Will the stock market rally keep on going? On the one hand, the growth in artificial intelligence and semiconductors is leading to a great deal of investor excitement. On the other hand, strong asset prices and seemingly sticky inflation readings may cause the Federal Reserve to forego planned interest rate cuts in 2024.
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Regardless of the market’s near-term direction, there are plenty of low-priced stock bargains out there. As of this writing, there are about 1,800 stocks listed on the major U.S. stock exchanges that trade for $5 per share or less. Many stocks priced in that range face significant headwinds, but there are still some worth considering.
Here are nine of the top cheap stocks under $5 to buy now:
— Sirius XM Holdings Inc. (ticker: SIRI)
— Fortuna Silver Mines Inc. (FSM)
— Up Fintech Holding Ltd. (TIGR)
— W&T Offshore Inc. (WTI)
— Enel Chile SA (ENIC)
— Rocket Lab USA Inc. (RKLB)
— B2Gold Corp. (BTG)
— Payoneer Global Inc. (PAYO)
— Grupo Aval Acciones y Valores SA (AVAL)
Sirius XM Holdings Inc. (SIRI)
Sirius XM operates a leading satellite radio platform. In addition to its automotive-based core listening market, Sirius also operates the Pandora streaming service. SiriusXM shares spiked last summer during a short squeeze based on hopes of a buyout. That didn’t pan out however, and since then the stock has fallen from a peak of $8 to less than $4 per share now. Shares are currently approaching new lows. This makes for bargain buying opportunity with SIRI stock now going for 11.6 times forward earnings. It also sells for just 1.5 times revenues, which is not a bad price for a business with such a strong recurring revenue stream. The company also pays a 2.7% forward dividend yield.
Fortuna Silver Mines Inc. (FSM)
Fortuna Silver Mines is a Canada-based mining company with operations spanning several Latin American countries. Right now, silver is in high demand, and prices recently topped $27 an ounce, which is approaching the highest levels since 2021. That comes in the midst of rallies in gold, copper and other metals. Traders are betting on significant inflation in the months and years to come.
Silver, due to its small supply, could be prone to a more dramatic rally than gold if the general bullish sentiment continues. Fortuna Silver Mines was unprofitable last year, but analysts expect it to become strongly profitable given the rise in silver prices. Shares currently trade right around book value. That makes for an attractive value if the current rally in silver gains further momentum.
Up Fintech Holding Ltd. (TIGR)
Up Fintech is a brokerage and financial services company focused on the Chinese markets. The company primarily operates in partnership with Interactive Brokers Group Inc. (IBKR), which does most of Up Fintech’s trading and clearing operations. Interactive Brokers also bought a large equity stake in Up Fintech, giving investors confidence that the firm has strong institutional practices.
Not surprisingly, the stock plunged amid the prolonged bear market in Chinese equities. Lower trading volumes and lower asset prices reduce fees and profitability. However, Up Fintech remains strongly profitable at about 15 times trailing earnings and just 11 times forward earnings. Shares also trade around book value which is a typically a solid entry point for a financial services stock.
W&T Offshore Inc. (WTI)
W&T Offshore is a Houston-based oil and natural gas exploration company. The firm has struggled during prolonged periods of lower energy prices. Things have turned more positive for the company over the past two years, however, as oil prices have rebounded considerably. Wars in Russia and the Middle East have the price of oil on the rise once again. While oil is surging to start 2024, the price of natural gas remains depressed, which is not helpful for the company. But overall, W&T sees an increasingly favorable outlook. The company is already profitable and paying a small dividend. Analysts expect a big jump in earnings this year as the energy price outlook continues to strengthen.
Enel Chile SA (ENIC)
Enel Chile is one of Chile’s largest independent power producers. The company has been one of the fastest adopters of renewable power and is on pace to be one of the first global utilities to reach net zero carbon emissions. This is thanks to its hydroelectric power production, along with a rapidly growing solar business. Northern Chile’s Atacama Desert has among the highest solar intensity in the world. This means that Enel Chile can generate unusually strong efficiency and profitability from its solar assets.
The macroeconomic outlook is also improving for Chile. The surging prices of gold, silver, copper and other metals will bolster the Chilean economy, which derives a significant share of its GDP from metal exports. In addition, the Chilean Central Bank recently slashed interest rates by 75 basis points, which should bolster industrial production and the construction sector, thus boosting demand for electricity.
Rocket Lab USA Inc. (RKLB)
Rocket Lab is a space company focused on launch services and space system solutions. When either defense agencies or private companies wish to launch satellites into space, they can hire Rocket Lab to help fulfill their missions. This is not just theoretical. Rocket Lab has already proven significant commercial demand. It generated $245 million of revenues in 2023 and analysts see that jumping to $435 million in 2024. Additionally, Lockheed Martin Corp. (LMT) recently announced an acquisition offer for Terran Orbital Corp. (LLAP), a small satellite manufacturer. This speaks to the growing interest in the space industry and the potential for further consolidation. An M&A spree could bolster Rocket Lab’s valuation going forward.
B2Gold Corp. (BTG)
B2Gold is a multinational gold mining company. It runs the Fekola mine in Mali, the Masbate mine in the Philippines and the Otjikoto mine in Namibia. It also owns holdings in a couple of other properties and mining companies. In a way, it serves as a diversified play on the gold industry with its multi-jurisdictional collection of assets.
Surprisingly, even as gold has surged to new all-time high, mining stocks such as B2Gold remain significantly depressed. BTG stock is down 34% over the past year. This leaves the stock at just 12 times forward earnings. B2Gold also offers a solid 6.3% dividend yield, making this a great growth and income pick for the emerging gold bull market.
Payoneer Global Inc. (PAYO)
Payoneer Global is a payments-focused financial services company. The firm’s core mission is to make it easier for companies to handle payrolls and billing for contractors, freelancers and other remote workers. The company’s total addressable market really took off over the past few years, thanks to the rise of remote and hybrid work models and the flourishing gig economy. Companies are increasingly comfortable with having remote staff, and these services really shine in paying remote workers in other countries with different currencies. Simply put, Payoneer can handle the bookkeeping and backend functions to facilitate these workflows and it also offers services to provide clients with working capital. Payoneer has grown revenues from $346 million in 2020 to $831 million in 2023. Though shares are currently depressed, the business model is having success, and it should be just a matter of time until the stock returns to a more favorable valuation.
Grupo Aval Acciones y Valores SA (AVAL)
Grupo Aval is one of the three large Colombian banking and financial groups. It owns stakes in four different Colombian banking franchises. Combined, these have about 25% market share in the country. The Colombian banking system is highly consolidated with the leading three operators having an overwhelming market share in the country. This leads to high profitability and limited competition.
Colombian stocks have greatly underperformed over the past decade. This was in large part due to the plunge in oil, which is the country’s leading export. Political uncertainty has also hurt sentiment. Oil has rebounded, however, and the country’s president has been ineffectual in office and faces low approval ratings. This suggests that there could be a shift in the business environment and that Grupo Aval will rebound from its current depressed valuation. In the meantime, shares are an absolute bargain, selling at a significant discount to book value.
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9 Best Cheap Stocks to Buy Under $5 originally appeared on usnews.com
Update 04/05/24: This story was previously published at an earlier date and has been updated with new information.
