The major stock market indexes are at fresh all-time highs, and sentiment is running hot. While momentum traders are delighted, some analysts are warning of a potential pullback. Investors might be tempted to go to cash until a correction happens. There are other alternatives to consider, though.
[Sign up for stock news with our Invested newsletter.]
For example, despite the rally, there are approximately 1,825 stocks listed on major American stock exchanges priced at $5 per share or less. Of course, many of these companies have major problems such as a broken business model or a creaky balance sheet. But there are also some real diamonds in the rough.
Here are nine of the best stocks to buy today for less than $5 per share:
— Materialise NV (ticker: MTLS)
— Enel Chile SA (ENIC)
— Frontier Group Holdings Inc. (ULCC)
— Almacenes Exito SA (EXTO)
— LG Display Co. Ltd. (LPL)
— Compass Inc. (COMP)
— Nokia Corp. (NOK)
— Lithium Americas (Argentina) Corp. (LAAC)
— Planet Labs PBC (PL)
Materialise NV (MTLS)
Materialise is a 3D printing technology company. It focuses on three main business segments: software, manufacturing and medical solutions. There was a great deal of hype around 3D printing in the 2010s, and prominent investors such as Cathie Wood created whole funds devoted to the concept. As sometimes happens, it took a while for the underlying technology to catch up with investor enthusiasm.
Now, though, 3D printing is showing real signs of commercial success, particularly in the health care sector. For its part, Materialise has grown its revenues from $208 million in 2020 to $283 million in 2023. The company has also reached profitability and is selling at a reasonable 25 times its expected 2024 earnings. MTLS stock has fallen more than 40% over the past 12 months as momentum has swung to artificial intelligence and semiconductor stocks, offering a solid buy-the-dip entry point.
Enel Chile SA (ENIC)
Enel Chile is one of Chile’s largest independent power producers. The firm is appealing for two primary reasons. First, it’s one of the world’s greenest utilities. Thanks to Chile’s ample hydroelectric capacity and some of the world’s highest-yielding solar farms, Enel Chile is uniquely situated to deliver affordable carbon-free electricity. This should make ENIC stock a natural beneficiary for fund managers interested in environmental, social and governance (ESG) investing approaches.
The environmental angle doesn’t end there. Chile has the world’s largest proven lithium reserves and is also a major player in the copper market. These elements are crucial for making batteries and other inputs for electric vehicles. More broadly, Chile’s export-led economy should benefit from higher commodity prices. Finally, Chile’s central bank has slashed its interest rate from 11.25% last year to just 5.75% in June, which should bolster investment in the Chilean economy and stimulate electricity demand.
Frontier Group Holdings Inc. (ULCC)
Frontier is a discount airline that operates approximately 136 Airbus aircraft and serves the U.S. and Latin American markets. The travel industry enjoyed an incredible boom coming out of the pandemic as people engaged in what some analysts have deemed “revenge traveling.” While that initial impulse has played out, total U.S. travel figures continue to impress. In fact, the Transportation Security Administration (TSA) screened more than 3 million passengers on the Sunday following July 4, setting a new single-day record.
Despite the rosy figures, airline stocks are plunging. Spirit Airlines Inc. (SAVE) in particular has fallen to new all-time lows after a failed merger process has left it on shaky footing. Various airplane and engine defects and recalls have also hampered industry supply. However, Frontier could be poised to benefit as other rivals, like Spirit, face grave issues. ULCC stock is down nearly 60% over the past year, setting up a significant bounce when sentiment improves.
[READ: 10 of the Best Stocks to Buy for 2024]
Almacenes Exito SA (EXTO)
Exito is a Colombian grocery store chain. It operates 642 stores, mostly in Colombia, along with a smaller footprint in Uruguay and Argentina. It also has a substantial real estate division and operates many malls and shopping centers that are anchored by an Exito grocery store. Exito was spun off from its prior ownership group in 2023 and, like many spinoffs, it has gotten an initially rocky reaction. Shares are down more than 40% year to date. However, a well-respected Latin American retail operation, Grupo Calleja, took a majority position in the chain recently and is revitalizing the retailers’ operations. Shares are a shocking bargain at today’s prices, selling for just 0.4 times book value, less than four times price to free cash flow, and less than five times EV/EBITDA.
LG Display Co. Ltd. (LPL)
LG Display primarily manufactures and sells thin-film transistor liquid crystal display (TFT-LCD) and organic light-emitting diode (OLED) display panels. These go into various consumer electronic devices such as TVs, laptop computers, navigation devices and medical equipment.
LG Display got caught up in the pandemic-era electronics boom. Demand for TVs and other consumer electronics skyrocketed as people were stuck at home and seeking better entertainment options. Since then, however, demand has faded and inventories have stacked up. LG Display’s revenues dropped from the 2021 peak of $25 billion to just over $16 billion in 2023. LG Display generated large operating losses over the past year due to these market conditions. But LPL stock is starting to rebound as consumer electronics demand is turning the corner and analysts are looking for a recovery over the next year.
Compass Inc. (COMP)
Compass is a leading real estate brokerage. The business model is to consolidate different local real estate agencies in various markets around the U.S., creating a unified platform with significant marketing benefits and cost savings. The company is approaching an estimated 5% market share of all U.S. real estate transactions. It added further momentum with the recent acquisition of Latter & Blum, adding roughly 3,000 real estate agents to Compass serving New Orleans and the surrounding Gulf Coast region.
Compass’ revenues fell almost 20% in 2023 as compared to its 2021 peak. Higher interest rates and a slowdown in housing market transactions have hampered results. However, this is unlikely to be a permanent condition. In fact, once the Federal Reserve starts to cut interest rates, activity should perk back up, setting the stage for Compass to return to robust profitability.
Nokia Corp. (NOK)
Nokia is one of the world’s largest telecom equipment manufacturers. It is primarily known for its mobile networking gear, such as telecom infrastructure for deploying 5G networks. However, Nokia is also involved in network infrastructure, cloud services, and a research and patent licensing division. It’s been a rough couple of years for the sector, as 5G deployments have been slower than bulls had been hoping. But as mobile data demand continues to grow, Nokia should continue to enjoy tailwinds, particularly as analysts raise national security concerns around rival Chinese networking equipment alternatives.
Nokia also recently announced that it is acquiring Infinera Corp. (INFN), which will add to Nokia’s capabilities in the optical semiconductors space. Nokia plans to purchase Infinera for $2.3 billion, which looks like a great deal with a transaction price around 1.5 times revenues. Morningstar’s Matthew Dolgin is upbeat both on the Infinera deal and NOK stock more broadly. He sees fair value of $5.90 per Nokia share versus a current price of less than $4.
Lithium Americas (Argentina) Corp. (LAAC)
Lithium Americas is a natural resources company focused on the production of lithium in Argentina. Its Cauchari-Olaroz asset has recently entered production and is in the ramp-up phase now. Analysts expect it to reach nameplate capacity in coming months and for the overall company to become significantly profitable in 2025 as it becomes a consistent low-cost lithium producer. In addition, the company has several other promising pipeline projects in Argentina.
LAAC stock has gotten shellacked over the past year. That’s mostly due to a collapse in the price of lithium futures, as Chinese demand has softened considerably. Though the lithium market is struggling now, there’s little doubt that the long-term trend toward electrification and EVs will generate additional demand for batteries. All this makes LAAC stock an intriguing play with shares near all-time lows.
Planet Labs PBC (PL)
Planet Labs is a pioneer in the Earth observability industry. Planet Labs provides its clients, which include both governments and commercial customers, with on-demand satellite imagery. Enterprises use satellite imagery in industries such as agriculture and forestry, shipping, natural resources and insurance. Meanwhile, governments can use satellite imagery for espionage, real-time tactical planning and disaster response.
Planet Labs is a former special-purpose acquisition company (SPAC) and it continues to linger under that cloud. In fact, shares are down more than 80% from their launch price and trade near all-time lows. That seems overblown, as the company is growing revenues at a double-digit rate and its most recent earnings report topped expectations. The company also has more than $250 million of cash on hand, giving it plenty of time to play the long game as its industry takes off.
More from U.S. News
8 Top Nancy Pelosi Stocks to Buy
2024’s 10 Best-Performing Stocks
Recession 2024: What to Watch and How to Prepare
9 Best Cheap Stocks to Buy Under $5 originally appeared on usnews.com
Update 07/10/24: This story was previously published at an earlier date and has been updated with new information.
