Best Stocks Under $5

Are you looking for cheap stocks under $5 to buy right now? I screened over 1,800 stocks to come up with my favorite ones.

Best Stocks Under $5

Here is a list of the best stocks under $5 to buy right now.

Lucid Group (NASDAQ: LCID)

Lucid Air

Lucid Group (NASDAQ: LCID) is my favorite cheap stock under $5 but may not remain on this list for long if LCID shares soar past the $5 barrier.

The company produces luxury electric vehicles and could be considered the next Tesla if management scales EV deliveries and follows through on execution.

Lucid plans to deliver between 8k to 10k EVs in 2023 while expanding production capacity on both its AMP-1 Arizona factory and AMP-2 Saudi Arabia factory.

Revenue could hit $1 billion in 2023 with the opportunity for more growth as production and deliveries increase.

Lucid’s management has done a good job of improving customer satisfaction by reducing its EV lineup from 5 EVs to 4 and offering a wide range of customizations for prospective Lucid owners.

To confirm my bullish stance, I posted on X that buying LCID stock at $4 was the deal of a lifetime.

However, Lucid does have some stiff competition in the growing EV market from the following companies:

  • Tesla (NASDAQ: TSLA): Tesla CEO Elon Musk released the Cybertruck and may start producing a cheap $25,000 EV at the company’s Texas factory to increase its lagging market share.
  • Rivian (NASDAQ: RIVN): Rivian is another EV company that’s suffering from cash burn but plans to cut costs in an aggressive effort to remain in business.
  • Fisker (NASDAQ: FSR): Fisker is a heavily shorted stock that doesn’t appear to be a major threat to Lucid but Fisker CEO Henrik Fisker could surprise the world in his 2nd attempt to outperform Tesla.
  • Toyota (NYSE: TM): The world’s leading automotive seller by total sales is planning an aggressive EV launch to help keep business away from Tesla and newer EV startups.
  • BYD (OTCM: BYDDY): BYD may become the world’s #1 EV seller by Q1 2024 and take away the title of “EV King” from Tesla. The Chinese EV maker was heavily backed by Warren Buffett’s Berkshire Hathaway.

LCID shares IPOed at $13 and are currently trading around 60% below its initial public offering.

Lucid Group was removed from the NASDAQ 100 effective December 18th, 2023 as part of the fund’s annual rebalancing. This is bearish for LCID shares because fund managers must sell LCID to rebalance their NASDAQ 100 ETFs and mutual funds.

With an average trading volume of 27 million shares daily, Lucid is a cheap EV stock that’s perfect for day trading, covered calls, and long-term investment.

Bitcoin Depot (NASDAQ: BTM)

Bitcoin Depot (Nasdaq: BTM) is the largest Bitcoin ATM operator in North America with over 6,400 kiosk locations as of Q3 2023.

Bitcoin Depot provides its users with simple, efficient, and intuitive means of converting cash into Bitcoin, which users can deploy in the payments, spending, and investing space.

Users can convert cash to Bitcoin at Bitcoin Depot’s kiosks and thousands of name-brand retail locations through its BDCheckout product.

BTM stock is up in 2023 thanks to Bitcoin’s strong performance and could continue soaring leading up to the April 2024 Bitcoin halving event.

The company controls a 23% leading market share out of all Bitcoin ATM companies including:

  • Coinflip
  • Bitstop
  • Rockitcoin
  • Coinhub
  • Athena
  • ByteFederal
  • Cash2Coin
  • National Bitcoin ATM
  • Just Digital Coin

Bitcoin Depot generates around $678 million in revenue annually and is currently profitable.

With just a market cap of $38 million, Bitcoin Depot is one of the cheaper stocks under $5 with massive long-term upside. As Bitcoin adoption increases, more Bitcoiners will use Bitcoin ATMs to convert fiat dollars into cash.

Bitcoin Depot’s growth is positively correlated to Bitcoin adoption so it’s one of the safer plays on this list.

ChargePoint (NYSE: CHPT)

Chargepoint Charging Station

ChargePoint is the largest North American EV charging company with one of the biggest EV charging station footprints in the world.

However, things haven’t gone well for the company recently due to a major crash in revenue caused by the 2023 Ford and GM labor strikes. ChargePoint’s Q3 2022 revenue crashed so low that both the company’s CEO and CFO stepped down.

ChargePoint is currently trading well below $5 but looks like it bottomed from $2 support after management reaffirmed the company’s goal of becoming EBITDA positive by Q4 2024.

There are issues with the company’s current cash burn rate plus ongoing competition from the following companies:

  • Tesla (TSLA): Tesla’s SuperCharging network continues to grow at a rapid pace and got a big boost in 2023 when several EV makers decided to adopt Tesla’s NACS plugs.
  • Blink Charging (BLNK): Another one of ChargePoint’s competitors that continues to grow its revenue despite a slowdown in overall EV sales
  • EvGO (EVGO): Another EV charging station stock that’s growing revenue aggressively

With a new management team and plenty of long-term growth ahead, CHPT shares are a solid buy in my opinion.

Luminar Technologies (NASDAQ: LAZR)

Luminar Technologies

Luminar is one of the best Lidar stocks because the global automotive technology company is ushering in a new era of vehicle safety and autonomy. The company produces Lidar software to help make driving safer by preventing accidents and saving lives.

On Luminar Day 2023, Luminar CEO Austin Russell revealed his ambitious goal to save 100 million lives and 100 trillion hours over the next 100 years by making roads across the world safer.

Studies show over 1 million people die in auto accidents globally but this number could be drastically reduced if drivers had access to proper safety software.

Luminar has a $3.4 billion order book from some of the largest automakers in the world and plans to add $1 billion by Q1 2024.

Luminar has already formed the following partnerships as the company grows its revenue:

  • Mercedes Benz
  • Volvo
  • Daimler
  • NVIDIA
  • MobileEye

While not profitable yet, management provided 2023 revenue guidance of around $75 million (87% YoY growth) and expects to release its major LiDAR product in 2024.

The bad news is that short sellers have pushed down LAZR shares recently and now LAZR has a 24% short interest. Many bears have pointed out that the company has only $300 million in cash on hand with an average quarterly free cash flow loss of $60 million.

Negative free cash flow is one of the reasons why LAZR shares are down 46% YTD but that doesn’t mean Luminar stock isn’t a good long-term buy.

LAZR shares are trading below a $1 billion market cap and could trend lower over the short run. However, I’m paying attention to Luminar and won’t mind buying up LAZR stock once the company approaches positive EBITDA and its first positive free cash flow quarter.

Matterport (NASDAQ: MTTR)

Matterport, Inc. (Nasdaq: MTTR) is leading the digital transformation of the built world by helping businesses transition into the Web 3.0 metaverse.

It’s one of the reasons why Matterport is one of my favorite metaverse stocks to buy now.

The company uses groundbreaking spatial data platforms to turn buildings into data to make nearly every space more valuable and accessible.

Millions of buildings in more than 177 countries have been transformed into immersive Matterport digital twins to improve every part of the building lifecycle from planning, construction, and operations to documentation, appraisal, and marketing.

OppFI (NYSE: OPFI)

OppFI is an online lending platform that offers short and mid-term loans to millions of people who aren’t eligible for traditional bank loans.

OppFI Stats (Source: OppFI.com)

I discovered OPFI shares as a good investment after watching Justin Timberlake’s In Time movie and learning key financial lessons such as how lenders make money by offering loans to the general public.

In Time Movie

OppFI is one of the only SPACs that is currently profitable but OPFI shares are still trading well below $5. Management raised its Q4 2023 guidance as it expects consumers to apply for more loans during the busy holiday season.

However, OppFI’s main blemish is the company’s weak balance sheet and high-risk debt-to-equity ratio. OppFI finished Q3 2023 with $66 million in cash on hand while carrying over $300 in debt on its balance sheet.

The good news is that OppFI maintains a solid 24.9% operating margin and trades at a crazy low Price-to-sales ratio of 0.26. I guess that investors are worried about OppFI’s quarterly interest payments of $34 million in Q3 2023 taking a toll on long-term profitability.

With a P/E ratio of just 11, OppFI offers plenty of long-term upside as the company continues to grow its user base.

Don’t expect OppFI stock to soar as quickly as some of the more popular EV and crypto stocks on this list but I believe OPFI shares could be a slow and steady profitable investment for long-term shareholders.

Urban One (NASDAQ: UONE)

Urban One

Urban One is a black-owned media company that became popular during the George Floyd protests against police brutality at the height of the 2020 COVID-19 pandemic.

UONE shares crashed in November 2023 after Richmond voters denied the company’s proposal to build a casino in Richmond, VA. Even though Urban One is profitable, the company has struggled to grow its revenue outside of its traditional Radio/TV/internet model.

The good news is that Urban One plans to build the casino in Petersburg, VA even though its Richmond proposal was rejected. Right now, UONE shares have dipped below $5 for the first time in a while and could pose as a unique dip buying opportunity assuming Urban One’s Petersburg Casino proposal gains acceptance.

With just a $185 million market cap, Urban One’s casino could help 2 to 5x Urban One’s market cap as it transitions into the more profitable casino & sports betting sector.

Grab (NASDAQ: GRAB)

Grab is a Southeast Asian ride-sharing & delivery app that has over 30 million active monthly users. If you ever traveled to any Southeast Asian country such as Thailand, Singapore, or the Philippines then you most likely used the Grab app to hail a taxi or order Sushi online.

The company is based in Singapore and already has a 5% adoption rate out of Southeast Asia’s 600+ million residents.

The company plans to reach profitability by Q4 2024 and has done a tremendous job of cutting costs while making the Grab app the most widely used mobile app in the entire region.

It hasn’t been easy for Grab shareholders because the company went public at a rosy $30 billion valuation during the peak of the SPAC boom.

However, GRAB owns a tremendous moat of its competitors (Food Panda) and shouldn’t see any long-term competition in the next 5 to 10 years. As more Southeast Asian residents enter the middle class and migrate to major cities, I expect the Grab app to become more popular and continue to grow its user base.

Blade (NASDAQ: BLDE)

Blade Air Mobility

Blade is an urban air mobility company that plans to assist the inevitable transition to sustainable electric air travel. eVTOL stocks are poised for hypergrowth as more people realize how much time you can save by avoiding traffic and commuting through the air.

The company generates revenue through 3 core businesses:

  • Short Distance Flights
  • Organ Transport

In Q3 2023, Blade achieved its first positive EBITDA quarter and BLDE stock soared on the positive news. However, eVTOL travel is still in its early stages so don’t expect massive gains until 2025 and beyond.

Blade has a strong balance sheet with over $100 million in cash on hand and zero long-term debt.

BitFarms (NASDAQ: BITF)

Founded in 2017, Bitfarms is a global, publicly traded (NASDAQ/TSX: BITF) Bitcoin mining company that contributes its computational power to one or more mining pools from which it receives payment in Bitcoin.

Bitfarms develops, owns, and operates vertically integrated mining farms with in-house management and company-owned electrical engineering, installation service, and multiple onsite technical repair centers. The Company’s proprietary data analytics system delivers best-in-class operational performance and uptime.

Bitfarms currently has 11 farms, which are located in four countries: Canada, the United States, Paraguay, and Argentina. Powered by predominantly environmentally friendly hydro-electric and long-term power contracts, Bitfarms is committed to using sustainable, locally based, and often underutilized energy infrastructure

Vimeo (NASDAQ: VMEO)

Vimeo (NASDAQ:VMEO) is the world’s most innovative video experience platform. We enable anyone to create high-quality video experiences to connect better and bring ideas to life. We proudly serve our growing community of more than 300 million users — from creative storytellers to globally distributed teams at the world’s largest companies.

Jumia (NYSE: JMIA)

Jumia is a German-based e-commerce and delivery app that is widely known as the “Amazon of Africa”.

Torrid (NYSE: CURV)

Torrid Store

Torrid is a women’s apparel company for plus-sized women (size 10 to 30) who struggle to find proper-fitting clothing in traditional women’s clothing stores.

According to Healthline, 66% of American women could be classified as “overweight or obese”. The company owns brick-and-mortar locations all across America and caters to a specific niche audience of 4 million active female customers.

Some of Torrid’s unique offerings include a wide selection of both outfits and lingerie for plus-sized women plus extra large fitting rooms that come with plenty of space and air conditioning.

Social media is filled with positive testimonials from plus-sized women who enjoy shopping at Torrid locations.

The bad news is that Torrid has very little cash on its balance sheet as of Q3 2023 and carries nearly $500 million in debt liabilities. Short sellers have targeted CURV shares as of recently but a market-wide short squeeze sent CURV stock to just under $5.

If Torrid’s positive momentum continues then CURV shares won’t be on this list for long.

EvGO (NASDAQ: EVGO)

EvGO is another EV charging station stock that’s similar to ChargePoint because the company will benefit from the global shift to sustainable energy vehicles.

The company focuses solely on fast charging solutions and operates more than 950 fast charging stations to over 750,000 customers in the United States. EvGO expects to add 3,400 to 3,700s fast-charging stalls by the end of 2023.

Quarterly revenue surged 234% YoY to $35.1 million in Q3 2023 and the company continues its march toward profitability with impressive gross margins of 5.6%.

The bad news is that EvGO must raise capital to stay afloat and dilute shareholders because the company has lost $98 million so far in 2023. The company sold $125 million worth of stock at $4.25 in May 2023, which put a ton of selling pressure on EVGO shares.

With a 22% short interest and only 195 million shares outstanding, EvGO may continue diluting shareholders to fund its expansive growth goals.

There may be some short-term challenges but EvGo is a cheap stock under $5 to consider if you are bullish on the EV charging industry.

Tilray (NASDAQ: TLRY)

Tilray Brands, Inc. (Nasdaq: TLRY; TSX: TLRY), is a leading global cannabis-lifestyle and consumer packaged goods company with operations in Canada, the United States, Europe, Australia, and Latin America that is changing people’s lives for the better – one person at a time. Tilray Brands delivers on this mission by inspiring and empowering the worldwide community to live their very best life, enhanced by moments of connection and wellbeing. Patients and consumers trust Tilray Brands to be the most responsible, trusted and market leading cannabis consumer products company in the world with a portfolio of innovative, high-quality and beloved brands that address the needs of the consumers, customers and patients we serve. A pioneer in cannabis research, cultivation, and distribution, Tilray Brands’ unprecedented production platform supports over 20 brands in over 20 countries, including comprehensive cannabis offerings, hemp-based foods, and craft beverages

Methodology (Why I Chose These Stocks)

I used FinViz to screen for stocks under $5 on the NASDAQ or NYSE.

To filter for stocks under $5:

  1. Go to the Stock Screener
  2. Change the “Price” filter under Descriptive from Any to Under $5.
  3. Hover over any of the tabs and click the column to sort by Market Cap, P/E ratio, Price, or Volume

Below is a screenshot showing the location of the “Price” filter on the desktop.

There are currently over 1,800 stocks under $5 so I used the following criteria to come up with my best picks:

  • Hypergrowth Gains: I focus on cheap stocks that could 5 to 10x your money within a reasonable time frame. All of these companies
  • Low Market Cap: Nearly all of these stocks are small-cap companies with a market cap of $10 billion or less. Companies with smaller market caps are often ignored by big institutional fund managers who focus on more expensive stocks for their clients. If you identify a few cheap stocks before the big money does then you can make a lot more money in the long run.
  • Low P/S Ratio: I only focus on cheap stocks with reasonable Price-to-sales ratios. I avoid risky stocks such as Fisker (NASDAQ: FSR) with inflated P/S ratios even though FSR stock is fairly cheap.
  • Honest Management: One of the downside risks to investing in stocks is the company may be run by dishonest management who doesn’t care about shareholders. All of the companies on this list are run by capable CEOs who are committed to the long-term success of the company. I avoid stocks with high C-level executive turnover and dishonest CEOs who only care about earning a high salary.

Why Do Stocks Trade Under $5?

Stocks that trade under $5 are known as penny stocks that carry higher risks than bigger, more established companies.

However, your investment returns are much higher since most of these stocks are trading under $5 for a good reason. These stocks are usually cheap due to the following issues:

  • Busted SPAC Plays: The 2021 SPAC gold rush is over and many of these SPACs are currently trading below the initial $10 SPAC IPO price. Interest rate hikes made it more difficult for retail investors to borrow on margin and thus the entire SPAC boom has crashed.
  • High Cash Burn: Many cheap stocks are simply money-losing companies that burn through cash at a high pace. They aren’t profitable and may dilute shareholders through stock offerings or take on debt to pay their expenses.
  • Unpopular Meme Stocks: The pandemic Meme Stock saga has fizzled out and only a few retail investors are still believing the hype in many of these once 100x bagger stocks. GameStop (GME) and AMC Entertainment (AMC) were 1 hit wonders that probably won’t happen again until interest rates are extremely low.
  • Companies with Poor Balance Sheets: Sometimes, a company holds very little cash but owes a lot of debt to its creditors. Most savvy investors won’t touch these stocks until management cleans up the balance sheet and increases free cash flow.
  • Heavily Shorted Stocks: Short sellers bet against certain companies to drive down the share price by borrowing shares and then selling them on the market. These stocks can potentially short squeeze but only when all the stars align perfectly.

Best Investing Strategies for Cheap Stocks Under $5

All of these cheap sub $5 stocks are good for:

  • Day Trading: Trade these cheap stocks during Intraday sessions to scalp profits and make money from big price swings
  • Covered Calls: Sell covered calls to generate income on your positions while you wait for a $10+ breakout
  • Cash-Secured Puts: Make money selling cash-secured puts if you’re bullish on any of these stocks.
  • The Wheel Strategy: Sell a cash-secured put then sell covered calls on these stocks to make money from the infamous Wheel Strategy
  • Long-Term Buy and Hold Investments: Many $100+ stocks started as cheaper penny stocks during the early growth stages. Some of these companies have massive long-term ROI potential.

Trading & Investing Tips for Cheap Sub $5 Stocks

  • Volume is King: Cheap stocks need volume to move in price. The higher the trading volume, the more potential for short and long-term gains. Sometimes, a cheap stock won’t have much volume so it’s best to avoid it. Once volume picks up, that can be the best signal to buy. You don’t want all of your capital sitting in a low-volume stock that never moves.
  • Be Patient: Sometimes, it takes days or weeks for cheap stocks to soar in price. Pay attention to volume and DYOR before investing in these cheap stocks. Most institutional fund managers won’t buy them unless there is a good reason to. Once you do enough research, it may take a long time for your investment thesis to play out. Don’t sell too early and miss out on gains. Be patient and stay the course.
  • Buy As Many Shares As Possible: One of my biggest regrets when investing in sub $5 stocks is not buying enough shares. For example, I bought a few Marathon Digital (NASDAQ: MARA) shares when they traded for less than $5. I made some good gains but should have bought more shares to multiply my investment returns. Good companies don’t trade less than $5 forever so buy as much as you can and be forced to pay more in the future.
  • Use Stop Loss Orders: One of the biggest mistakes beginner investors can make is to hold onto your losing stocks for too long. Cheap stocks can crash much lower than you could imagine if there’s a serious problem with revenue growth or cash on hand. For example, I told my readers in October 2023 to avoid WeWork stock like the plague at $ 2.50 because the company was on the brink of bankruptcy. Within 45 days, Wework filed for bankruptcy and crashed below $1. Using a stop-loss order protects you against the unknown and prevents you from losing all of your savings.
  • Take Profits on Breakouts and Short Squeezes: Cheap stocks will often soar on positive earnings or rosy press releases due to hype and excitement. Unfortunately, many traders target these stocks for quick gains and dump them once everyone becomes too bullish. There is nothing wrong with taking profits at the top if you made some nice gains.
  • Sell Covered Calls on Large Positions: If you’re a long-term investor then don’t let your shares sit idle while you wait for your investment thesis to pay off. Sell OTM-covered calls to earn a yield on your position to boost your gains. 80% of options contracts expire worthless so you probably won’t need to sell your shares if you choose a strike price well into the future. Take the covered call premium and buy more shares or pay some of your bills.

Where to Invest in Stocks Under $5

Most brokerages offer commission-free trades on stock under $5. You may pay a small fee if you want to trade options on any of these stocks.

How to Buy Stocks Under $5

To start investing in stocks under $5, do the following:

  1. Open a brokerage account or log in to your current broker
  2. Deposit money into your account from your checking or savings
  3. Enter the ticker symbol or company name in the search field
  4. Tap “Trade” or “Buy”
  5. Enter the desired number of shares or amount of $ (for fractional shares)
  6. Choose either market or limit trade
  7. Preview your trade and Tap “Buy”

    Disclaimer on Investing in Stocks Under $5

    Investing in stocks priced under $5 carries inherent risks and the potential for substantial losses. The lower share price often reflects increased volatility and susceptibility to market fluctuations. It is crucial to recognize that all investments involve risk, and past performance is not indicative of future results.

    The information provided here is for educational purposes only and does not constitute financial advice. Always conduct thorough research or consult with a qualified financial advisor before making investment decisions. Your financial well-being is your responsibility, and we do not assume liability for any losses incurred based on the information provided.

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