The stock market seems to be at a crossroads. The major market indexes remain near record highs. However, there’s been more volatility this earnings season, including some heavy selling of stocks associated with artificial intelligence and semiconductors that were previously attracting investors. Between geopolitical concerns, the upcoming presidential election and changing Federal Reserve policy, this autumn could bring uncertainty.
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That could make it a good time to rotate into other parts of the market, such as deeply discounted stocks. As of early September, there are approximately 1,800 stocks listed on major American stock exchanges trading for $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:
— Ambev SA (ticker: ABEV)
— Enel Chile SA (ENIC)
— Sibanye Stillwater Ltd. (SBSW)
— Agilon Health Inc. (AGL)
— Olaplex Holdings Inc. (OLPX)
— Petco Health and Wellness Co. Inc. (WOOF)
— Evotec SE (EVO)
— Almacenes Exito SA (EXTO)
— Transocean Ltd. (RIG)
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 independently and with a different corporate strategy. It maintains a net cash position, which provides it security amid the economic volatility often found in key markets such as Brazil and Argentina. Furthermore, Ambev sidestepped the political controversies that led to boycotts of Anheuser-Busch properties in the United States.
Brazilian equities have slipped recently amid a sputtering economy and worries about the Brazilian government which, among other matters, recently blocked access to the social media platform X (formerly Twitter). However, these issues shouldn’t matter much to a beer company. In the meantime, Ambev shares sell for 13 times forward earnings and yield 6.5%.
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. Second, Chile has huge reserves of copper, lithium and other minerals vital for driving the electrification trend globally.
Enel Chile is ramping up capacity now ahead of anticipated demand growth. It brought 250 new megawatts of renewable energy generation capacity online last quarter and has additional new solar and wind projects in the works to deploy additional renewable capacity in the near future. With Chile’s central bank slashing interest rates, it should only be a matter of time until Chile’s economy gains steam and lifts ENIC stock out of its current doldrums.
Sibanye Stillwater Ltd. (SBSW)
Sibanye Stillwater is a precious metals mining company that produces gold and silver, along with platinum group metals such as palladium and rhodium. It is a highly diversified firm, with projects in locations ranging from South Africa and Zimbabwe to the United States, Canada and Argentina.
SBSW stock slipped over the past month, falling to levels last seen at the COVID-19 lows back in 2020. The company warned that it will run a loss this year amid persistently low prices for most platinum group metals. However, the company recently refinanced its debt, firming up the balance sheet and giving it time to ride out the current downturn. Additionally, its gold mining operations are a silver lining right now, as gold has blasted off this year amid inflation and geopolitical worries. Sibanye Stillwater is facing real headwinds, but the stock is down from $20 in 2022 to less than $4 today, more than accounting for these risks.
Agilon Health Inc. (AGL)
Agilon Health is a fast-growing health care company focused on providing medical services for seniors. The company provides primary care physician services through a subscription platform. Founded in 2016, the company has enjoyed tremendous growth, growing its revenue from $794 million in 2019 to an expected $6 billion for 2024. So far, it has struggled with profitability, and analysts see it continuing to lose money into next year. That said, the company is continuing to post nearly 40% year-over-year revenue growth, and as its platform grows, it should gain the benefits of scale.
Over the longer term, Agilon should be able to grow its business due to America’s aging demographics and the need to apply technological solutions to find more efficiencies within the country’s expensive and overburdened health care system. AGL stock has slid about 75% over the past year due to its struggles to reach profitability, creating a strong speculative opportunity today.
Olaplex Holdings Inc. (OLPX)
Olaplex is a consumer wellness company focused on hair care and beauty products. It is known for its direct-to-consumer business model instead of traditional lower-margin third-party distribution. This worked tremendously during the pandemic as customers increasingly turned to online shopping. But the company’s luck ran out in 2022 as consumers returned to physical stores, and the company made a series of marketing stumbles.
This resulted in OLPX stock plunging from a peak of nearly $30 per share to less than $2.50 today. However, the company still has a real shot of turning things around. While revenue plunged in 2023, Olaplex has now stabilized the business, with analysts expecting revenue to fall by just 2.7% this year before returning to 6.7% growth in 2025. The company remains strongly profitable, with shares going for less than 16 times forward earnings. If Olaplex can recapture its prior marketing magic, shares could have tremendous upside from here.
[SEE: 7 Best Monthly Dividend Stocks to Buy Now.]
Petco Health and Wellness Co. Inc. (WOOF)
Petco was another wellness company that enjoyed a boom during the pandemic era and has since fallen on hard times. WOOF stock debuted in January 2021. Shares opened at $26 — 44% above their IPO price — and soared 63% on their first day of trading. Fast forward to today, and that enthusiasm is long gone, with the stock now trading in the $2 range. While there was a boom in pet adoption and spending during the stay-at-home period, that momentum has since faded.
Throw in inflation and higher labor costs, and Petco has gotten squeezed on multiple fronts. However, the worst seems to be over. WOOF stock has rallied over the past few months as earnings results have stabilized and a turnaround appears to be gaining momentum. Adding to that, Petco recently brought in a new CEO, Joel Anderson, the former leader of discount retailer Five Below Inc. (FIVE). This could set Petco on a more favorable path heading into the all-important holiday shopping season.
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 for performing research, but also takes small royalty kickers on drugs it works on that ultimately get a commercial launch. In this way, Evotec should build a diversified biotech royalty stream over the years.
The approach has paid off, with revenues surging from $501 million in 2019 to an estimated $886 million this year. Shares have plunged this year amid a prolonged downturn in the biotech industry. However, the company keeps signing new partnerships, such as a recent one with Pfizer Inc. (PFE), indicating that the business model has momentum despite the stock’s dismal performance over the past year.
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 0.45 times book value. Meanwhile, Colombia’s central bank has started slashing interest rates, going from 13.25% last year to 10.75% now, which should help spark the economy and boost retail spending in the months to come.
Transocean Ltd. (RIG)
Founded in 1953, Transocean is an offshore contract drilling company. It owns and operates a variety of deepwater, midwater and harsh environment rigs for drilling in various geographic regions. Offshore drilling had fallen out of favor in past years due to the depressed price of oil along with alternatives such as onshore shale production that had more attractive unit economics than offshore oil exploration. However, the rise in inflation and surge in energy prices has made offshore drilling attractive again. Transocean’s revenues have rebounded from $2.6 billion in 2022 to an estimated $3.6 billion for this year. RIG stock has sold off sharply over the past few months on weakness in crude oil prices along with a non-cash impairment charge on the value of some of its drilling equipment. This sell-off seems overdone, and Transocean’s improving fundamentals will reassert themselves in due time. In the meantime, the stock trades in the $4 to $5 range.
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Update 09/05/24: This story was previously published at an earlier date and has been updated with new information.
