners with well-known brokerages like ETrade and TD Ameritrade.
Share prices saw a considerable spike in the spring, but have since fallen back below the $1 mark. Total revenue for the quarter still exceeded $1.4 million, narrowly missing out on expectations.
The company is now working on producing more new items in the future. This includes a mobile app for self-directed investors, who make up a far higher market share than the day trader group it now caters to.
The business has also started developing a professional version of the Blackbox platform for the professional trader market and institutions.
These new goods and the continuous platform improvements, which will greatly contribute to its development in 2022 and beyond, should thrill investors to no end.
The company’s revenue stream looks solid even as Blackbox Stocks spends money to get its name out there.
Pixelworks, Inc. (NASDAQ: PXLW)
Pixelworks looks to optimize the video experience through several innovative picture quality enhancements. To do so, the company creates and delivers IP cores, semiconductors, software, and custom ASIC solutions to customers.
Its products are used in recording equipment, projectors, and mobile devices. TrueCut Motion is Pixelworks’s latest innovation, having just rolled out in December of 2021.
Share prices back down after a rollercoaster of a fall season, having peaked at over $5 per share more than once. Second-quarter financials reveal positive numbers for both revenue and earnings per share.
Mobile revenue comprised another straight quarterly record for hardware-based sales of mobile visual processors. This resulted from increased customer uptake and the rollout of new initiatives at selected mobile OEMs.
Also, three smartphone versions from OPPO’s Find X5 series were released, each using Pixelworks software and unique high-efficiency color and brightness calibration technology.
As video quality keeps increasing, Pixelworks plans to stay at the forefront of the latest technology.
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.
The company has suffered a bit at the hands of supply chain issues and regulatory crackdowns, settling into a share price around the $1 mark.
The first quarter of the year is always sluggish for the e-commerce sector. Still, since the start of this year, it has encountered even greater unforeseen obstacles and supply chain-harming macroeconomic uncertainty.
It continues to concentrate its efforts on better margin categories like garments. This is estimated to continue to provide the largest share of total revenues this year to weather the short-term challenges.
Compared to the same quarter last year, the first quarter’s clothing sales increased by 13.7% to $67.2 million, accounting for 71.7% of the company’s overall revenues.
This is evidence of the company’s capabilities in the apparel industry and the successful optimization of its product mix.
Gross margin increased to 50%, up from 46.6%in the same period of 2021, while total sales for the first quarter were $93.8 million, down from $112.0 million.
With so much building below the surface, this could be the calm before Lightinthebox stock really takes off.
Cheap Dividend Stocks Under $5
ARC Document Solutions Inc. (NYSE: ARC)
ARC Document Solutions provides many consumers with document imaging and graphic production services. The printing venture has been in business for over 100 years and now services clients from over 170 locations and the internet.
Products include digital prints, physical signage, posters, and banners. In addition, the company offers technology and enterprise customer solutions. ARC has seen some flux in share price of late, landing a hit higher than its numbers from last year.
Like the fourth quarter of last year, it generated sizable sales increases in each of its four business lines in the first quarter of 2022.
Net sales were $74.6 million, up 32% from the second quarter of 2021. Cash and cash equivalents totaled $44.6 million in the second quarter of 2022 on the consolidated financial sheet.
The business anticipates steady growth for the whole year based on its good first half results.
Revenue continues to rise also as ARC continues to expand its presence.
Ambev ADR Representing One Ord Shs (NYSE: ABEV)
Ambev is the largest brewer in the Latin American region and one of the largest beer producers in the world. The company has been headquartered in Brazil since its inception in 1999.
It has a ~$47 billion market capitalization, which is relatively uncommon in the penny stock space, as these low-priced stocks typically represent micro- or small-caps. Its flagship brews are Skol and Brahma beer brands, among the ten most consumed in the world.
In addition, Ambev has an assortment of soft drinks and non-carbonated products for sale in 18 countries. Today, Ambev is an independent company, but Anheuser-Busch Inbev controls a majority share of its stock.
Alongside being a producer of top beverages, Ambev is also making strides to be carbon neutral. Share prices have increased over the last year, but financial reports keep coming in strong.
According to the company’s CEO, it should be a solid year in consumer demand. The World Cup will be held in the summer for the first time, and its goods are returning to bars.
With 23 million shares, this stock sees a lot of trades that play well into its volatility.
What Are Penny Stocks?
Penny stocks belong to smaller, often nascent companies, and are typically priced under $5 per share. They are known for their affordability which makes them an attractive prospect for people interested in participating in the stock market.
Penny stocks have a dynamic nature. They can experience significant price movements, which, given favorable market conditions, may translate into remarkable returns. This potential for rapid financial growth is another appealing characteristic of these stocks.
You may not find these stocks on major exchanges like NYSE or NASDAQ. Instead, they are traded on the over-the-counter (OTC) market. It’s not due to any shortcomings, but rather because they represent companies that are either newer or smaller.
Penny stocks offer a unique and accessible entry point into the stock market. Their combination of affordability, growth potential, and their unique market placement makes them an interesting part of the stock market universe. This understanding allows individuals to uncover and consider a different yet valuable part of the stock market and – potentially – healthy returns.
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 stock prices 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 their press releases are often exaggerated, so don’t believe everything you read.
Because of this, you might want to start with stocks under $5 that have made their way onto major exchanges like NASDAQ and NYSE. 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.
Should You Buy Stocks Under $5?
Stocks under $5 can be a great entry point into the trading game, but they might not be for everyone. Understandably, many investors are not a fan of volatility, so they sidestep stocks trading under $5 altogether.
Fortunately, many penny stocks can be found on major exchanges, and companies have stricter criteria to be listed. This could, on paper, offset some risk, but these stocks are still very volatile comparatively.
Finding undervalued stocks under $5 could lead to some serious gains. There are plenty of duds on the penny stock market, so do your diligence and be prepared to see a stock drop. Another opportunity worth looking into for penny stocks is the oil and gas industry.
Check out the list of our top oil penny stocks if you want to know more. You could also look into a biopharmaceutical company if you are in the market for more speculative investments.
Features To Look For In Stocks Under $5
Navigating the world of stocks priced under $5 involves careful analysis of several key factors. It’s more than just an attractive price tag; there are vital signs to spot the growth potential.
- Earnings Per Share: This figure tells us how profitable a company is. It’s found by taking away the money given to preferred shareholders from the company’s total profit and dividing the result by how many shares exist. A growing EPS can indicate a company’s potential for expansion.
- Trading Volume: This represents the number of shares traded during a day. If trading volume is low, selling your stock might be challenging. Ideally, look for stocks with a daily trading volume of at least a million for safer dealings. It also helps you identify stocks that might be gaining momentum.
- Management Approach: A committed management team can steer a low-priced stock towards growth. Evidence of a strategic plan aiming to tap into a growing market indicates potential. Examine the company’s business strategy to understand management’s perspective.
- Growth Potential: The ultimate question is whether to retain the stock or sell it once it reaches its potential. Some individuals may include stocks under $5 in their retirement portfolios due to their potential growth. Such stocks can continue to grow over time because rapidly expanding companies have an incentive to increase their stock value.
Stocks under 5 dollars can be an affordable way to get a taste of the stock market. They come with their own set of features and dynamics, and understanding these can pave the way for potential success.
Always remember: not all stocks under $5 are created equal, but by focusing on the points above, you’re well-equipped to evaluate them with discernment.
Rewards of Buying Stocks Under $5
Embracing the opportunity to buy stocks under $5 can offer several rewarding outcomes. It’s not just about affordability—there are compelling benefits to be found in this specific segment of the market.
- Potential for High Returns: While stocks under 5 dollars come with risks, they also offer the possibility of impressive returns. A small shift in the stock’s price can translate to a substantial percentage increase, thereby multiplying your initial stake.
- Affordability: The low price of these stocks allows individuals to acquire more shares for a smaller amount of money. This characteristic can make stock ownership more accessible.
- Learning Experience: Navigating the intricacies of this market segment provides a valuable learning experience. It helps you understand the dynamics of the market and adapt to the often rapid changes in stock prices.
- Broadened Portfolio: Adding these low-cost stocks can diversify your portfolio. Different segments of the market react differently to economic shifts, so variety can be beneficial.
- Access to Emerging Companies: Many companies offering stocks under $5 are in the early stages of their growth journey. By purchasing their stocks, you have the chance to be part of this journey and potentially benefit from their future growth.
While it’s crucial to recognize that buying stocks under $5 comes with risks, the rewards can be significant. They offer a unique opportunity to gain a high return, learn about the market, diversify your portfolio, and connect with emerging companies
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. You might want 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 probably 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
We feel the tickers above are the hot stocks under $5 across markets right now.
There will be lots of opportunities in the markets ahead but expect volatility.
Stocks Under $5 FAQ
Check out our answers to some of the most-asked questions about stocks under $5.
What Is the Best Stock to Buy Under $3?
All the stocks on our list fall between the $2 and $5 range. Copper Mountain Mining and Ambev are currently sitting just under $3 with lots of growth potential. Picking up either one of these could bring significant returns down the road, but only time will tell.
What Stocks Are Good for Beginners?
Stocks around $5, especially those with high market caps, can make for good picks for beginners who want to start investing on a budget. These stocks have a foundation, see a lot of trade, and the right stocks can grow significantly in short order.
How Do I Find Penny Stocks?
A majority of the penny stocks we recommend are found on more stable markets like NASDAQ and the NYSE. Platforms such as Robinhood and Webull can help you navigate those markets and find solid tickers to invest in.
What Are the Best Cheap Stocks to Buy Now?
Most of our picks trade on major exchanges, so they do not represent the cheapest stocks to buy now. If you want to know about some cheap stocks to consider, take a look at some sub-penny stocks to watch out for.
Are Penny Stocks Worth It?
Trading stocks under 5 dollars could be worth it, but this is a riskier investment strategy. Learning to trade penny stocks usually involves a lot of trial and error, so it might not be profitable until you fall into a rhythm that can reliably spot shares with potential.