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
Charlotte’s Web Holdings, Inc. (CWBHF)
CBD company, Charlotte’s Web Holdings, has shifted from landing some major landing spots for its products to a solid direct-to-consumer seller. In its recent quarterly earnings report, the company sold $15.6 million worth of goods directly to consumers (DTC). Other bright spots were:
- More on DTC sales: net sales grew by 33.6% year-over-year as online traffic and high conversion rates increased through ongoing marketing and social media programs.
- Year-over-year new consumer acquisitions increased 25% and conversion rates increased 77%.
All that said, it was lackluster B2B sales that pinched them.
“The pandemic has had a larger and longer impact than we anticipated on retail and health practitioners,” explained Russ Hammer, Chief Financial Officer of Charlotte’s Web. “We are seeing improvements and a stronger back half in our DTC channel, but without a meaningful opening up of the economy and health practitioner channel we expect only flat to modest consolidated net revenue growth for the rest of the year.”
B2B sales fell 54.5%, but there are some positive catalysts on the horizon for the Stanley Brothers and their CBD company to the stars.
Why CWBHF Will Be a Cheap Stock That Grows
The first growth prospect catalyst is the obvious one: CBD sales will grow once its regulatory outlook is clear. Charlotte’s Web believes the current market size will increase at a minimum 3x. The other catalyst is maybe the greatest multiplier: the acquisition of Abacus Health Products.
Abacus’ consumer brands CBD MEDIC™ and Harmony Hemp, and for professional practitioners, Abacus’ CBD CLINIC™, give the combined entity more than 33% of the CBD market share.
Charlotte’s Web is currently trading at $2.82. At the start of the year, CWBHF was more than $7 a share, we believe there is a bullish thesis for the company to return to that price point and makes the list with a bullet for stocks to buy under $5.
Endeavour Silver Corp. (EXK)
The silver market will likely grind out a price range between $20 and $30 for the remainder of the year, but we still want some low-cost/high upside exposure to the precious metals market.
One interesting thing has been the silver market’s resilience, even during monetary policy updates. As prices continue to uptrend and bulls have the technical advantage, miners like Endeavour Silver are on our radar.
EXK is not without its risks as mine production disruptions dragged down the company’s quarterly tonnage, but day traders should see these numbers increase substantially as mines reopen to full capacity—and then we should see sharper revenue growth.
EXK’s Upside Potential
Endeavour has two interesting projects and one that has yet to really ramp up. Guanacevi has continued to be a big surprise for the company. Bradford Cooke, the company’s CEO, summarized his thoughts on the Mexican mine: “Guanacevi continued to generate mine free cash flow of around $2.7 million, and we saw higher processed tonnes higher silver and gold grades, higher silver and gold recoveries all well above plan.”
But, the really juicy project is the Terronera mine. The company is restarting the drills and the money bags are still some way away, but expectations are the mine will produce 3 million troy ounces (toz) of silver and more than 30,000 toz of gold annually. Yeah, we are willing to wait, and that is why it is one of the best stocks to buy under $5.
Best Day Trading Stocks Under $5
Here is a bit of a rapid-fire rundown ranging across different sectors like Biotech, Tech, and Food Delivery…
Waitr Holdings Inc. (WTRH)
WTRH is another good stock under $5. The Southeast delivery company has done a solid job of streamlining operations and its new CEO, Carl Grimstad, probably saved the company from imminent doom.
Unfortunately, Waitr did this by laying off 2,300 drivers, focusing on smaller markets that the big boys like Uber Eats and DoorDash do not want—but it got the company into the black.
LightPath Technologies, Inc. (LPTH)
I am writing this quickly so LPTH does not jump above $5 before the article can post. LightPath is really below that watermark because of Q4 results that did not meet expectations.
In my opinion, the sell-off seemed to not take into account how the coronavirus might impact a smaller company like LPTH and how the macro-environment might tamper down some sales, but in reality, sales are not down…They were just pushed forward into the future which is why this is one of my best stocks under $5.
Why are sales not down? Well, optical components, lenses, and thermal imaging are in high demand as we ask machines to do more and more for us.
The market for LightPath is $300M and climbing 5% annually with a sharp increase in thermal analyzer—why you ask? Well, the coronavirus has created a temperature check demand in hospitals and other locations like theme parks, etc. and thermal analysis makes this possible.
The problem for LightPath is that manufacturing and production are limited and take time, here is President and CEO Sam Rubin summing it:
“We have a strong pipeline of opportunities. Some of them the quoting process, many of them in the design process in which we work very closely with the customer, and some of them in the prototyping process. We believe that we have some significant winds coming down the road.”
De-listing is always a threat for small-caps and LightPath has faced its own challenges here, but we believe this is one of the best stocks under $5 to buy now.
Parks! America, Inc. (PRKA)
PRKA operates three safari parks in Georgia, Texas, and Missouri. The company has low liquidity, but the bottom line is quite nice.
PRKA makes money off ticket sales and concessions. Now, you may be thinking, an amusement park right now in this season?
Yes, these theme parks are all outdoors and provide ample spacing for guests. In fact, attendance at the parks has surprised management with net sales up 50.7% from this time last year.
There is lots of upside in this climate when parents need places to take their kids The company has also shown a knack for profitability.
Biotech Stocks Under $5
Bio-Path Holdings [BPTH]
The United States Patent and Trademark Office issued a notice of allowance to Bio-Path for one of its therapeutic candidates, prexigebersen. The new patent provides broad legal protection for the company over the use of prexigebersen as a treatment of a variety of cancers in combination with front-line therapies.
Bio-Path CEO Peter Nielson made the following comment after the firm’s October 22nd announcement: “This further strengthens our intellectual property portfolio and complements already granted patents. Our growing patent estate continues to be a valuable asset for Bio-Path”
BPTH push for more patents could lead to more gains for the stock in the near future.
Aptinyx Inc. [APTX]
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. The company says it plans to move forward with pivotal clinical trials in 2021.
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.
Midatech Pharma PLC [MTP]
This micro-cap pharma stock is rallying after the firm released upbeat headline data from a recent Phase-1 study on October 19. The small-scale study examined Midatech’s MTX110 therapy as a treatment for Diffuse Intrinsic Pontine Glioma (“DIPG”).
The median overall survival state seemed to show a significant improvement over baselines. However, the company noted in a 6-K filing that survival rate was not the study’s primary endpoint, so it stopped short of drawing firm conclusions on the data. Instead, the company says it plans to move forward with Phase-2 trials.
The jury is still out on MTX110, but the Phase-1 data looks promising. If the trials work out, Midatech shares could appreciate substantially.
Best Tech Stocks Under $5
Zedge Inc. [ZDGE]
Investors are turning bullish on Zedge after an upbeat earnings report. The “phone personalization app maker” posted an unexpected profit in its fiscal fourth-quarter thanks to strong-than-usual sales growth in the quarter. All and all, Zedge brought in $2.7 million in the quarter and grew its revenues at a 39.2% clip. Monthly active users increased 10.8% from Q3, but they were down 5.6% YoY.
Zedge’s 2021 forecast also seems bullish. The company’s revenue growth target for next year is 20%, and it’s aiming for continued positive cash flow and profitability.
In this market, investors are eager to find growth opportunities, so Zedge’s 39% revenue growth rate definitely got the market’s attention. The future could be bright for this low-key app-maker.
Nokia Corp. [NOK]
After a slate of upsets, Nokia is gaining ground in the race to outfit the world’s developing 5G networks. Earlier this month, the company landed a contract to help build 5G networks in Belgium with the assistance of Orange Belgium and Proximus.
The Belgians previously selected Huawei [HWT.UL] for the contract, but they dropped the Chinese firm in favor of Nokia as the result of pressure from U.S. authorities. The U.S. maintains that Huawei’s 5G equipment constitutes a national security threat, and it’s insistently pushed its Western allies to take a similar stance.
NOK rallied on news of the contract, and there could be more gains in store for the stock if the company can continue to eat up market share from Huawei. Keep an eye on Nokia because it could play an integral role in the international transition to 5G.
ASE Technology Holding Co., Ltd. (ASX)
How much better can two entities under the same company do after they can finally communicate? ASX, or Advanced Semiconductor Engineering, and SPIL, or Siliconware Precision Industries Co., Ltd., were not allowed to communicate under China’s anti-monopoly regulations, but in March 2020, the two Taiwanese companies were able to actually integrate their business.
For its own right, ASX offers semiconductor packaging and testing, and it represents a value when you look at its forward PE of 14.5x.
Outside of this exciting integration, ASX is an exciting stock because it is firmly positioned in the miniaturization trend in the semiconductor space. A further catalyst to this trend is simply the growing demand for semiconductors as millions of children now learn from home and adults who now work from home full-time.
Of course, semiconductors sales are cyclical, so expect some peaks and valleys with ASX.
Best Asian Stocks Under $5
Lianluo Smart Ltd. [LLIT]
Lianluo Smart Limited announced on October 26 it will merge with privately-held Newegg Inc, an eCommerce marketplace focused primarily on technology and electronics. Newegg’s stockholders will become the majority of owners of Lianluo and its subsidiaries. However, Lianluo will sell its Linluo Connection Medical Wearable Device Technology Co. to another Chinese company.
“Over the course of nearly two decades, Newegg built a highly reputable and widely recognized name in the tech-focused eCommerce market. As we prepare to become a publicly-traded company, we are well-positioned to build on this foundation to take Newegg to the next level,” said Anthony Chow, Global CEO of Newegg.
NewEgg has been a popular online marketplace for computer and tech enthusiasts for decades, so the company is not a young startup. As big as the eCommerce market is, there’s still room to grow. Keep an eye on LLIT because it could have some serious growth ahead of it.
Taiwan Liposome Company [TLC]
On October 7, Taiwan Liposome Company announced its inhalable COVID-19 drug has received a green light from Australian regulators to begin human trials. The Bellberry Human Research Ethics Committee approved the company’s application to launch a Phase-1 clinical evaluation of TLC19. The decision comes just days after Taiwan approved TLC’s investigational new drug application for the compound.
An inhalable COVID-19 treatment could have enormous commercial potential. However, TLC still has a long way to go before it can bring TLC19 to market. If successful, the stock could have substantial gains in its future.
Color Star Technology [CSCW] … Last Close: $0.54
Dividend Stocks Under $5
VOC Energy Trust [VOC]
VOC Energy Trust recently announced a new dividend payment, and it’s driving an upward move in share prices. The company said it will distribute $1.455 million to its shareholders for a total dividend payment of $0.085 per share.
At yesterday’s closing price, the dividend payment yields 5.82%, and that’s a spectacular figure in the current low-interest-rate environment.
Yield hungry investors are pouring into the stock to get a piece of that dividend. It’s hard to find returns like that with interest rates this low. Oh and – by the way – interest rates aren’t going back up any time soon.
Global Self Storage, Inc. (SELF)
SELF is a REIT for self-storage properties that offer residential and commercial storage options. Global pays a dividend $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.
And 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.
If you think the housing market turns positive, you may choose LYG, but if you don’t think it recovers then you may want shares of SELF.
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.