In this article, we will introduce you to five companies whose low-cost stocks do not go beyond the price of $ 5. Some of them traded in the two-digit range earlier, but for various reasons fell lower. One way or another, they have potential for growth this and next year..
Modest stocks can increase investment by several times even after bad periods.
Advanced Micro Devices [NASDAQ: AMD] was trading for less than $ 2 per share in early 2016. After two and a half years, they cost almost $ 20 apiece. Bank of America [NYSE: BAC] in 2011 was trading at $ 5. Now, after 7 years, their low-cost stocks have strengthened by $ 30. Price Noodles&Co [NASDAQ: NDLS] over the past 52 weeks has fallen to a minimum of $ 3.5, and is now trading around $ 10.
[Note: Stock prices and indicators in the article are indicated at the time of publication. You can see the current stock prices in a special widget at the end of the text.]
1. Chesapeake Energy [NYSE: CHK]
• Stock Price: $ 4.00
At the end of July, shares of natural gas producer Chesapeake Energy soared due to a reaction to a statement about the upcoming sale of assets in Utica shale for $ 2 billion. For a company with a market capitalization of $ 4 billion, this is an important deal.
The management claims that the deal will improve EBITDA, lower gas production and processing costs, as well as transportation costs worth more than $ 400 million. CHK remains a promising investment option because energy prices continue to show a growing trend..
2. AK Steel [NYSE: AKS]
• Stock Price: $ 4.37
Shares of steel companies such as AKS, Nucor and U.S. Steel recently unstable. The global economic war between the USA and China, Trump’s high twitter activity and frequent changes in trading rates have created an unstable investment environment. This uncertainty worsens the situation in such a volatile segment. But it makes sense to wait for the resolution of problems this year, so optimism remains.
On the other hand, there is a risk associated with the possible refusal of car manufacturers to cooperate. Similar decisions are heard in talks about General Motors and Ford Motor. So far, these are only rumors. Steel rolling companies and AK Steel, in particular, are in a healthy economic environment where stocks should be strengthened.
According to the US economy report for the second quarter, GDP reached 4.1%, while the same indicator for the first quarter increased by 0.2%. If everything really goes so well, the steel industry will become one of the profitable segments..
Following earnings reports in early August, AK Steel shares fell below $ 5. Moreover, the company’s revenue dipped as a result of a power outage due to an unexpected strike. A second such event is unlikely. Therefore, in the current situation it is logical to wait for the planned increase in the price of AKS.
3. Zynga [NASDAQ: ZNGA]
• Stock Price: $ 4.02
Zynga shares dangle throughout the year between $ 3.4 and $ 4.4. Moreover, the company is not so big – only $ 3.5 billion according to market estimates. But do not rush to conclusions.
Firstly, Zynga works in the field of developing online games, and to fail in this industry, having a strong brand, you still have to try. Secondly, the company has more than $ 635 million in cash and in the form of short-term investments, as well as no debts.
Analysts suggest that by the end of this year, Zynga sales will increase by 10-15%, and in 2019 by another 13-14%. Profit, according to experts, will grow by 66% this year and 33% in the next.
No one says Zynga is a classic example of blue chip. But double-digit income growth and lack of debt make this asset attractive. When a company can reduce costs and increase margins, it will be even more attractive. And if the USA continues to work on the legalization of online gambling, the position of the gaming operator will only be envied.
4. Groupon [NASDAQ: GRPN]
• Stock Price: $ 4.00
The low-cost shares of Groupon’s discount service show a negative trend since the end of July, when the company lost a patent dispute with IBM. This caused a drop below the $ 5 mark. Groupon has a debt of $ 192 million. True, $ 725 million in cash makes the situation more optimistic..
Now the company is in the process of improvement and restructuring to the market requirements. Despite the fact that, according to GAAP analytics, Groupon is not yet a profitable company, it is close to breaking even. Based on GAAP, experts predict earnings of $ 0.24 per share (last year + $ 0.11), as well as revenue growth by about 12.5% before the end of the year.
Last year, GRPN had a profit of -6.7%, but next year, according to analysts, the company will come out in plus.
Groupon’s assets are far from perfect, but they do not have a bloated balance, they are working to increase profitability, and this is confirmed by experts’ forecasts. If this behavior continues, GRPN investors will remain in a good mood.
5. Fitbit [NYSE: FIT]
• Stock Price: $ 5.51
The low-priced stocks of Fitbit, a manufacturer of consumer electronics and wearable fitness devices, are dishonestly on this list because their price exceeds $ 5. But the company is not far from the ones described above and is trading in the range of $ 5-6 for almost two years.
Until 2017, Fitbit was a key player in the technology market, but Apple’s dominance in the production of smart watches has translated it into the category of catching up. Fitbit still makes good-quality, high-tech products and strives to follow industry trends..
FIT can count on steady growth as demand for compact handheld devices such as smart bracelets and watches is increasing. The industry is attracting the attention of insurance companies and medical institutions. For example, Target begins to provide customers with products used to track health.
Fitbit has a market capitalization of $ 1.4 billion, $ 658 in cash and short-term investments and zero debt.
Expert forecasts indicate a decrease in sales by 8.7% this year, and 1.7% in the next. This is still not ideal, but evidence of corrective work. This year, Fitbit can boast of improved margins, which also speaks of the desire to go into profit in the near future..
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Can you recommend any cheap stocks that are currently priced under five dollars?
I am curious to know whether investing in cheap stocks worth less than five dollars is a wise decision. Are these low-priced stocks potentially profitable, or could there be inherent risks associated with them? Any experiences or insights you can share would be greatly appreciated.
Investing in cheap stocks worth less than five dollars can be a tempting option for some investors. However, it is important to proceed with caution. While low-priced stocks may have the potential for high returns, they also come with inherent risks. These risks include the possibility of fraud, lack of liquidity, and limited information available about the company. Additionally, cheap stocks are often more volatile and susceptible to market manipulation. It is crucial to thoroughly research any investment and diversify your portfolio to mitigate these risks. Always consult with a financial advisor before making investment decisions.