Best Cheap Stocks to Buy Under $5

The stock market might be doing really well, but there are some smaller companies worth paying attention to. These companies have some of the best cheap stocks to buy now that cost less than $5 each, which many people are not aware of. But they could be hiding some really great opportunities.

These companies might have new and exciting ideas and are eager to shake things up in their industries. Especially in fields like AI and semiconductors, there could be some big discoveries coming soon.

This guide explores these cheaper stocks to buy now, finding companies that could become big players in the future. Yes, these smaller cap stocks are risky due to the price volatility that comes with it. However, remember to invest in these cheap stocks to invest in within your risk appetite and the amount of capital that you are willing to lose.

So, get ready to further understand these best cheap stocks to invest in and find the ones that could make you a lot of money in the future.

 

Finding Diamonds in the Rough: Undervalued Stocks vs. High-Risk Stocks

The stock market offers chances for investors with different comfort levels for risk. While big companies feel safe, the chance for big growth often comes from lesser-known ones. This is where undervalued stocks come in.

But how do you find these hidden gems without getting into risky ventures?

Undervalued Stocks: Good Finds

Undervalued stocks are from companies with strong basics, meaning their real potential isn’t reflected in their current price.

Here is what to look for:

• Strong Fundamentals: These companies have good financials, like steady sales growth, higher profits, and a good handle on debts. You can check these in their financial reports.
• Growth Potential: They are likely to grow because they are in a fast-growing industry, making new stuff, or entering new markets. Reports and ratings can give you clues about their future.
• Low P/E Ratio: This compares the stock price to earnings. A low P/E ratio (compared to others in the industry) can show a stock is undervalued. Websites like Yahoo Finance can help you compare these ratios.

Finding undervalued stocks means doing your homework. Check financial reports, industry news, and ratings to know a company’s true worth.

High-Risk Stocks: Not All Shine is Gold

High-risk stocks promise big returns, but they are different from undervalued ones:

• New Companies with Limited Track Record: These companies are new and do not have a strong financial history, making it hard to predict their future.
• Unproven Technology/Business Model: They might be doing something new, which could shake up the industry, but it is also risky.
• High Volatility: Their stock prices swing a lot, so these companies are not for folks who want stability.

Investing in high risk stocks needs a big appetite for risk and a good understanding of the company and its industry. It is smart to only put a small part of your money into these.

By knowing undervalued stocks and high-risk ones, you can be a better investor, spotting hidden gems and navigating the market wisely. Remember, research and a balanced approach are key to getting the most while risking the least.

 

Factors to Consider When Choosing Low-Priced Stocks

While the appeal of cheap stocks lies in their potential for big growth, it is important to be careful when investing in them.

These companies might not have the same long history as bigger ones, but you can still find hidden treasures by considering a few things.

Here is what to think about:

1. Strong Financial History

A company’s financial health is key for its success over time. Look for:

• Growth in Revenue: Good companies see steady growth in their sales. Low-priced stocks that beat the average growth rate of 7% for S&P 500 companies over the last 10 years show strong potential.
• Making Profits: Sales alone aren’t enough. Companies need to turn sales into profits. A healthy profit margin (profits divided by sales) is a good sign.
• Manageable Debt: Too much debt can hurt a company’s growth. Look for companies with a debt-to-equity ratio where debt isn’t higher than what the company’s worth.

2. Experienced and Skilled Management Team

The decisions leaders make can greatly affect the success of a company. Consider:

• Track Record of Past Success: Has the leadership team led the company to growth and profits before?
• Industry Expertise: Does the team understand the industry and competition well?
• Transparency and Communication: Do they talk openly with investors?

3. Riding the Innovation Wave: New Technologies and Industries

Sometimes, the best investment chances are in new areas. Think about companies focused on:

• Disruptive Technologies: Things like AI, blockchain, and clean energy can shake up whole industries.
• Emerging Industries: New industries like cybersecurity or self-driving cars have a lot of room to grow.

4. Keeping an Eye on News: Things That Can Boost Growth

Outside things can really affect a the stock price of the company. Watch for:

• Good Industry Reports: Analysts might say certain sectors will grow a lot. Look for cheap stocks in those areas.
• Favourable Government Policies: Government policies might help some industries grow. Look for companies that benefit from these.
• Product Launches or Partnerships: Big product launches or partnerships can show a company’s future potential.

Remember, cheap stocks are riskier. But by looking at these factors and doing your research, you might find companies that are worth much more than their current price.

 

Best Stocks Under $5 To Invest In

1. Nerdy, Inc. (NYSE:NRDY)

• Latest Stock Price: $2.86 as of 6th April 2024
• Company Description: A tech firm runs a top-notch platform for live online learning. Their main business, Varsity Tutors, uses technology and AI to offer personalized live learning on a large scale.
• Industry: Education Technology (EdTech)
• Latest Financials Update: During the third quarter of 2023, the company achieved significant growth, increasing its Active Members base by 27% to 39,500 paying customers. Additionally, its institutional business expanded, executing 80 contracts, resulting in $10.6 million of bookings, an 89% increase compared to the previous year.
• Analyst Rating: Following the release of earnings, Cantor Fitzgerald analyst Brett Knoblauch maintained an ‘Overweight’ rating but adjusted the price target to $6. This new price target implies a potential upside of 90.48% based on the share price as of December 14.
• Recent Developments: Nerdy recently acquired Camp K12, a leading provider of online summer camps, expanding their reach into a lucrative market segment.
• Future Outlook: Nerdy’s focus on personalized learning and its recent acquisition position it well to capitalize on the growing EdTech market. However, competition in the space is fierce, and the company needs to demonstrate consistent profitability to solidify its position.

2. Baytex Energy Corp. (NYSE:BTE)

• Latest Stock Price: $5.46 (as of 6th April 2024)
• Company Description: Baytex Energy Corp. is a Canadian oil and gas exploration and production company with a focus on assets in the Eagle Ford Shale and Viking light oil plays.
• Industry: Oil & Gas Exploration & Production
• Industry Trends: The global oil and gas market is expected to rebound in 2024 due to increasing demand and supply chain constraints. However, long-term trends favor renewable energy sources.
• Recent Developments: Baytex recently announced a significant oil discovery in the Viking play, potentially bolstering its production capacity.

  In June, Baytex Energy Corp. (NYSE: BTE) completed the acquisition of Ranger Oil Corporation for a total cash and stock payment of $2.2 billion. This acquisition adds 162,000 net acres in the crude oil-rich Eagle Ford region.

  Baytex Energy Corp. (NYSE: BTE) is actively pursuing a shareholder return program, aiming to allocate 50% of its free cash flow to share buybacks and dividends, with the remaining 50% dedicated to strengthening its balance sheet.

Future Outlook: Baytex’s future hinges on oil price fluctuations and its ability to navigate the transition to a lower-carbon economy.

Important Note: The oil and gas industry is inherently cyclical and subject to volatile price swings.

3. SomaLogic, Inc. (NASDAQ:SLGC)

• Latest stock price: $0.0860 as of 6th April 2024
• Company Description: SomaLogic is a proteomics company that uses artificial intelligence (AI) to analyze proteins, identify potential drug targets and provide clinical diagnostics. Based in Boulder, Colorado, their technology platform includes assay services and diagnostics, along with access to one of the world’s largest clinical proteomic databases.
• Industry: Biotechnology
• Industry Trend: SomaLogic operates in the high-growth field of AI-powered drug discovery. The company boasts partnerships with major pharmaceutical companies and has a growing pipeline of potential drug candidates.
• Recent Developments: SomaLogic recently announced a collaboration with a leading pharmaceutical company to develop new treatments for autoimmune diseases.

  SomaLogic, Inc. (NASDAQ: SLGC) and Standard BioTools Inc. (NASDAQ: LAB) have agreed to merge in an all-stock deal announced on October 4. The merger values the combined companies at a pro-forma equity value exceeding $1 billion. This transaction creates a top-tier platform of multi-omic technologies, offering high throughput and superior data quality for clinical research.

Future Outlook: The success of SomaLogic hinges on the validation of its AI platform and the clinical trials of its drug candidates. Continued positive developments in these areas could lead to significant stock price growth.

Important Note: The field of AI-powered drug discovery is still relatively young, and there’s no guarantee of success. SomaLogic is a high-risk, high-reward investment – one of the best cheap stocks to invest in.

4. Perimeter Solutions, SA (NYSE:PRM)

• Latest Stock Price: $7.79 (as of April 6, 2024)
• Company Description: Perimeter Solutions, SA is a leading provider of solutions worldwide, creating top-notch firefighting products and lubricant additives. Their offerings include retardants like PHOS-CHEK® and FIRE-TROL®, foam concentrates and gels, such as AUXQUIMIA® and SOLBERG®, and extinguishing agents and retardants like BIOGEMA®.
• Industry: Fire Safety & Specialty Chemicals
• Financial History: Perimeter Solutions boasts a healthy gross margin of over 26%, indicating efficient operations. They have also experienced consistent revenue growth, exceeding the S&P 500’s average annual growth rate of the past decade.
• Positive Industry Trends: The global fire safety market is projected to reach $28.4 billion by 2027, fueled by growing urbanization and rising fire safety regulations. Additionally, the company’s specialty chemicals segment, focusing on anti-wear additives for engine oils, benefits from the ongoing demand for high-performance lubricants.
• Recent Developments: Perimeter Solutions recently reported a 44.1% year-over-year revenue increase, showcasing strong business momentum. They are also scheduled to release their next earnings report on May 7, 2024, which could provide further insights into their financial performance.

Future Outlook: With a focus on essential fire safety solutions and a growing presence in the specialty chemicals market, Perimeter Solutions is positioned to capitalize on positive industry trends – another cheap stocks to invest in. However, it is crucial to note that the company’s earnings growth has been negative in the past year.

5. Conduent Incorporated (NYSE:CNDT)

• Latest Stock Price: As of April 7, 2024, CNDT is trading around $3.42.
• Company Description: Conduent Incorporated is a global provider of digital business solutions and services, catering to commercial, government, and transportation sectors worldwide. Their services range from business process outsourcing and customer experience management to healthcare claims administration and transportation tolling solutions.
• Industry: Business Services/Financial Services/Transportation
• Strong Fundamentals: Preliminary research suggests that Conduent has a track record of steady revenue and is working towards enhancing profitability.
• Positive Industry Trends: The business process outsourcing (BPO) market is projected to grow substantially in the coming years, driven by digital transformation and cost efficiencies. Conduent, being a significant player in this field, stands to benefit from this trend.
• Recent Developments: Conduent has been concentrating on expanding its digital solutions portfolio and streamlining operations to boost efficiency.

Future Outlook: Conduent’s future success relies on its ability to seize opportunities in the growing BPO market, integrate its digital solutions effectively, and maintain strong client relationships.

Important Note: This is just a brief overview, and conducting thorough research is essential before making investment decisions. Here are some resources to assist you:

• Conduent Investor Relations: https://investor.conduent.com/
• Conduent Latest News: https://www.news.conduent.com/news
• Financial Statements (available on platforms like Yahoo Finance or Google Finance)

Remember, investing in one of the best cheap stocks to buy today comes with risks. Always perform your due diligence, assess your risk tolerance, and consider consulting a financial advisor before investing.

6. TETRA Technologies, Inc. (NYSE:TTI)

• Latest stock price: As of April 7, 2024, TETRA Technologies is trading around $4.93.
• Company Description: TETRA Technologies is a prominent provider of completion fluids and related services to the oil and gas sector. They specialize in creating and delivering tailored fluid solutions to enhance wellbore performance during drilling and completion operations.
• Industry: Oil & Gas Exploration and Production Services
• Strong Fundamentals: TETRA has a consistent history of revenue growth, focusing on operational efficiency and cost management. They also maintain a healthy debt-to-equity ratio, which can be found in their financial statements.
• Positive Industry Trend: Despite long-term challenges in the oil and gas industry due to the shift towards renewable energy, there remains a high demand for efficient exploration and production. Established players like TETRA could benefit from rising global energy needs and potential supply disruptions.
• Recent Developments: TETRA has expanded its service offerings to include downhole wellbore cleaning technologies, broadening its opportunities within the drilling and completion sector.

Future Outlook: The company is committed to technological innovation and strategic partnerships to stay competitive in the evolving oil & gas landscape.

Important Considerations:

This is just a brief overview of TETRA Technologies. Conduct thorough research before making investment decisions to buy the cheap stocks to invest in. Consider analyzing TETRA’s financial statements, evaluating its competitive position in the oil & gas services sector, understanding broader market dynamics, and aligning with your risk tolerance and investment objectives.

7. Matterport Inc. (NYSE: MTTR)

• Latest Stock Price: $2.04 (as of April 5, 2024)
• Company Description: Matterport Inc. is a leading company in spatial data technology, specializing in digitizing physical spaces. They use advanced cameras and software to create 3D models of buildings and environments, known as “digital twins,” enabling virtual tours, remote inspections, and improved building management.
• Industry: Spatial Data Technology / 3D Modeling
• Strong Fundamentals: Despite not yet being profitable, Matterport demonstrates remarkable revenue growth and is actively expanding its customer base and product range.
• Positive Industry Trend: The 3D modeling market is expected to grow significantly in the coming years, driven by demand in real estate, construction, and architecture sectors.
• Recent Developments: Matterport’s recent launch of a mobile app allows users to capture basic 3D spaces using their phones, potentially broadening their market reach.

Future Outlook: Positioned to benefit from the increasing demand for 3D spatial data solutions, Matterport’s technology has diverse applications across various industries.

Important Considerations:

• High Volatility: Like many sub-$5 stocks, Matterport’s share price can experience significant fluctuations.
• Emerging Market: While promising, the 3D modeling market is still developing, with rising competition.
• Limited Track Record: Matterport is a relatively young company, and its long-term profitability of this best cheap stock under $5 is yet to be determined.

8. Rocket Lab USA Inc. (NYSE: RKLB)

• Latest Stock Price: $3.80 (as of April 7, 2024)
• Company Description: Rocket Lab is a prominent launch provider for small satellites, offering dedicated orbital missions and rideshare opportunities to both government and commercial clients.
• Industry: Aerospace & Defense
• Industry Trend: The small satellite market is witnessing rapid expansion due to advancements in miniaturization and growing demand for affordable Earth observation and communication services. According to a report by Research and Markets, the global small satellite market is expected to reach $24.8 billion by 2025.
• Recent Developments: Rocket Lab achieved its 30th electron launch milestone in March 2024, reinforcing its reputation as a dependable launch provider. Additionally, the company announced a collaboration with a major telecommunications provider to deploy a constellation of internet-broadcasting satellites.

Future Outlook: With the small satellite market thriving, Rocket Lab is poised to capitalize on this growth. Its focus on innovation and established track record position it as a key player for the future, potentially another best cheap stocks to buy today. However, the space industry is fiercely competitive, presenting challenges from established companies and emerging startups.

9. Iteris (NYSE: ITI)

• Latest Stock Price: As of April 5, 2024, ITI closed at $4.82 USD, solidifying its status as a genuine low-priced stock.
• Company Description: Iteris leads in delivering inventive solutions for monitoring, analyzing, and managing critical infrastructure assets. Their expertise spans smart transportation systems, air quality monitoring, and water resource management.
• Industry: Iteris operates within the environmental and infrastructure sectors, both witnessing favorable industry trends.
• Industry Trend: Heightened concerns surrounding climate change and aging infrastructure are fueling demand for solutions that enhance resource management and ensure safety, presenting opportunities for Iteris’ products and services.
• Recent Developments: Iteris recently secured a contract with a major transportation agency to implement their advanced traffic management system. This achievement underscores the increasing adoption of their technology and hints at potential expansion opportunities.

Future Outlook: With a growing emphasis on sustainability and infrastructure modernization, Iteris is well-positioned for sustained growth. Their dedication to innovative solutions aligns seamlessly with the evolving needs of these sectors.

Another best stock under $5 to invest in today, however, remember to do your own research first!

10. Dynagas LNG Partners (NYSE: DLNG)

• Latest Stock Price: As of April 7, 2024, DLNG is trading at approximately $3.04, reflecting a recent uptick of 4.83%.
• Company Description: Dynagas LNG Partners LP is a forward-thinking limited partnership primarily focused on owning and operating top-tier liquefied natural gas (LNG) carriers. These vessels are engaged in multi-year contracts with global energy companies, providing Dynagas with several advantages:
• Stable Cash Flows: Long-term contracts ensure consistent revenue streams.
• High Utilization Rates: Dynagas’ LNG carriers maintain high operational efficiency, maximizing earnings potential.
• Industry: Maritime transportation, specifically specializing in the LNG shipping sector.
• Industry Trend: The global LNG market is anticipated to witness substantial growth in the foreseeable future, driven by factors such as:
• Increasing Demand for Natural Gas: Natural gas is preferred as a cleaner alternative to coal and oil, attracting countries shifting towards cleaner energy sources.
• Rising LNG Exports: The United States is positioned to emerge as a key LNG exporter, driving the need for specialized LNG carriers.
• Recent Developments: Dynagas recently secured a multi-year contract extension with a prominent energy firm, further solidifying their revenue stability.

Future Outlook: With the LNG market poised for expansion, Dynagas is one of the best cheap stocks to invest in and it is well-equipped to capitalize on the growing demand for LNG transportation services. Their focus on securing long-term contracts and maintaining high utilization rates suggests a promising outlook for stability and profitability ahead.

11. Puma Biotechnology (NYSE: PBYI)

• Latest Stock Price: $0.15 (as of April 7, 2024)
• Company Description: Puma Biotechnology (PBYI) is a biopharmaceutical company dedicated to acquiring and advancing innovative treatments for various cancers. They specialize in obtaining drug candidates that have undergone initial clinical testing and further developing them for potential commercialization.
• Industry: Biotechnology
• Potential for High Growth: With the global oncology market projected to reach $314.3 billion by 2027, there’s significant growth potential for companies focused on cancer treatments.
• Recent Developments: PBYI exceeded analyst expectations with positive earnings and sales surprises in Q1 2023, indicating potential for continued growth.
• Focus on Unmet Medical Needs: PBYI’s pipeline includes treatments for aggressive breast cancers with limited options, addressing critical unmet medical needs.
• Industry Trend: The biopharmaceutical industry is rapidly advancing in areas like targeted therapies and immunotherapy, presenting opportunities for companies developing innovative cancer treatments like PBYI.

Future Outlook: PBYI’s future success depends on the continued development and potential commercialization of their drug candidates. Positive clinical trial outcomes and regulatory approvals are key for long-term growth.

 

Conclusion

Finding the best cheap stocks to buy now is like searching for hidden treasures in a vast landscape. It is not easy, but it is worth it. To discover valuable companies, you need to do your homework, focus on strong basics, and handle risks wisely. By considering things like financial health, experienced leaders, new technologies, and industry trends, you can spot real gems among cheap stocks to buy now.

Yet, navigating the market, especially with low-priced stocks, can be tough. That is why it is a wiser choice to talk to a financial advisor who can help you create a strategy that fits your comfort with risk and financial goals.

Remember, a good investment mix includes both big names and carefully chosen cheap stocks with lots of growth potential. So, arm yourself with knowledge, manage risks well, and start your journey to find the best cheap stocks to buy today!

 

Disclaimer: The content provided in this article serves for informational purposes exclusively and should not be construed as financial advice. Investing carries inherent risks, and previous performance does not guarantee future outcomes. Prior to making any investment choices, it’s advisable to seek guidance from a certified financial advisor who can take into account your unique financial circumstances and risk tolerance. We are not financial experts, and nothing presented here should be interpreted as a suggestion to purchase or sell any security.