There is a familiar adage about stock investing: buy low, sell high. That simple advice, however, is easier said than done. No one can predict short-term price movements and, in any case, a stock’s share price is not necessarily an indication of value or growth potential. In other words, a low share price alone isn’t a sufficient reason to invest.
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Even so, low-priced stocks — especially those trading under $5 — do attract investors. The lower the share price, the more shares an investor can accumulate. This provides a very satisfying sense of accomplishment. Yet, the potential benefits go beyond just investor psychology.
There are many well-run companies with good management and sound business plans that, for various reasons, are selling for under $5 a share. These companies may be smaller, lesser-known enterprises that, nonetheless, have significant capital appreciation potential. When and if the broader market recognizes their inherent value, these low-priced stocks can experience rapid price increases. Investors who get in early can be rewarded with big profits.
A word of warning is in order: Smaller, lower-priced securities are more volatile and carry more risk than larger, higher-priced stocks. Cheap stocks can indeed be lucrative if the underlying company does well, but if the company falls short of its goals, the share price will fall fast.
As you explore this list of the seven best cheap stocks, remember that it is intended only as a starting point for your research, and low-priced stocks are not suitable for all investors:
| Stock | Market Cap* |
| Globalstar Inc. (ticker: GSAT) | $4 billion |
| B2Gold Corp. (BTG) | $3.2 billion |
| Sutro Biopharma Inc. (STRO) | $155 million |
| Tilray Brands Inc. (TLRY) | $1.3 billion |
| Staffing 360 Solutions Inc. (STAF) | $3.4 million |
| ChargePoint Holdings Inc. (CHPT) | $513 million |
| Sterling Bancorp Inc. (SBT) | $242 million |
*As of Dec. 27.
Globalstar Inc. (GSAT)
GSAT is a leading provider of satellite communications services and equipment. The company has a market cap of just over $4 billion.
The firm’s proprietary technology allows for efficient wireless connectivity even in remote and underserved areas where modern digital infrastructure is scarce. GSAT doesn’t serve individual users. Its customers are tech companies, communications firms and government entities.
The stock attracted some attention recently when it entered into a high-profile collaboration with Apple Inc. (AAPL). Globalstar will help Apple provide satellite-enabled emergency services to enhance the safety and preparedness of the billions of people who use Apple products. Obviously, being in business with Apple has highlighted Globalstar’s competitive advantage when it comes to high-tech innovation and, over time, share price appreciation.
GSAT has been and remains a volatile stock, but its improving position in the satellite communication industry makes it worth considering by investors interested in cheap stocks.
B2Gold Corp. (BTG)
BTG is a metals and mining company with a market cap of about $3.2 billion. The company is a fairly prominent gold producer with principal locations in Mali, Namibia and the Philippines.
BTG is known for its efficient use of financial and natural resources and the fact that it has one of the strongest balance sheets in the precious metals industry. Put simply, the firm has a relatively low debt level compared to its peers while maintaining strong free cash flow and plenty of cash reserves. The company’s solid financials allow it to pay a forward annual dividend of 16 cents a share, which equates to a 6.5% yield.
Global economic uncertainties are plentiful in our world today. Gold remains a recognized store of value and an excellent hedge. This, of course, enhances B2Gold’s appeal to investors who aren’t afraid of stocks under $5.
Sutro Biopharma Inc. (STRO)
STRO is a clinical-stage biopharmaceutical company with a special focus on immunology and immunotherapy in cancer research.
The company bioengineers molecules designed to activate the patient’s immune system. The idea is to produce antibodies that destroy cancer cells without harming healthy cells or noncancerous tissue. It calls its proprietary system XpressCF.
STRO has several promising treatments in its pipeline, but its lead product candidate is luveltamab tazevibulin. That drug is already in mid-phase trials for ovarian cancer and endometrial cancer. If those trials prove successful, the company will ask the FDA for expedited approval.
On Sept. 30, the company reported cash, cash equivalents and marketable securities on hand of $388 million. This figure is significant because STRO has a current market cap of just $155 million. Depending on how much cash it has spent on operations since September, the stock may have a net cash position of more than twice its current market cap. A big cash position is no guarantee that a stock will go up, but it is an interesting dynamic from a value perspective.
BofA Securities has a “buy” rating on the stock with a price objective of $12.
Tilray Brands Inc. (TLRY)
The legal cannabis industry is a relatively new and controversial investment category. It is a high-risk, high-potential reward opportunity that probably isn’t suitable for conservative investors.
TLRY is a leading cannabis distribution company and has distinguished itself with strategic business thinking and global expansion plans. TLRY is a Canadian firm that evolved from its roots in the medical marijuana business into a prominent player in medical and recreational cannabis, alcoholic beverages, supplements and other wellness products.
In 2018, TLRY entered into a strategic partnership with Novartis AG (NVS) to co-brand smokeless medical cannabis products worldwide.
This company has demonstrated robust revenue growth, and Wall Street expects that trend to continue. Analysts are looking for around $52 billion in revenue from the stock in 2025. That’s roughly 4% more than the $50 billion they project for 2024.
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Staffing 360 Solutions Inc. (STAF)
STAF is a small, New York-based firm that specializes in buying, consolidating and operating staffing companies. The company has a market cap of just $3 million and has commercial and professional staffing operations in both the U.S. and the U.K.
Investors thinking about STAF should realize that this is an aggressive investment. Still, there are several good reasons to consider this small-cap stock.
Many industries are dealing with a sometimes acute shortage of skilled labor in both the professional and commercial arenas. Staffing companies like STAF and others help employers and candidates connect. In other words, staffing is a very timely business. The growing popularity of work-from-home and hybrid jobs plus the meteoric expansion of the gig economy are two more factors that make STAF worth taking a good look at.
This company has a strategic focus on acquiring and integrating staffing agencies, making it well positioned to capitalize on the trends dominating the U.S. and global labor markets.
ChargePoint Holdings Inc. (CHPT)
The global market for electric vehicles (EVs) is experiencing rapid growth. There will be ups and downs along the way, but many indicators show that the explosive growth we’ve seen should continue into the next decade.
CHPT doesn’t make EVs, but it offers investors a compelling way to gain exposure to that industry. CHPT is a global leader in the EV charging station industry. The company installs and operates charging stations in high-traffic locations, such as busy parking lots, along highways and at crowded workplaces. It also offers residential charging solutions for EV drivers who own homes.
The company enjoys multiple revenue streams from its products and services. It makes money at the point of sale, installation, operation and servicing. It designs both the hardware and the software for the stations it sells.
Like many low-priced stocks, CHPT is an aggressive play, but if the EV industry grows as expected, CHPT could benefit.
Sterling Bancorp Inc. (SBT)
SBT is a bank holding company that owns Sterling Bank & Trust F.S.B. This regional bank has branches throughout Michigan, California and New York and a significant and growing online presence as well.
SBT offers all the banking and lending services you’d expect from a modern bank, with over $2 billion in customer deposits. It provides checking and money market accounts, savings accounts, certificates of deposit and credit cards to its clients. The bank’s main focus, however, is on residential and commercial mortgages and small business lending.
Currently, the stock has a market cap of just $242 million, but the management team is committed to controlled, intelligent growth over the long term. Recently, the bank’s board of directors became concerned about its overconcentration in residential loans. As a result, it is making a concerted effort to diversify its revenue stream by pushing for more commercial real estate mortgages.
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7 Best Cheap Stocks Under $5 to Buy Today originally appeared on usnews.com
Update 12/27/24: This story was previously published at an earlier date and has been updated with new information.
