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
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
Interpace Biosciences, Inc. (IDXG)
$13M market cap for this biotech with not a lot of volume, but there is a lot to like in the portfolio for IDXG. The company saw some recent declines in its clinical services business— clinical services first quarter 2020 net revenue was approximately 60% of total revenue and pharma services was approximately 40%—but we expect that to pick up as the economy recovers and hospital allow more surgeries again.
In addition, the company is testing a COVID-19 serology antibody test and it is being launched at a lab in Pittsburg.
We think this is good for the company’s portfolio and might also lead to this stock popping exponentially which could take out out of this list for best stocks under five dollars.
The company received grants from the Department of Health and Human Services for this test and we believe that diagnostics related to the virus can be just as lucrative as the vaccines themselves. For this reason, we think IDXG offers a lower-level commitment on the price and a ton of upside, which is why we are recommending it as a stock under $5 to buy.
Akers Biosciences, Inc. (AKER)
AKER may be familiar to some readers as this stock was on many penny stock traders’ minds when it struck a deal with Premas Biotech to develop a vaccine back in May.
The two have now completed a proof of concept for their joint effort and a “robust immune response was observed.” According to the news release, the company’s vaccine candidate was generally well tolerated and safe at all doses, with no adverse events reported.
The next steps are to work with regulators and probably set up a series of patient trials. Dilution may be an issue for Akers, but we are certainly monitoring the development of the vaccine. If the tests go well, they could be a buyout candidate.
Best Tech Stocks Under $5
Wipro Limited (WIT)
Wipro is an Indian IT company with a solid balance sheet and growth opportunities as companies shift employees to working from home long-term. WIT has not set the world on fire, but it has held steady increasing topline growth by 4.2% and keeping net income growth to 8% in an exceedingly difficult year.
WIT is a good stock under $5 because it is consistent and that it holds the line with its peers. Lastly, we also think Thierry Delaporte, the company’s new CEO, can bring in fresh eyes to the company’s workforce and business model. There is room for growth at WIT.
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.
Dividend Stocks Under $5
Lloyds Banking Group plc (LYG)
Lloyds is a retail and commercial bank and insurer operating in the United Kingdom. The stock fell from its price of +$5 after it was bailed out by the UK government.
Now, you may be saying, this sounds promising, but LYG has a ton of cash to its name. And, the bank’s dividend rate is $0.17.
LYG is a solid bet on the return of the British economy and rejuvenation to the housing market. Right now, Lloyds is so cheap because investors are worried about another housing crisis, and the prices are already dirt cheap. If the economy stays solid, LYG will certainly be on the shady side of the news.
Global Self Storage, Inc. (SELF)
SELF is a REIT for self-storage properties that offer residential and commercial storage options. The stock has a dividend rate of $0.26—which makes is what makes it a great monthly dividend stock under $5— and it operates in small niche markets…Now, the recent sell-offs will likely not affect the storage sector but bottom dollar interest rates will let them refinance some debt and SELF’s balance sheet could use it.
And unfortunately, one reason for 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. We see a lot of opportunity in the markets ahead but also volatility as we enter an interesting time of year.
Did we miss any stocks you are making gains with? Let us know in the comments.