The Federal Reserve delivered on expectations, making a major interest rate reduction in September. And Fed Chair Jerome Powell indicated that the bank is open to more rate cuts to help provide support for the job market heading into 2025. This has unleashed a round of exuberance in the stock market, with major indexes hitting new highs.
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Is it too late for investors to cash in on the market move? Not at all. In fact, there are still plenty of cheap stocks out there. As of this writing, there are more than 1,750 stocks traded on major U.S. exchanges that sell for $5 per share or less. Many of these firms have major issues with their business models, balance sheets or other such structural issues. However, there are some real diamonds in the rough.
Here are nine of the best stocks to buy for less than $5 per share today:
— Marqeta Inc. (ticker: MQ)
— Agilon Health Inc. (AGL)
— Arcadium Lithium PLC (ALTM)
— iQIYI Inc. (IQ)
— Evotec SE (EVO)
— Almacenes Exito SA (EXTO)
— Uranium Royalty Corp. (UROY)
— Transocean Ltd. (RIG)
— Planet Labs PBC (PL)
Marqeta Inc. (MQ)
Marqeta is a financial services company that offers technology solutions to fintech companies. Specifically, Marqeta operates an application programming interface (API) platform that enables clients to issue new credit cards and process certain types of transactions. Historically, Marqeta’s growth was overwhelmingly tied to the success of fintech firm Block Inc. (SQ) and its Cash App ecosystem. Marqeta renewed its contract with Block last year, but at a reduced revenue rate, leading to a dramatic drop in the company’s revenues, operating income and share price. That negative event has now passed however, and Marqeta has returned to growth and is landing new opportunities with fintech operators such as buy-now-pay-later company Affirm Holdings Inc. (AFRM). MQ stock is still near its 52-week lows, making it a bargain buy in this market.
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, increasing 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 80% over the past year and shares are heavily shorted as well, creating a strong speculative opportunity today for when positive catalysts occur.
Arcadium Lithium PLC (ALTM)
Arcadium Lithium is an Ireland-based lithium mining company with a variety of in-production and prospective lithium production sites around the world. The company was formed earlier this year via the merger of Allkem and Livent. Arcadium got off to an inauspicious start following its merger, with shares dumping from $7 to as low as $2.19 recently. Like many lithium mining companies, Arcadium has sagged amid a dramatic decline in the price of lithium futures, tied to weakness in the crucial Chinese battery manufacturing market. However, investors are turning more optimistic on China’s economy now amid new stimulus efforts.
Shortly before publication of this article, Rio Tinto Group PLC (RIO) announced an all-cash deal to purchase Arcadium outright for $5.85 per share, and the stock’s price has soared accordingly, doubling in the last five trading days. While there’s clearly not as much upside left as there was just a week ago, investors betting on the deal to go through, or for Arcadium to attract more suitors, can still bet on some degree of upside as long as the stock trades below the $5.85 level.
iQIYI Inc. (IQ)
Speaking of stocks that can benefit from improved sentiment, Chinese streaming media company iQIYI could be set for a comeback. It’s no secret that China’s economy has struggled to bounce back over the past couple of years. But the Chinese government has suggested that more direct economic relief is on the way for consumers — a move which has jumpstarted a dramatic rally in Chinese equities over the past month. IQ stock has rebounded from a low of $2 to nearly $3 over the past month on the upbeat news.
However, that could be just the beginning. Shares still sell for less than nine times forward earnings. Incredibly enough, the stock is going for about 0.6 times revenues, which is a rather compelling price for a leading streaming service.
Evotec SE (EVO)
Evotec is a German contract research organization (CRO). CROs are a type of life sciences company that carry 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 $904 million this year. However, Evotec lowered guidance earlier this year, leading to a 70% or so share price decline year to date. The biotech market is in a downturn, as higher interest rates have reduced venture capital’s willingness to deploy money to the sector. But Evotec should be back on the upswing. It recently announced deals with Pfizer Inc. (PFE) and Novo Nordisk (NVO), showing that the business model is still working.
[SEE: 7 Best Defense Stocks to Buy Now]
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 35% this year.
This has pushed shares down to a price-to-book value of less than 0.5, and the stock trades for less than 0.2 times sales. The company remains modestly profitable despite the current economic and operational headwinds. Meanwhile, a well-respected Latin American retail operation, Grupo Calleja, took a majority position in the chain recently and is revitalizing its operations. Exito recently announced a new discounting strategy to recapture market share in the Colombian grocery market, and EXTO stock has rallied on the news. But shares are still available under $5 — for now, at least.
Uranium Royalty Corp. (UROY)
Uranium Royalty is a pure-play uranium royalty company which owns a piece of the economics at more than a dozen uranium projects around the world. The company is already well into the commercialization stage of its business model, as it generates about $40 million in annual revenue. In addition, the company holds uranium inventory on its balance sheet, giving investors exposure to the uranium bull market.
That could become a tantalizing feature in coming months. The uranium market is heating up again thanks to the surge in demand for clean electricity. Data centers and artificial intelligence applications are eating up incredible amounts of electricity, creating dramatic demand for generation capacity. In fact, a major utility company announced it will be restarting the old Three Mile Island nuclear plant to deliver power to Microsoft Corp. (MSFT). Given this massive wave of electricity demand, uranium producers like Uranium Royalty should have bright days ahead.
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 and more promising alternatives such as shale. However, the rise in inflation and surge in energy prices has made offshore drilling attractive again. The recent flare-up in Middle East tensions further highlights the need to tap oil resources in other parts of the world.
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, especially as geopolitical tensions are simmering. In addition, Transocean inked a new $232 million drillship deal with BP PLC (BP) in September, showing the ongoing demand in the market.
Planet Labs PBC (PL)
Planet Labs is a pioneer in the Earth observability industry. The company provides on-demand satellite imagery to both governments and commercial customers. Satellite imagery is used in a wide variety of industries such as agriculture and forestry, shipping, natural resources and insurance. Meanwhile, governments use satellite imagery for espionage, real-time tactical planning, and disaster response such as tracking damage from hurricanes.
It’s still early in the commercialization of earth imagery, and Planet is growing out its revenue and customer base. However, as the industry grows, there should be enormous scale benefits and as the price of imagery falls, the total addressable market will dramatically expand. In September, Planet announced an important contract win, being granted a NASA Commercial SmallSat Data Acquisition Program On-Ramp1 award. The company is approaching breakeven on an adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) basis, and retains a huge cash balance to support its future business growth.
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9 Best Cheap Stocks to Buy Under $5 originally appeared on usnews.com
Update 10/09/24: This story was previously published at an earlier date and has been updated with new information.
