These stocks under $5 may have major upside.
Some of the top-performing stocks of the past decade have gone on such big runs that their share prices have gotten steep. Amazon.com Inc. (ticker: AMZN) and Alphabet Inc. (GOOG, GOOGL), for example, both have share prices of more than $2,500. Investors looking for bargain stocks trading for less than $5 per share find themselves searching through plenty of bad investments. A low share price is often an indication that a company is struggling and a stock is a risky bet, but there are a handful of hidden $5 gems, as well. Here are seven cheap stocks for less than $5 that have strong growth prospects, according to Bank of America.
Banco Bradesco SA (BBD)
Banco Bradesco is Brazil’s second-largest private sector lender. Analyst Mario Pierry says the company’s 12% year-over-year net interest income growth and 10% quarterly insurance revenue growth were highlights of Bradesco’s earnings report in February. Loan growth was up 20% year over year in the quarter, but Pierry says Bradesco’s 2022 net income growth guidance of 8% was below expectations. Despite the lackluster guidance, Pierry says the stock is a compelling value, given its defensive earnings profile. Even after a 30% year-to-date gain, Bradesco shares still trade for less than $5. Bank of America has a “buy” rating and a $5.30 price target for BBD stock, which closed at $4.44 on April 6.
Telefonica SA (TEF)
Telefonica is the leading telecom company in Spain. Analyst David Wright says the bear case against Telefonica has been disappearing one problem at a time. Wright says Telefonica has significantly reduced its debt, its currency headwinds have subsided, its core assets have improved and its Latin America operations have reached an inflection point and are now performing well. Wright says the stock could have 50% upside over the next three years from re-rating alone, as it continues to deleverage its balance sheet. Bank of America has a “buy” rating and a $6.74 price target for TEF stock, which closed at $4.93 on April 6.
B2Gold Corp. (BTG)
In March, gold prices reached their highest level in more than a year following the Russian invasion of Ukraine, which is good news for global gold producer B2Gold. In late March, the company announced an updated mineral resource estimate for its Anaconda deposit in Mali that analyst Lawson Winder says is more than four times larger than its previous total resource estimate for the property. Even at significantly lower gold prices of $1,600 per ounce, Winder says the new estimate for Anaconda is still a major upgrade. Bank of America has a “buy” rating and a $5.85 price target for BTG stock, which closed at $4.55 on April 6.
Cazoo Group Ltd. (CZOO)
Cazoo is a direct-to-consumer online car retailer focused primarily on the U.K. market. Online auto retailer stocks have taken a beating in the past year, and shares of Cazoo have dropped more than 70% in that time to less than $3. Analyst David Amira says he remains optimistic about Cazoo’s secular growth story as the company expands outside the U.K. He says Cazoo is targeting a large addressable European auto market that is still in the early stages of transition to online sales. Bank of America has a “buy” rating and $6.60 price target for CZOO stock, which closed at $2.88 on April 6.
ATRenew Inc. (RERE)
ATRenew is the largest pre-owned consumer electronics retailer and services platform in China. ATRenew is a risky investment due to the current uncertainty over whether U.S.-listed Chinese stocks will fully rebound after Beijing announced plans to allow more transparency when companies share financial data with foreign regulators. But analyst Joyce Ju says ATRenew’s 48% revenue growth in the fourth quarter demonstrates its business is strong, and she says the company is uniquely positioned in China’s massive pre-owned mobile phone market. In addition, she says the stock is attractively valued due to excessive pessimism surrounding a potential U.S. delisting. Bank of America has a “buy” rating and a $12.10 price target for RERE stock, which closed at $3.89 on April 6.
Berkshire Grey Inc. (BGRY)
Berkshire Grey is a tech company that specializes in industrial robotics and artificial intelligence software. Analyst Andrew Obin estimates that orders grew about 480% sequentially in the fourth quarter, and a growing percentage of that order mix is new customers. The company recently announced a new product that it says can automatically return goods to inventory 25% faster than manual returns, which Obin says demonstrates Berkshire’s ability to effectively address customer problems. Looking ahead, Berkshire projects a ramp-up in orders and revenues in the second half of 2022. Bank of America has a “buy” rating and a $10 price target for BGRY stock, which closed at $2.58 on April 6.
A.k.a Brands Holding Corp. (AKA)
The A.k.a. Brands portfolio includes Culture Kings, Princess Polly, Petal & Pup and Rebdolls, four digitally native fashion brands targeting millennial and Gen Z consumers. Analyst Lorraine Hutchinson says A.k.a.’s U.S. momentum is strong, but rising freight costs and COVID-19 outbreaks have weighed on Australia sales. Hutchinson says Australian COVID-19 headwinds will likely persist through the first half of 2022, but A.k.a’s U.S. growth opportunity and asset-light business model make it a compelling long-term growth stock. Bank of America has a “buy” rating and a $12 price target for AKA stock, which closed at $4.25 on April 6.
7 best cheap stocks to buy now under $5:
— Banco Bradesco SA (BBD)
— Telefonica SA (TEF)
— B2Gold Corp. (BTG)
— Cazoo Group Ltd. (CZOO)
— ATRenew Inc. (RERE)
— Berkshire Grey Inc. (BGRY)
— A.k.a Brands Holding Corp. (AKA)
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