Low-priced stocks can be very attractive to investors. The ability to purchase thousands of shares for relatively cheap sometimes gives the illusion that these cheap stocks may be better than more expensive ones.
But, that’s not exactly the case. Cheaper stocks tend to be significantly more volatile, with their low volumes and small market cap. On the flip side, stocks that trade for under $5 a share can also produce explosive returns. Like many things, higher risk can grant higher rewards.
With that being said, here are some of the best stocks for under $5 right now. All the stocks in this article are also currently a Zacks Rank #2 (Buy) or better.
Blueknight Energy Partners BKEP Zacks Rank #1 (Strong Buy) – Market Cap = $53.34 million
Formed in July 2007, Blueknight operates midstream energy assets, dealing with asphalt and crude oil. Blueknight operates an Oklahoma crude pipeline system and provides crude oil transport throughout Kansas, Oklahoma, and parts of Nebraska and Texas. Meanwhile, the company’s asphalt operations are spread throughout the U.S.
Currently, BKEP is trading around $1.35 a share and is up 14.8% YTD, essentially performing equal to the S&P 500. Our Zacks Consensus Estimates predict fiscal 2019 earnings growth of 65.52% along with 5.24% revenue growth. And in the past 60 days both BKEP’s fiscal 2019 and 2020 EPS estimates have surged over 50%.
Xcel Brands XELB Zacks Rank #2 (Buy) – Market Cap = $52.97 million
Founded in 2011, Xcel attempts to provide customers with a shopping, entertainment, and social experience through its interactive television and internet channels, as well as brick-and-mortar stores. Xcel stock has posted impressive YTD growth of 148.7% and was up over 16% through morning trading Thursday to $3.26 per share.
Even with this recent price jump, Xcel is only at trading at 6.91x earnings, significantly below the industry average of 12.81x. Additionally, Xcel is expected to have solid fiscal 2019 and 2020 growth. Our Zacks Consensus Estimates forecast fiscal 2019 top-line growth of 27.99% and earnings growth of 33.33%. Fiscal 2020 estimates anticipate an additional 25% earnings growth on the back of 14.86% revenue growth that would see it hit $51.8 million. The expected growth and recent gains, can provide investors with optimism that the stock may continue to add to its positive run.
Ring Energy Inc. REI Zacks Rank #1 (Strong Buy) – Market Cap = $230.56 million
Based in Midland, Texas, Ring Energy is an oil and gas exploration, development and production company. The firm owns and operates land on the Permian Basin located in West Texas. REI is the most commonly traded stock on this list, with an average volume of 839,000. Ring was added to the Zacks Rank #1 list Tuesday and also carries with it an overall “B” VGM (Value, Growth, Momentum) grade in our Style Scores system. Over the past five years, REI has traded with a median P/E of 26.83, which is higher than the industry average of 18.12. But, Ring stock is currently trading at 4.29 times earnings, its lowest multiple in 2018 and 2019 and significantly below the industry average of 13.08. These numbers might suggest REI is undervalued at the moment.
Ring is also expected to post significant earnings and revenue growth over the next two years. Our Zacks Consensus Estimates call for 57.45% earnings growth along with 72.93% revenue growth in fiscal 2019. Following these expectations is another 27.52% earnings and 25.98% revenue growth in fiscal 2020. Ring’s fiscal 2019 EPS estimate has surged 111%, from $0.35 to $0.74, over the past 90 days. Meanwhile, its fiscal 2020 estimate is up 51%, from $0.62 to $0.94. YTD, REI is down 33%, but the expected growth could help the stock to bounce back.
Atlantic Power Corp AT Zacks Rank #1 (Strong Buy) – Market Cap = $269.85 million
Massachusetts-based Atlantic Power is a power producer that also owns power generation assets in nine states and two Canadian providences. The company sells electricity to large, creditworthy customers, primarily under long-term agreements. Atlantic has the largest market cap of the stocks on this list, currently around $269 million. Atlantic’s fiscal 2020 EPS estimate has jumped 170% over the past 60 days, with fiscal 2019 up over 100%.
Our Zacks Consensus Estimates predict earnings growth of 50% in fiscal 2019 and an additional 12.5% growth in fiscal 2020. Both years are also expected to see single-digit revenue growth, bringing expected fiscal 2020 revenue to $229.20 million. Atlantic has also posted positive earnings surprises in the past four quarters, for a 127% average. AT stock is up 13% YTD.
WidePoint Corp ( WYY Quick Quote WYY - Free Report) Zacks Rank #2 (Buy) – Market Cap = $36.41 million
WidePoint is a tech company based in Virginia that delivers “secure, cloud-based, enterprise-wide information technology-based solutions.” WidePoint has provided the U.S. government with its services for 20 years and also serves Fortune 100 companies. WYY is currently trading around $0.43, the cheapest stock included in this list. It also has the smallest market cap, sitting around $36.41 million.
With that being said, WidePoint is supposed to grow significantly over the past two years, which is why it holds an “A” for Growth in our Style Scores system. Our Zacks Consensus Estimates anticipate 150% earnings growth on the back of 10% top line growth in fiscal 2019. Following that is another expected 200% earnings growth as well as 9.37% revenue growth to bring its expected fiscal 2020 revenue to $100.76 million. YTD, WYY has gained 3%, underperforming the S&P 500 significantly. But with significant expected growth in the near future, the stock could receive a strong boost.
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