1. Home
  2. /
  3. investing ideas
  4. /
  5. stocks
  6. /
  7. The Best Stocks To...

The Best Stocks To Buy Under $5 In June 2024

Best Stocks Under $5

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

Mizuho Financial Group Inc (NYSE:MFG)

Mizuho Financial Group Inc (MHFG) is a Japan-based bank holding financial conglomerate.

It offers financial services and products to retail, corporate, SME, and public sector clients.

Mizuho services include securities, retail banking, asset management, credit cards, private banking, and venture capital.

 

 

The firm reported assets under management worth more than 266.1 ¥ million, a figure that has grown by 12% from the same period last year during the first quarter of 2023.

Its net income during the same quarter grew by nearly 54% as well.

Currently, the stock trades at under $3.5 per share. In the last year, it has offered a 55% return to investors.

Rocket Lab USA Inc. (NASDAQ: RKLB)

Rocket Lab is a company that provides space systems solutions and launch services, two rapidly expanding industries.

It provides spacecraft, satellite components, launch services, and on-orbit management to businesses and government organizations. 

The firm can design and plan missions to deliver cargo to orbit or a destination when they need to launch objects into space, like satellites.

Rocket Lab’s products include: satellite components, lightweight electron orbital rockets, and flight software. It also plans to build a larger neutron rocket as early as 2024.

Although this is still a relatively new industry, Rocket has already demonstrated that there is a sizable market for its Photon satellite platforms and Electron launch vehicles.

 

 

It generated $211 million in revenues last year and is on track to beat those numbers based on the first two quarters of the year so far.

Analysts are predicting that by 2025, the firm will be able to achieve $600 million in revenue and become profitable as well.

The stock price touched nearly $8 during July this year, but is available under $5 right now.

Ardelyx Inc.(NASDAQ: ARDX)

Ardelyx, Inc. is a biopharmaceutical company that develops, discovers, and commercializes innovative medicines.

Its first approved product is IBSRELA, sold under the brand name tenapanor, which is available in the United States and Canada.

Tenapanor is a novel product candidate that controls serum phosphorus in adult patients with CKD on dialysis. 

Ardelyx also has a kidney disease-related drug called Xphozah, which was approved to treat hyperphosphatemia.

Hyperphosphatemia is a condition that results in an abnormally elevated level of phosphorus in the blood.

Excess phosphorus can remove calcium from bones and other parts of the body, which can cause: brittle bones, joint pain, muscle cramps, and itchy skin.

 

 

The company’s stock has seen a positive outlook from market watchers recently, with its market cap growing by nearly 150% over the year.

Ardelyx saw a 400% increase in revenues in the previous year, and even though its net earnings remain negative, they have significantly improved.

Part of the reason why this stock is doing well right now is that many believe it is significantly undervalued as compared to the sector median.

The stock has an average volume of 7.86 million shares per day and an average monthly beta above 1.

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.

 

Best Stocks to Buy Under $5

 

In addition, financial numbers surpassed expectations for 2023’s first three quarters and look to remain strong.

The business announced its financial results for the first three quarters of the fiscal year. The $1.69 million in net earnings for the nine months ending June 30, 2023, is one of the few times that the company has shown positive earnings in its first three quarters.

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.

 

Best Stocks Under $5

 

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 since then. Currently, the shares trade below the $2.5 mark. Total revenue for the quarter was $4.96 million.

 

Best Stocks to Buy Under $5

 

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 are back down after a rollercoaster of a fall season, having peaked at over $2.2 per share more than once. Second-quarter financials saw a decline in both sales and earnings, but were better than the first quarter figures.

 

Best Stocks Under $5

 

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.

 

Best Stocks to Buy Under $5

 

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 second quarter’s revenues increased by nearly 45% to $191.77 million.

This is evidence of the company’s capabilities in the apparel industry and the successful optimization of its product mix.

Net income was up by 39%, while net profit margin was up by 58.01%.

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.

 

Best Stocks Under $5

 

The first two quarters of this year have been flattish. However, the previous year saw a 5% revenue growth to $286.01 million

Net income grew to $11.09 million, nearly 21% higher. Free cash flow amounted to $28.15 million in the previous year.

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 ~$39 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.

 

Best Stocks to Buy Under $5

 

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 13.85 million average share volume, this stock sees a lot of trades that play well into its volatility.

What Are Penny Stocks?

Penny stocks belong to smaller, often nascent, undervalued 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. 

Best Stocks Under $5

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 susceptible to major price swings.

Finding undervalued stocks under $5 could lead to some serious gains. There are plenty of duds on the penny stock market, so one part of your trading strategy could be to 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 expect to lose money until you fall into a rhythm that can reliably spot shares with potential.

mm

Jessica is a published author and copywriter specializing in personal and investment finance. Her expertise is in financial product reviews and stock market education.