Penny stocks are stocks under 5 dollars and are usually from small companies still struggling with resources.
Some bigger companies can have these stocks too when they incur debts bigger than their resources or a change in leadership that went bad.
According to The U.S. Securities and Exchange Commission (SEC) stocks trading under 5 dollars are penny stocks.
Usually, these stocks are from smaller companies trying to grow their resources or even bigger ones that weren’t favored by sways in the securities market. The SEC classifies these companies.
The SEC is an independent federal government agency that protects investors and maintains fair and orderly functioning of the securities market.
In this article, we’d be looking at some of the best stocks under 5 dollars, otherwise known as penny stocks. But first, we will try to explain why these stocks are priced thus.
Anyways, take a look at our table of content for an overview of this piece.
Stocks Under Five Dollars ( Penny Stocks)
Stocks under 5 dollars are usually associated with small companies. They are traded infrequently meaning they have a lack of liquidity or ready buyers in the marketplace.
As a result, investors may find it difficult to sell stock since there may not be any buyers at that time. Because of the low liquidity, investors might have difficulty finding a price that accurately reflects the market.
These stocks are considered highly speculative because of their lack of liquidity, wide bid-ask spreads or price quotes, and size of the companies.
While it might be cheaper to buy these stocks, loosing money from them is also easy.
Stocks under-5 dollars are best suited for investors with high tolerance risk. They are volatile, which makes it’s reward huge, and also increases it’s risk factors.
While penny stocks can have explosive moves, it is important to have realistic expectations. Investors must understand that penny stocks are high-risk investments with low trading volumes. They must also learn how to invest so they don’t buy any stock they see.
Due to the high volatility of these under 5 dollars stocks, we would be making a list of the best under 5 dollars stocks you should put your money on.
Making a list of these under-five dollar stocks do to guarantee ROI. While we are confident that these companies will be having an Upside, we do not guarantee it.
Best Under 5 Dollar Stocks
So here’s our list of some of the best under 5 dollar stocks:
#. Identiv (ticker:Inve)
The need for home security has become more exigent since 2020 with the pandemic outbreak. It has also increased companies’ and people’s need for security.
Because many of Identiv’s products seem tailored to security during a global pandemic. The company has also been able to pivot well during the pandemic.
Its Hirsch Velocity Software now includes contact tracing for office buildings that have begun to reopen. The company has developed its wearable Body Temperature Measurement Patch to check people’s temperatures as stadiums and theme parks reopen.
As a result, the company’s recurring revenue increased 13% in the second quarter, and its backlog of orders grew 100% since the same quarter last year, indicating that the future seems bright for Identiv.
Updated Stock Price is US$7.66
#2. SunOpta (STKL)
This is an organic food company and their market value has been growing with the booming organic foods market. SunOpta is one of the companies with cheap stocks to buy right now. The company now operates three different business segments since it restructured.
The segments are plant-based foods and beverages, fruit-based foods and beverages, and global ingredients.
With impressive revenue growth from the three business segments, SunOpta recorded a 13% adjusted revenue growth.
Additionally, they got the second-highest adjusted (earnings before interest, taxes, depreciation, and amortization) in the company’s history.
#3. AMC Entertainment Holdings (AMC)
Amongst the companies with cheap stocks to buy right now, AMC is the largest movie theater operator in the U.S. It has been forced to close its doors for months due to the pandemic. And even as theaters reopen, customers are still afraid to be in confined spaces with other people.
AMC is a contrarian investment whose future is essentially predicated on one thing: a vaccine.
If a cure for the virus does come to market within the next few months, shareholders are sure to be rewarded.
But without a way to make customers feel safe in theaters, AMC will succumb to its mounting pile of debt.
The bull case makes AMC’s low price point seem like a no-brainer, but right now the bears are winning.
Stock Price US$4.32
#4. LiveXLive Media (LIVX)
There are industries that will continue to hurt as long as there is no vaccine.
Live concerts and events will remain on break until crowds feel safe enough to return.
This is where LiveXLive Media comes in. A company that used to simply digitize concerts for your screen but has pivoted to live streaming and pay-per-view quarantine concerts.
Their results have been impressive so far.
The company had a record 2020 fiscal year with revenue up 15% and subscribers growing 25%. With a 336% year-over-year increase in the number of events, it has streamed this year and a 179% increase in hours streamed, LiveXLive is fully in growth mode and shows no signs of slowing down.
Although the company will likely have to rethink its business model when concert venues start filling up again.
Until then, LiveXLive is one of the few companies out there capitalizing on a global pandemic.
Stock Price US$4.25
#5. OrganiGram Holdings.
The year 2019 was a nightmare for most cannabis companies. They prepared to put a difficult year behind them and look toward a brighter 2020. Little did they know what this year would hold, and companies like OrganiGram have been forced to adjust to the new reality.
OrganiGram had to reduce 25% of its workforce and lowered cannabis production at its New Brunswick facility in Canada to decrease costs.
A necessary sacrifice for a company that saw its Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) turn negative due to the higher cost of sales last quarter.
OrganiGram has struggled these last few months, but the company could very well emerge from under-five dollar stocks companies after the pandemic. They can streamline and become cost-effective price than ever before – and at a great price point for investors.
Stock price US $1.80
#6. Catalyst Pharmaceuticals (CPRX)
The biopharmaceutical industry’s investment thesis for cheap stocks is usually predicated on the success of a new drug in clinical trials.
Catalyst is one of the few that already has a successful drug on the market: Firdapse. Firdapse treats Lambert-Eaton myasthenic syndrome or LEMS.
The treatment has proven a hit, and Catalyst enjoyed a 134% quarter-to-quarter increase in revenue during its first quarter of 2020 thanks to Firdapse.
Although the market for LEMS treatments is small (about 1 in 1 million people has LEMS), Firdapse is currently in trials as a treatment for muscle-specific kinase myasthenia gravis and Spinal Muscular Atrophy Type 3.
If either one of these trials proves successful by the end of trials, Catalyst will have newer, larger markets to expand into and shareholders will continue to profit.
Stock Price US $3.54, this makes their stock one of the cheap stocks to buy right now.
Related Post: 10 Best Free Stock Picking Services in 2020
#7. Aphria (APHA)
The pandemic didn’t seem to border Aphria. This is perhaps why they have one of the cheapest stocks to buy right now.
While cannabis stocks have struggled to achieve profitability, Aphria has managed to set itself apart with positive adjusted EBITDA in its last consecutive four quarters.
The company has the largest cash balance in the cannabis industry – approximately 515 million Canadian dollars ($379.4 million) in cash and cash equivalents. And that’s particularly good news right now in the midst of the pandemic.
But while others struggle, last quarter Aphria reported a 65% increase in net revenue and sold 14,014 kilograms of cannabis; that’s up 98% compared with 7,062 kilograms sold in the second quarter of 2020.
The cost of that cannabis also decreased from CA$1.11 the previous quarter to CA$0.93 in the most recent period. In other words, last quarter Aphria produced more marijuana at a lower price while simultaneously selling more marijuana – a combination that shareholders are sure to love.
Updated Stock Price Is US $8.30: Above the under five-dollar stocks but still, a cheap stock to buy right now.
#8. Nokia (NOK)
With the 5G network building momentum around the world, it presents an opportunity for the once dominating Nokia to turn things around.
Additionally, the recent change of heart many governments are having about using Huawei equipment to build those 5G networks also places the company at a good advantage.
But this rollout will take time, so in the meantime, investors should pay attention to how Nokia shores up its balance sheet. The company discontinued its dividend late last year to focus funding on building 5G infrastructure and has slowly but surely been clawing its way to positive free cash flow.
If Nokia can illustrate that it has its house in order and has positioned itself well to take advantage of the opportunities it has been presented, then its cheap price point today may look like a bargain in a few months.
Stock Price is US $ 3.28.
The best cheap stocks (Penny Stocks) to buy now certainly have risks, but some have head-turning reward potential, too. While you may not want to lose any money because of the volatile nature of these stocks, you should look at the prospects of making 100% profits if the companies witness an upscale in the market.
Best Online Brokers For Stocks Under 5 Dollars
While stocks under 5 dollars might have its inherent issues ,figuring out the best brokers for such shares will increase your chances of profiting from such stocks. With the right broker, executing your investments would be optimally done, to give you the best results.
So find them, and use those you’re very comfortable with.
Features To Look Out For In Stocks Under-Five Dollars.
While trying to get stocks under 5 dollars, there are things you must consider and they include:
Weigh Risks For Stocks Under 5 Dollars
Penny stocks have potential growth and a fair amount of risks. Stocks under $5 are notorious for major upswings and downfalls. Their volatility makes them risky. Your risk for loss is also higher if the company hits a difficult roadblock. It’s not unheard of for companies with shares trading under $5 to go under and leave investors with nothing.
“Do not put all your eggs in one basket” In this case, your money. Diversify with safer assets like blue-chip stocks or bonds. Stocks under $5 can be a valuable addition to your investment portfolio with your due diligence and diversification.
While you’d be looking to make money with these under 5 dollars stocks, be wary lets you lose them all. You must your due diligence and diversification before trading with any under 5 dollars stock.
Find the right brokers with the right experience with under 5 dollar stocks. Their input and experience will help you navigate the muddy waters of Under 5 dollars stock markets.