Best Stocks Under 5 Dollars: October 2019
If you’re investing on a small budget, you can appreciate the value of cheap stocks. The best stocks under 5 dollars are a great place to start for many new investors. They’re cheap enough that most investors can afford to buy a round lot of 100 shares. You won’t pay any more than 500 dollars for a lot of any of the best stocks under 5 dollars, so they’re perfect for new traders.
Be sure to check out this article for more low-cost options, and the best stocks for under 10 dollars offer even more great picks for everyday traders. Stocks under 5 dollars are also referred to as penny stocks. Learn more about penny stocks in this page.
Many blue-chip stocks are too expensive for most retail investors. A thousand bucks will only get you about 5 shares of Apple (AAPL). You could buy 200 shares of a five-dollar stock for the same price, and if share prices went up by only one dollar you would net a 200-dollar gain. Therefore, in our hypothetical Apple trade, share prices would have to make a 40-dollar move to net you the same gains as the lower-priced stock.
Top 5 Picks: Stocks Under 5 Dollars
To get you started on your investing journey, we’ve listed our top-5 low priced stock picks. These stocks are high-risk high-reward assets, so remember to consult a professional financial advisor before making any investments. All of our best stocks for under 5 dollars are based in the United States.
Agenus Inc. (AGEN)
Agenus is a clinical-stage immuno-oncology firm. Basically, the firm focuses on developing cancer treatments that activate the immune system to fight cancer. In addition to cancer treatments, Agenus is developing a variety of vaccines.
Like most small-cap biotech firms, Agenus is not profitable just yet, but the future looks bright. The firm has collaboration agreements with several notable biotech firms, and it’s also working with Gilead Sciences (GILD) sciences to develop immuno-oncology therapies.
Though Agenus isn’t turning a profit just yet, shares are trading for about three times sales; relatively cheap for an up-and-coming biotech firm. We’re not the only ones who like this one, Zack’s recently upgraded AGEN to a buy. AGEN could be worth keeping an eye on.
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Workhorse Group Inc. (WKHS)
If you’re looking for a promising small-cap electric vehicle stock, Workhorse Group may be worth a look. Workhorse is an up-and-coming electric vehicle manufacturer that produces commercial EVs and electric aircraft, like helicopters and drones.
This EV stock got a big boost in May when the company entered into an agreement to purchase an assembly plant in Lordstown, Ohio from General Motors. The company even got a Twitter shoutout from Trump after the deal hit the newswires.
The stock gained 214% on the news, a dramatic reaction to say the least, but it may have been overdone. Workhorse is a minority partner in the deal and they’re still looking to raise capital. Under the terms of the deal, GM formed a separate entity, called Lordstown Motors Corp.(LMC), to facilitate the purchasing of the plant. Workhorse intends to license its IP and technology to LMC as part of a joint effort to manufacture a new electric pickup truck, the Workhorse W-15. Workhorse CEO Duane Hughes says licensing the company’s technology entails “minimal engineering and no production expense.”
However, the Trump bump didn’t last. The stock lost over 20% of its value in one session after posting a huge loss on earnings. Shares bottomed around the 200-day SMA and have been on a steady uptrend since. The company is losing a lot of money, but it has a decent backlog of orders and just raised an additional $25 million in a private funding round.
According to the latest earnings call, Workhorse is a finalist for a lucrative contract from the United States Postal Service’s next-generation delivery vehicle program. The USPS contract is worth approximately $6.3 billion, over 25 times Workhorse’s current market cap of $226.43 Million. Landing that large of a deal would be a huge catalyst for the stock, but it’s far from a sure thing. Interestingly, Hughes said in the call, “we do view the Lordstown plant as a potential game-changer in that [USPS] contract.”
Workhorse is facing a lot of uncertainties, but a small position now could pay off big time if they manage to land that multi-billion-dollar USPS deal. Keep an eye on this one.
It’s been a rough couple of months for cannabis investors, but the sector could be due for a rebound. Hexo lost over 50% of its value since peaking in May but rebounded sharply after briefly sliding into the $3-range. After the slide, the stock rallied over 30% but lost its steam shortly before breaking above $5. Now, it’s struggling, along with the rest of the sector, after Canopy’s (CGC) big miss on earnings a few days ago.
Hexo is an intriguing stock. It gets less attention than Cronos (CRON), Tilray (TLRY), and the rest of the major cannabis players, but it has a strong footing in Quebec, where it received the largest provincial cannabis supply contract ever last year. It also has a partnership with Molson-Coors (TAP) to produce infused beverages.
This stock might not be as flashy as the bigger names but it’s been making smart decisions and expanding operations at a steady, but spending at a more rational pace than some of the other companies. Hexo’s biggest competitors, like Canopy and Aurora Cannabis (ACB), spent billions of dollars expanding production during last year’s cannabis boom and, if those investments don’t pan out, they could be on the hook for a substantial write-down in value. Aurora alone has $2.4 billion worth of goodwill on its books, and Canopy has $1.2 billion. MarketWatch called this staggering amount of goodwill a “bomb ticking away” within the cannabis sector.
Conversely, Hexo only has $3 million in intangible assets, including goodwill, so they’re much less exposed to the write-off crisis that some of the other larger companies are facing. That fact seems to indicate that Hexo has a smart management team that expanded strategically while the rest of the big weed firms were just throwing cash around. The supply contract with the Quebec provincial government will provide guaranteed revenues for Hexo for years to come, and Hexo is planning to go after a big stake in the infused drink market as part of its partnership with Coors. Hexo expects cannabis-infused beverages to become legal in Canada on December 16th of this year.
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Histogenics Corp. (HSGX)
Last April, this micro-cap biotech stock jumped when the company announced a stock-for-stock merger with privately-held Ocugen. Upon closing, Ocugen stockholders will become the majority owners of the newly formed company, which will also operate under Ocugen leadership.
When news of the merger broke, Histogenics shares rallied as much 71.78%. The news helped the stock breakout of a funk that saw share prices dip down as low as 8-cents-per-share. Share prices more than doubled since then, even breaking above $0.30 per share for a few sessions. After a prolonged consolidation around $0.17, HSGX is up over 15% from its August 15th close with over 2.5 times more trading volume than average.
Peculiarly, the move was not accompanied by any news, so traders should be cautious. This stock does have some things going for it, however. The Ocugen merger could create a few more catalyst headlines for this biotech stock before the deal closes. Histogenix was trading for $2.80 per share just 1 year ago. It’s highly unlikely that share prices will get back to those prices, but there is still a significant amount of potential short-term upside in the stock.
Plug Power Inc. (PLUG)
This company manufactures hydrogen, fuel cell systems, and other alternative energy technologies for material handling and stationary power applications in North American and Europe. Its primary products are proton exchange membrane (PEM) fuel cell and fuel processing technologies.
The company released its Q2 2019 earnings report on August 6th. Plug Power beat consensus estimates on both top and bottom-line earnings in the second quarter. The company beat revenue estimates by over 8% and posted smaller-than-expected losses for the quarter.
Share prices began sliding in June after they failed to sustain a breakthrough past $2.60. The slide sent prices tumbling as low as $2.00, then last week’s earnings report gave this energy stock a kick in the pants. However, it’s unclear if the stock has enough momentum to sustain the move. Shares traded with below-average volume during the recent move.
PLUG is on the right track. Revenues are growing and losses are narrowing. Prior to this quarter, Plug Power missed on its previous two earnings reports. Hopefully, this quarter’s double-line beat will mark a turning point for the energy stock.
Best Stocks Under 5 Dollars: Credibility Check
Pay attention to market capitalization. Generally, stocks with market caps below $500M tend to be more volatile. In addition, tt’s also important to consider which exchange lists the stock.
OTC markets have less stringent listing requirements than NASDAQ or NYSE, so it’s important to pay attention to exchanges when considering a trade. Most stocks under 5 dollars are not in the S&P 500 or other major indices.
Finding The Best Stocks Under 5 Dollars
To find your own 5-dollar stocks, use a stock screener. Most brokers have a stock screener built into their trading platforms. Screeners are a great tool for finding new trade opportunities.
Screening tools help traders sort through stocks and find the ones that meet their criteria. It’s like a search engine for stocks. Finviz has a free screening tool that offers tons of features and works well enough for most retail traders
Best Stocks Under 5 To Buy: Expect Volatility
Even the best stocks under 5 dollars are not a sure thing. Small-cap stocks are even more volatile, so you have to keep a close watch on your positions when trading stocks this cheap. For more interesting stocks, read here.
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