The stock market has hit some turbulence this summer. Between weaker corporate earnings, interest rate uncertainty, geopolitical tensions and an economic shock in Japan, there is plenty for investors to account for right now. In such unsettled times, traders might want to go looking for some bargains.
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And now, with the recent market correction, there are about 1,800 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 for less than $5 per share:
— Mizuho Financial Group Inc. (ticker: MFG)
— Ambev SA (ABEV)
— Sirius XM Holdings Inc. (SIRI)
— LG Display Co. Ltd. (LPL)
— Enel Chile SA (ENIC)
— Uranium Energy Corp. (UEC)
— Compass Inc. (COMP)
— Evotec SE (EVO)
— Almacenes Exito SA (EXTO)
Mizuho Financial Group Inc. (MFG)
Mizuho is the third-largest banking group in Japan, with approximately 7% of the total market share for Japanese lending. The bank is not heavily involved in overseas markets, and thus is more closely tied to the Japanese economy than some of its peers. That has put Mizuho in the spotlight given the recent disruption in Japanese stocks. Japanese equities crashed at the start of August following an interest rate hike, which set off chaotic trading in that market. The recent jitters shouldn’t distract from the fact that Japanese stocks have surged over the past year amid improved Japanese corporate governance and a more favorable domestic economic outlook. With the recent dip, MFG stock is back under 10 times earnings and trading at a considerable discount to book value.
Ambev SA (ABEV)
Ambev is the dominant brewing company in Brazil and the largest player overall in the South American market. While Ambev is a subsidiary of Anheuser-Busch InBev SA/NV (BUD), it operates with quite a different corporate strategy. It has avoided the political controversies and boycotts that tripped up its corporate parent, and Ambev also holds a net cash balance, whereas AB-Inbev operates with a large debt load. These characteristics have served Ambev well in often-volatile markets such as Brazil and Argentina. Right now, ABEV stock is on the downswing, as investors have been moving money out of Brazilian equities. That creates opportunity with Ambev shares trading around 13 times earnings and offering a 7.1% dividend yield.
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 around $3 now. Shares rallied earlier this summer, but got caught up in the recent market correction once again. Regardless, the bull case remains solid. Namely, Warren Buffett’s Berkshire Hathaway Inc. (BRK.A, BRK.B) holds a large position in a tracking stock, which is tied to the value of Sirius XM shares, and Berkshire Hathaway holds more than $2 billion of that position. SIRI stock now trades for about 10 times forward earnings, less than 1.5 times revenues and offers a decent 3.4% yield.
LG Display Co Ltd. (LPL)
LG Display primarily manufactures and sells LCD and 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. The worst appears to be over, however. In July, LG Display reported upbeat second-quarter results, with revenues surging 42% year over year while the company’s operating loss dramatically decreased from last year’s level.
[READ: 10 of the Best Stocks to Buy for 2024]
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.
Uranium Energy Corp. (UEC)
Uranium Energy has some of the largest uranium reserves in North America, with production-ready capacity of about 8.5 million pounds of uranium per year. The price of uranium has soared in recent years as the world has shifted toward nuclear power again. While the Fukushima disaster paralyzed the industry in the 2010s, the recent push for affordable and reliable carbon-free electricity has put nuclear back on the agenda. As uranium prices have risen, investors have gone looking for more exposure to the sector. Uranium Energy can fill that void, both by restarting its previously idled Texas properties along with its robust project development pipeline. Shares have dipped from $7.50 to below $5 recently, giving traders a solid pullback to buy.
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 have dropped sharply since 2021. High interest rates crushed demand for houses in many parts of the country. Simply put, most people aren’t comfortable with mortgage rates north of 7%. However, recent weak employment data seemingly has the Federal Reserve set to launch a rate cut program in September. This should bring back housing demand and lift Compass to profitability.
Evotec SE (EVO)
Evotec is a German contract research organization. This is a type of life sciences company that carries out clinical research for other biotech and pharmaceutical companies. Evotec has dozens of partnerships with leading firms and academic institutions. Its unique approach is in running a dual-till revenue stream. It earns money both for performing research and small royalty kickers on drugs it works on that ultimately get a commercial launch. In this way, Evotec should build a broad diversified biotech royalty stream over the years. The approach has paid off, with revenues surging from $501 million in 2019 to an estimated $956 million this year. Despite that, shares plunged this year on a short-term biotech spending slowdown, creating a great buy-the-dip opportunity.
Almacenes Exito SA (EXTO)
Exito is a Colombian grocery store chain. It operates hundreds of 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 about 40% this year. However, a well-respected Latin American retail operation, Grupo Calleja, took a majority position in the chain recently and is revitalizing its 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 enterprise value to earnings before interest, taxes, depreciation and amortization.
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9 Best Cheap Stocks to Buy Under $5 originally appeared on usnews.com
Update 08/07/24: This story was previously published at an earlier date and has been updated with new information.
