Should Investors Buy Stocks Under $5?

This article discusses the pros and cons of investing in stocks that are priced under $5, also known as penny stocks. While some investors may believe that penny stocks should trade for less than $1, many now accept the definition that any stock that consistently trades below $5 fits into this category. Penny stocks are usually small-cap companies that are either new to the market or undervalued and not recognized by investors. While they carry an element of risk, they also provide the opportunity for investors to make significant gains. However, it’s essential to research these stocks thoroughly, as they can be part of a “pump and dump” scam, may be stocks of a company that’s about to go bankrupt, or may not go anywhere. It’s crucial to understand that investing in undervalued, up-and-coming companies is only one trading strategy, and investors may choose to focus on dividend-paying stocks, ride the market’s ups and downs, or buy shares in specific industries.

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Trading penny stocks requires discernment between price and value. While some stocks under $5 are traded on the New York Stock Exchange and NASDAQ, most trade through over-the-counter transactions, and some can be found on a listing service called Pink Sheets. Pink Sheet stocks can carry significant risks, and investors should use caution and due diligence when purchasing them. It can be challenging to find good stocks under $5, particularly in bull markets when most stocks frequently hit new all-time highs, and the price-to-earnings ratios of most S&P 500 companies make purchasing shares look like an expensive proposition. However, value investing opportunities do exist, and investors can find the best stocks under $5 by looking at smaller and riskier companies in sectors that are either undiscovered or unrecognized by the market as a whole.

Interested in finding potentially lucrative investments or trades in penny stocks?

Here is a list of stocks under $5/share with the following criteria for your due diligence and consideration:

Stock Price <$5

Market Cap <$2 Billion

Insider Transactions > Positive

Institutional Ownership >20%

Institutional Transaction >Positive

Net Profit Margin >Positive

RSI 14 Not Overbought <50



FlexShopper, Inc. (NASDAQ: FPAY)

Great Elm Group, Inc. (NASDAQ: GEG)

Lulu’s Fashion Lounge Holdings, Inc. (NASDAQ: LVLU)

MarketWise, Inc. (NASDAQ: MKTW)


RF Industries, Ltd. (NASDAQ: RFIL)

Emeren Group Ltd (NYSE: SOL)

TETRA Technologies, Inc. (NYSE: TTI)

Uranium Energy Corp. (AMEX: UEC)


These are not recommendations but a starting point for those interested in researching potential investments in stocks trading under $5 per share.

Happy Trading!

Gregory Timmons

Only Headline Contributor


On the date of publication, Gregory Timmons did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer/contributor.


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