If you are a penny stock or small-cap stock trader, then you know it can be rough when you are trading the best stocks under $5
You know what I am trying to say, right? Micro-cap and small-cap stocks are as volatile as bottle rockets and trading them are not for the faint of heart. And neither are the best stocks under $5…
Now, if you are totally unfamiliar, here is a quick primer: penny stocks can trade on the Over-the-Counter Bulletin Board exchange (OTC), a daily listing of the bid and ask prices for over-the-counter stocks, usually because they are too small to meet exchange-listing requirements.
OTC stocks are less regulated than stocks on the NYSE or Nasdaq, which means it can be difficult to know all the details about the company before you invest. To be frank, OTC stocks are not required to be transparent and often their press releases are hilarious exaggerations, so don’t believe everything you read.
One more thing to know, OTC stocks have less liquidity than exchange-traded securities along with lower trading volume, and larger spreads between the bid price and the ask price.
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.
As a note, not all the stocks below 5 trade on the OTC—see the exchange listing for details.
Best Stocks Under $5 To Buy Now
Opko Health (OPK)
Opko Health is a medical company based in Miami, Florida. They make pharmaceutical products as well as medical tests. They are a global company and are active in over 30 countries around the world.
While Opko has many operations in their portfolio, the largest is BioReference Laboratories, which focuses on genetic testing. Some of Opko’s most successful products include a blood test for prostate cancer as well as a treatment for chemotherapy-induced nausea.
Many investors have been excited about Opko Health stock this year. Their shares shot up by 169 percent over the course of 2020. Part of this is because BioReference pivoted to focus on COVID-19 PCR testing, which has been in high demand around the country.
However, the company’s most recent earnings report had some investors a little concerned. Opko’s stock price dipped slightly after the report came out. Although their overall bottom line improved, their drug sales have slowed down and their operating expenses increased.
This isn’t necessarily something to be concerned about in the long run, though. Opko’s revenue went up, and their EPS beat consensus estimates. If they’re able to keep this revenue growth up, it should balance out any fluctuation in drug sales.
Additionally, Opko Health has announced that they will be part of the NY Forward Rapid Testing Program. This program aims to increase access to rapid COVID-19 tests. Opko has opened eight rapid testing locations throughout the US as a result.
The recent dip in Opko Health’s stock price actually makes it the perfect time to buy. This is a stock that definitely has the potential to pop above the $5 per share mark at some point this year.
Best Day Trading Stocks Under $5
Waitr Holdings Inc. (WTRH)
During the pandemic, food delivery and carryout services have skyrocketed in popularity. Wair is an up-and-coming company that offers both food delivery and carryout. Unlike many other food delivery services, they have flat delivery fees and can take group orders.
Right now, Waitr is only available in select cities in the southeastern United States, but they are expanding quickly. They work with many local business development groups to partner with small restaurants. Their focus on restaurants in rural areas separates them from other leading food delivery services, which tend to focus more on urban areas.
Waitr stock is unique in that their share price actually went up when the pandemic hit. They had been struggling pre-pandemic due to high competition from other food delivery services. However, their stock price went up over the summer of 2020. They acquired another small delivery service, Bite Squad, which has helped them increase their delivery coverage.
While their stock price has dropped off slightly from its peak in August, it has still remained relatively steady. At the end of February, Waitr announced they were partnering with Nextbite to provide delivery from virtual restaurants, or ‘ghost kitchens’. Ghost kitchens have become incredibly popular during the pandemic, which means there’s plenty of potential for the company to boost their revenue.
Waitr currently has a market cap of $366.29 million. Revenue growth has been slow but steady over the course of their past few earnings reports. However, they were profitable for the last two quarters of 2020 – something very impressive for a company of this size.
As of February 24th, Waitr’s stock is trading for $3.30 per share. Since this is slightly down from their year-long high, which was just over $5 per share, there’s plenty of room for the stock to go back up again.
Tellurian Inc. (TELL)
Tellurian is a natural gas company based in Houston. Like many other companies in the energy sector, Tellurian struggled during the pandemic. However, the company’s stock prices are finally starting to recover.
At the beginning of January, Tellurian’s stock price jumped from $1.70 to $3.95 in the space of a few days. Shares have remained around the $3.50 mark in the two months since then.
Natural gas companies tend to be very volatile. They have the potential for huge returns, but they also have the potential to fluctuate when the price of natural gas drops. This has been the case with Tellurian in the past.
Right now, Tellurian is working on a huge pipeline project called Driftwood LNG, with the goal of breaking ground on it in the summer of 2021. The company also has committed to reducing their debt. They recently announced that they had reduced their debt by $57 billion, which has dramatically increased their free cash flow.
If Tellurian does end up breaking ground on Driftwood over the summer, there’s a chance this natural gas stock could jump up even higher. This new project and the company’s commitment to financial stability both indicate that this is a good pick moving forward.
Biotech Stocks Under $5
Aptinyx Inc. [APTX]
Aptinyx is a pharmaceutical company based in Illinois. They have a focus on treating neurological disorders, and their drugs focus specifically on NMDA receptors.
An ongoing study into an experimental Aptinyx PTSD treatment is showing promise mid-way through trials, according to an October 20 announcement. The 153-patient study found ‘statistically significant and clinically meaningful efficacy results with a favorable adverse event and tolerability profile.’
In other words, it’s looking good for NYX-783 early on. They have recently moved the drug into phase 2 of clinical trials. The drug has also received a fast track designation from the FDA, which means it could get approved very quickly if these tests are successful.
PTSD is becoming an increasingly prevalent mental health issue in the developing world, and effective treatment options are scarce. Aptinyx might be onto something with NYX-783, and share prices could skyrocket if they get it right.
In addition to their PTSD treatment, Aptinyx has two other drugs in the pipeline. NYX-2925 is currently in phase two of clinical trials and also has a fast track designation from the FDA. This drug will treat painful diabetic peripheral neuropathy and fibromyalgia. Their third drug, NYX-458, will treat the cognitive impairment associated with Parkinson’s disease.
Aptinyx stock has had positive returns this year. Many analysts are feeling bullish on the stock moving forward into 2021, with some price targets as high as $10 per share.
Midatech Pharma PLC [MTP]
Midatech is a British pharmaceutical company that focuses on building more effective drug delivery technologies. Essentially, their technology helps the drug reach its final destination in the body more efficiently.
This micro-cap pharma stock rallied after the firm released upbeat headline data from a recent Phase I study on October 19. The small-scale study examined Midatech’s MTX110 therapy as a treatment for Diffuse Intrinsic Pontine Glioma (“DIPG”).
Midatech currently had a large number of drugs and therapeutic technologies in the pipeline. They currently have two therapeutics in Phase I trials. The first is MTD201, which could treat endocrine disorder. The second is the aforementioned MTX110, a direct-to-tumor technology that could treat several different types of brain cancer.
Midatech stock has been up and down throughout the month of February. Investors will want to keep their eye on Midatech’s clinical trial results. A positive result could send the stock trending upwards in the near future.
Best Tech Stocks Under $5
LiveXLive Media [LIVX]
LiveXLive Media is a digital media company that focuses on the acquisition, distribution, and
monetization of live music, internet radio, and podcasting, among other digital enterprises.
LiveXlive Media is also the force behind Slacker Radio, a moderately popular live music
LiveXLive has had a good past year thanks to its focus on streaming music and podcasts. Given that live in-person music has tanked recently, their focus on streaming live music has put them in a unique niche and their share price is expected to continue to rise as more people look for ways to experience live music via streaming services.
The stock’s price has steadily increased over the last several months. The stock dipped slightly in the middle of February, but that means it could be the right time to buy before it goes back up again. Demand for music and podcast streaming isn’t going to go away anytime soon, as we are still several months away from hosting live events like concerts again.
While LiveXLive isn’t profitable yet, their revenue numbers have consistently increased over the past several quarters. They are taking steps to diversify their operations, with both subscription and pay-per-view models to choose from.
Best Asian Stocks Under $5
Uxin Ltd. [UXIN]
This Chinese stock may be affordable, but it has huge potential moving forward into 2021. Uxin is a used car dealer that operates entirely online, and they have a solid market share in China. The pandemic has made consumers more likely to want to buy their cars online, which has been very fortuitous for Uxin.
Like many startup companies, Uxin was operating at a loss last year. Their most recent earnings report was disappointing, but the company is shifting their business model to be more profitable in the future. Instead of working with third party dealers, they’re taking steps to buy their inventory up front. This could be more profitable in the long run, even though it costs more up front.
It will take some time to determine exactly how profitable this new business model is for Uxin. In the meantime, this is an affordable stock for investors to keep an eye on, especially if they want to break into the Asian auto market.
Dividend Stocks Under $5
Global Self Storage, Inc. (SELF)
SELF is a REIT for self-storage properties that offer residential and commercial storage options. Global pays a dividend of $0.26, a great yield for a dividend stock under $5. Despite the recent economic turmoil, the self-storage sector industry seems secure. Low-interest rates will allow them to refinance debt, so SELF is in good shape.
Unfortunately, one reason for the growth is looming evictions. If people do lose homes, storage units often hold valuables that they can’t take with them to loved ones or downsized apartments.
During the pandemic, many people also chose to temporarily move out of their apartments in the city in order to stay with family. This meant that they relied on storage units to keep their property safe until they returned. As a result of the pandemic, it’s likely that people will continue to move around frequently. This bodes well for Global Self Storage.
Global Self Storage has consistently performed well over the past several months. They saw a boost at the beginning of February, and we wouldn’t be surprised if they broke out of the $5 range soon.
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.
Did we miss any stocks you are making gains with? Let us know in the comments.