Top 5 Stocks Under $5: Best Stocks Under $5 to Watch
While many assume that stocks under $5 hold no value, that is equally both true and incorrect.
Many companies face turbulent times and for that, the company shares can suffer and hence turn off potential and current investors.
Statistically, it is likely many stocks under $5 are not viable for the long-term, however, that is not always the case. With detailed analysis and a well-established risk management strategy, it’s possible to find some unique entry options.
What are the potential top 5 stocks under $5? We review them in this article, along with more information on penny stocks, fractional shares and more.
Table of Contents
Best Stocks Under $5: What are Penny Stocks?
Penny stocks are typically low-priced stocks issued by small companies that trade at a relatively low market capitalization. Typically, this means they trade for under $5 per share.
These stocks are often associated with early-stage companies, startups, or firms facing financial challenges. While the low price per share may seem attractive to some investors, it's essential to understand that penny stocks can be highly speculative and carry significant risks.
One of the key characteristics of penny stocks is their susceptibility to extreme price volatility. Due to their low market capitalization and limited trading volume, they are more vulnerable to price swings driven by relatively small trading activities. This volatility can present both opportunities and risks for investors.
While some investors seek penny stocks with the hope of significant short-term gains, others approach them with caution due to the potential for sudden and substantial losses.
Additionally, penny stocks are often less regulated than larger, more established companies, which can make them susceptible to fraudulent activities and market manipulation.
Would you like to learn more about trading the financial markets, investing and more? Register for one of our free webinars by clicking the banner below:
Best Stocks Under $5: What are Fractional Shares?
Traditionally speaking, investors had to purchase whole shares, which could be expensive, particularly for high-value stocks like those of tech giants – for example, Google, Amazon, Microsoft and so on.
An intriguing aspect of fractional shares is that they break down the barriers of high stock prices, allowing investors to buy a fraction of a share for a proportionate amount of the full share's price. This democratization of investing has made it more accessible to a broader range of investors, irrespective of their available capital.
While the globe has already seen a huge shift in how accessible the world of finance is for the regular, everyday individual since 2020’s pandemic, this is a step further to make investing more democratic.
Fractional shares are typically offered through online brokerage platforms and are executed in real time, providing investors with the ability to build diversified portfolios with smaller amounts of money.
At Admirals, you have the option to invest in fractional shares with us directly. Please note, that fractional shares are not available for all Admirals users; our product offers are dependent on the jurisdiction the individual is registered under.
Advantages and Disadvantages of Fractional Shares
Advantages of Fractional Shares:
One of the key advantages of fractional shares is that they enable investors to diversify their portfolios more effectively. Instead of concentrating their investments on a limited number of expensive stocks, investors can spread their capital across a wider range of assets, reducing risk and increasing the potential for long-term returns.
However, it's essential to note that not all brokerage platforms offer fractional shares, and fees and limitations may vary.
Disadvantages of Fractional Shares
While fractional shares have democratized investing and brought several advantages, they also come with certain disadvantages.
One drawback is that not all stocks are available for fractional trading or investing, particularly in the case of less liquid or smaller companies.
Therefore, while fractional shares offer accessibility, they also require careful consideration of availability, and potential limitations when incorporating them into an investment strategy.
Would you like to practice trading via an Admirals' free demo account? Practice with virtual funds and master your strategy - Click the banner below to register now:
Top 5 Best Stocks Under $5
Let’s review the potential top 5 stocks under $5, based on the subjective opinion of the author.
Please always keep in mind your appetite for risk and risk profile, while trading/investing responsibly.
Current price as of 09/23: $2.55
Operating in the food and beverage sector, Ambev works with the overall ecosystem of production, distribution and sales of beverages, such as beer, non-alcoholic beverages and soft drinks. They operate in Canada, Brazil, Central America and the Caribbean (CAC).
- With a low-cost entry of around $2.5 a share, the company Ambev operates as the South American branch of the world’s largest brewer, Anheuser-Busch InBev SA. They are also the exclusive distributor of Pepsi products in Brazil. Both points suggest a strong and stable backing of the company.
- The Cost of Revenue has doubled from 2019 to 2022, while the Total Revenue has not grown at the same pace, suggesting potential future volatility of the stock.
Current price as of 09/23: $2.18
MediciNova Inc is a biopharmaceutical company which acquires and develops small-novel therapeutics for the treatment of neurological, respiratory, and liver diseases.
- MediciNova has made many recent positive headlines in 2023, for example upon the success of the company’s lead asset MN-166 (ibudilast) announcement, a medical countermeasure in chlorine gas-induced lung damage. The stock added 19% pre-market on 28/09/23.
- While the stock is enjoying much positive attention at the moment, there are still many roadblocks in terms of patents, government approvals and competition, which could slow down any potential success of the stock.
You can invest in MNVA shares directly at Admirals.
Current price as of 09/23: $4.05
Another biopharmaceutical company, Ardelyx develops and commercialises medical treatments for gastrointestinal and cardiorenal therapies.
- From 2019-2022, the Total Revenue of Ardelyx has grown 10x, while the Cost of Revenue has remained low, showing promise for the company’s development, hence a healthy stock price.
- With a 52-week range (as of September 2023) of $1.11-5.12, this shows the stock is highly volatile and may propose additional risk.
You can buy ARDX shares directly at Admirals.
Current price as of 09/23: $3.81
Banco Santander is well-known in retail and commercial banking, wealth management and financial services in Europe, North America, and South America.
- From 2019-2022, the Total Revenue shows gradual but slightly volatile growth, however, the TTM (trailing twelve months) is the highest ever in the given period, suggesting a positive future.
- In 2023, Banco Santander has seen much negative media coverage, which could suggest future volatility in the stock price.
Current price as of 09/23: $1.89
Operating in the sector of genomics and proteomics, NanoString develops, manufactures, and sells technology for scientific and clinical information. They operate in the Americas, Europe, the Middle East, and Asia Pacific.
- From 2019-2022, the Total Revenue of the company has been volatile however, the TTM (trailing twelve months) as of September 2023 shows a sizeable increase in Total Revenue.
- With a current ban on sales of Nano’s CosMx products in Europe, this could cause some ongoing turbulence for the stock.
You can invest in NSTG shares directly at Admirals.
Do you have access to the leading MetaTrader 5 trading platform? Automate your trading, use advanced charting tools and more - Click the banner below to download for free and start trading now:
How to Invest in the Best Stocks Under $5 at Admirals
At Admirals, we strive to bring accessibility to both trade and invest for all.
Through the use of the MetaTrader 5 platform, Admirals users can trade and invest via the Trade.MT5 and Invest.MT5 accounts, both accessible via MetaTrader 5.
Please note, that you have access to a demo account, which allows you to practice trading with virtual funds.
Additionally, you also have the option to invest in fractional shares via a live account. Fractional shares, as mentioned, allow you to invest in high-priced company shares for a fraction of the share price.
If you’d like to get started today, you can do so by clicking the banner below to register for a free live account:
Can I buy a stock for $5?
Yes, you can buy a stock for $5 in a variety of cases. Stocks under $5 are typically referred to as 'penny stocks', for which you can buy directly from a regulated online broker, like Admirals. It is also possible to buy a stock of $5 using fractional shares.
What is the best stock to invest $5 in?
While this kind of question is subjective, potentially some of the best stocks to invest $5 in include:
- Ambev S.A
- MediciNova Inc
- Ardelyx Inc
- Banco Santander S.A
- NanoString Technologies
Other Articles of Interest:
INFORMATION ABOUT ANALYTICAL MATERIALS:
The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admirals' investment firms operating under the Admirals trademark (hereinafter “Admirals”). Before making any investment decisions please pay close attention to the following:
1. This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
2. Any investment decision is made by each client alone whereas Admirals shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
3. With view to protecting the interests of our clients and the objectivity of the Analysis, Admirals has established relevant internal procedures for prevention and management of conflicts of interest.
4. The Analysis is prepared by an independent analyst (hereinafter “Author”) based on Brandie E Blackler, Financial Analyst, personal estimations.
5. Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admirals does not guarantee the accuracy or completeness of any information contained within the Analysis.
6. Any kind of past or modeled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admirals for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
7. Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.