Are you looking to add one or two cheap stocks under $5 to your portfolio in 2021? Then take a look at these 7 cheap stocks that look to be the perfect additions that look to have good growth potential ahead.
Stocks To Invest In Under $5
There is one thing for certain when looking at cheaper stocks on the market and it's that if you can handle a risk, then you can most certainly receive fantastic returns from these low-cost stocks. And one thing we know to be true about human nature is we all have this one side of our brain that asks the question that steers us into an unknown territory of, what if?
In today’s reality, a lot of investors look to low-cost stocks for numerous factors. Reasons such as these stocks are more affordable, they look to add diversity to an investor's growing portfolio and the last and the most clear point, of course, is to maybe look at gaining great returns off the back of these cheap assets, more so than the larger stocks on the market.
For example, if you are an investor who is new to the stock trading world, investing in a stock giant such as Amazon (AMZN) could leave you with only one share within the market due to its costly price that this stock holds. Whereas if you look at cheaper assets you can look at having a good diversified collection at a lower cost than just holding one share in AMZN.
Lastly, the reason as to why “maybe” surrounds potential growth within these stocks is because penny stocks are known for being extremely volatile and risky assets. It's also worth noting that most but not all penny stocks are in their current position for a reason, either they have run into troubling times or yes perhaps they are new to the market and are just beginning their journey. This is why conducting thorough research beforehand is strongly advised otherwise it can end up being extremely costly.
Definition Of A Penny Stock?
If you are a beginner into the world of stocks you may not be familiar with the term penny stock. If not, let's explain.
A penny stock relates to a company that typically trades under $5 and can trade on popular exchanges such as Nasdaq and New York Stock Exchange (NYSE). But more notably penny stocks do trade over-the-counter (OTC) through an OTC bulletin board due to various factors including specific requirements that penny stocks have to meet in order to trade on public exchanges.
Penny stocks are typically known or are stereotyped for having a lack of liquidity meaning that they also trade infrequently. Due to these factors, it can also be a challenge for investors to sell a stock due to lack of buyers around the marketplace and in addition, when it comes to buying a stock this too can be a challenge to get a stock at the right price that reflects current market conditions. However, that is not to say that investors can’t find these penny stocks that tick all the right boxes.
Key Fundamentals To Look Into When Looking To Choose The Right Penny Stocks To Invest In
When it comes to picking out the best penny stocks on the market this can and should take time and knowledge to fathom out the best of the bunch, as one slip could end up being one of your biggest investing mistakes you may ever make.
The first and the most vital points to take into consideration is that just because the price of a penny stock looks attractive, it far from means that these assets can deliver value meaning that you have to dig that extra bit deeper to come out with a more detailed conclusion to see what lies on the surface.
Having said that, here are a few fundamental factors to take into consideration when looking into choosing the right penny stocks on the market:
- The first step is to look at all key fundamentals within a penny stock of interest. When talking about fundamentals we are referring to taking a look at a stock's operating cash flow ratio, debt ratios and price-to-earnings ratios (P/E) to see how a stock is and has performed overtime. Taking a look at all of a penny stocks' visible data both past and present including looking at a penny stocks profitability status is key when looking to give investors a clearer outlook of a good penny stock.
- Take a closer look at the management team that surrounds a penny stock of interest. This is another crucial point to look at when looking to determine if a penny stock is sitting in a good position, as if you find that a stock has issued new shares it is in order to attract investor attention, but not necessarily for the right reasons. This actually indicates that this stock is facing troubling times and it's wise to think twice before jumping straight in when you see this activity occur.
- Look at the volume. Ultimately liquidity is what matters for investors, so by taking a closer look into a stocks daily volume will allow you to see how many trades change hands within that 24 hour period and will also give an indication of a stocks activity levels. To clarify, the higher the volume the more interest a stock has from investors.
- The last point to factor into the equation is to take a closer look at a penny stocks volitility. To make it clearer,a stock with high volatility is proven to be a more risky investment. This means that value will fluctuate dramatically and potentially could even give you a loss altogether if a company is on a mission to deliver success at a quicker rate. Sticking to a stock with low volatility should provide less risk when it comes to value, that is if the penny stock you are considering seems to be a good one.
Read Also: Understanding the Market Value of a Company
7 Stocks To Invest In Under $5
Having looked at what is entailed within penny stocks and how advantageous these stocks can be when chosen correctly, now let's take a look at 7 attractive penny stocks under $5 sitting on the market today that are looking to be giving off all the right signals to consider buying in 2021.
List of 7 best cheap stocks to invest in:
- Nokia (NOK)
- Greenlane Holdings Inc (GNLN)
- Trivago N.V. (TRVG)
- Fluent Inc (FLNT)
- Dogness (International) Corp (DOGZ)
- Pixelworks Inc (PXLW)
- Vinco Ventures Inc (BBIG)
1. Nokia (NOK)
Share Price: $4.96
The Finnish telecommunications company Nokia (NOK) has been having an impressive run in 2021, being up by approximately 50% todate. In recent days NOK announced that it is looking to raise its full year guidance as the company has experienced stronger than thought results and are now looking to expect more upside moving forward. Since the recent news broke, NOK shares have increased by above 7% within the past 24 hour period.
Nokia’s new CEO Pekka Lundmark is strongly pushing forward with his strategic plans and advising that NOK is on course for “sustainable, profitable growth and technology leadership” within the company’s three-phased plan. A plan which was previously forecast to reach positive free cash flow between EUR 20.6 billion- 21.8 billion in net sales and reach a comparable operating margin of 7-10%. This leaves no room to question as to why NOK is now being pushed into riding the recent ‘meme’ stock wave.
To give you an understanding of how well NOK stock has performed so far in 2021, within the company’s Q1 report Nokia announced that net sales were up by 3% YoY with net cash rising by almost 180% YoY, placing NOK in a strong financial position with net cash of EUR 3.7 billion and total cash of EUR 8.8 billion within Q1.
Looking at what analysts are predicting for NOK, Goldman Sachs has issued a ‘Strong buy’ rating with NOK holding an average medium price target of $6.00, alongside a low price target of $5.28 and a high price target of $7.70. Zacks Investment Research has also been optimistic on this telecommunication company’s future, issuing ‘A’ grades across the board for growth, value and momentum with an expected growth in earnings per share (EPS) to increase by 1.49% over the 3-5 year outlook.
Upon writing this report NOK is currently trading at $5.78, up by just over 7% within the past 24 hours and is averaging a daily trading volume of just over 38,759,617.
Sitting in a sparkling position Nokia seems to be a great stock to buy in 2021. Sitting slightly above the $5 mark thanks to the news over the past 24 hours makes NOK stock shine even brighter and one that investors should overlook in 2021.
Nokia is due to release additional second-quarter results on July 29th.
2. Greenlane Holdings Inc (GNLN)
Share Price: $4.12
The cannabis industry is one industry that has been given heightened attention over the past year, and rightly so as more US states look to continue legalising the use of marijuana. For this reason, Greenlane Holdings Inc (GNLN) looks to be sitting in a good spot having its hands firmly within this exciting industry that has the potential to offer great value to its shareholders over the coming years.
Greenlane Holdings Inc (GNLN) is a global holding platform who through its subsidiaries sells vaporisation products, cannabis accessories and much more to consumers worldwide. Additionally, GNLN has over 11,000 retail locations across the globe and remains free and clear of federal drug laws.
One standout feature for GNLN is its merger with American company KushCo Holdings (KSHB), which looks to sell an array of products within the cannabis industry. Within KushCo Holdings latest Q3 2021 results the company’s revenue grew by a whooping 27% year-over-year to $28.3 million. The combined entity between these two companies is set to project a market cap of approximately $400 million with an anticipated $250 million in forma revenue expected.
From its close, GNLN is up 1.70% to $4.15 upon writing this report, and according to analysts predictions, GNLN could potentially see an upside of 80% based on its mean target given of $7.50 with a high price target of $8.00 and a low price target of $5.00.
Greenlane currently holds an average trade volume of around 493,946 which is currently lagging behind upon writing this report at just over 100,000 shares traded. Nethertheless, this indirect cannabis company looks to be an attractive buy in 2021 for the booming potential that this exciting industry holds.
3. Trivago N.V. (TRVG)
Share price: $3.10
The Dutch transnational company Trivago N.V. (TRVG) is one of the world's leading hotel and alternative accommodation platforms that is creeping its way back up on the radar as the world seeks to ease global restrictions.
Over the course of the past 15 months, Trivago has managed to remain in a somewhat good financial health over 2020 in comparison to its competitors on the market by reducing costs across various areas. Additionally, at the start of 2020 Trivago announced that it had acquired weekend.com, a company designed for giving local recommendations for mini breaks. Not to mention that TRVG is also majority-owned by Expedia, one of the biggest platforms within the market. With all these factors included it may just help this stock reach its financial gains sooner than expected.
According to a recent report, Wall Street analysts are predicting that the travel boom will push TRVG to reach over $80 million in sales for this coming quarter, with a loss of just $0.03 per share in the second quarter. Looking to the further future, Zacks Investment Research has been bullish on the stock by upgrading its consensus rating from a ‘Hold’ to ‘Buy’ in recent days confirming that the movement is readily on its way with the potential that TRVG could reach profitability by 2022. Alongside, Zacks has also issued TRVG with an average price target of $3.50, confirming a 12% increase from its price it sits at today at $3.10 upon writing this report.
As more restrictions ease globally Trivago N.V. looks to be a travel penny stock sitting in a bright position amongst others within this market.
4. Fluent Inc (FLNT)
Share price: $2.58
Fluent Inc (FLNT) is an American company that specialises in digital consumer engagement. From advertising to marketing Fluent Inc looks to connect audiences and drive solid future growth for businesses worldwide.
Fluent has had an undeniably tough year over the past 12 months. Nevertheless, the stock has still managed to rise up within its shares hitting just shy of 50% over the past 12 month period. However, the stock missed out on estimates within its revenue as its revenue was down by 11% in Q1 2021 and archived a net loss of $6.3 or $0.08 compared to a net income of $0.4 million or $0.01 per share in Q1 2020.
Looking at the future ahead, Fluent Inc is looking to push the boundaries further to the positive as the stock is already witnessing strong client demand in 2021 and its contact center continues to exceed expectations. This also includes FLNT’s recent partnership with Fyllo, a leader in digital marketing and compliance solutions who are looking to create, drive and provide unique access to further enhance strategic performances for well-known wellness, health and pharmaceutical brands.
Analysts are being optimistic on Fluent’s future giving the stock an average price target range of between $4.50 to $5.00, showing a potential upside of just under 97% at its highest. Alongside, earnings are forecasted to grow just below 50% over the coming 3-5 years ahead.
This leading performance marketing company is setting its way up within this quickly-evolving marketplace including having a switch around within its management with co-founder and previous CEO Ryan Schukle, now being moved into a new role of Chief Strategy Officer to enhance further strong growth for this leading digital stock.
5. Dogness (International) Corp (DOGZ)
Share Price: $2.24
Dogness International Corp (DOGZ) is a china-based holding company that specialises in designing and creating pet products, ranging from animal collars to state of the art pet feeder dispensers to be able to see your pet's activity. Additionally, users can download the Dogness app that enables users to keep upto date with all of their pets' activities throughout the day, DOGZ is leaving no stone unturned within this market.
The Dogness sales platform is going from strength to strength having its pet products available to buy online via Amazon (AMZN), Target.com (TGT), Costco Wholesale Corp (COST) and many more and has now further added another favourite to list having its products being available to purchase on HomeDepot.com.
Over the past 24 hours, DOGZ shares have gained around 4.67% to $2.24 or $0.01 per share from its previous opening of $2.21, and holds an increased average daily volume of 776,454 following from over 1 million shares passing hands over the past 24 hour period.
Within this petting stock's recent first quarter results, DOGZ confirmed that revenue has risen by 6.7% YoY to $12.2 million, with U.S sales holding up as the biggest contribution of 41.1% YoY in net sales. In total it was confirmed that smart pet sales rose by 60.3% in 2020 making up 27% of the total revenue, up from 18% the previous year. Additionally, earnings per share (EPS) has grown to $0.03 per basic and diluted share from a loss of $0.01 per share in 2020.
Coming from a negative trend back in 2019, expert analysts are now forecasting that this stock could see a potential upside in revenue, growing as much as 60% in the coming years.
As the pet craze continues globally, DOGZ is one of the most exciting penny stocks on the market today that has amples of potential to offer investors as it continues its positive drive.
6. Pixelworks Inc (PXLW)
Share Price: $2.90
Pixelworks Inc (PXLW) is the next stock under $5 that should not be overlooked in 2021.
Pixelworks Inc (PXLW) seeks to create and market semiconductor and software solutions within the electronics industry. Its primary product category focuses on image processing, processing video signals, network capability and other applications. Aside, PXLW also offers digital signage, digital displays and projection devices.
Back in 2019, Pixelworks was on the uptrend reaching a total year revenue of $68.8 million over the year. This could have been down to contributing factors such as political discussions that then pushed this stock and others to surge. But welcome 2020 and the global pandemic. Following government guidelines businesses across the U.S and globally had to seize operations and be subject to strong restrictions which naturally took a toll on PXLW stock.
However, moving into 2021, PXLW has been on the uptrend once again following the release of the stock's first-quarter 2021 performance. Within Q1 record total revenue was recorded reaching 44% of total revenue with archives mobile record revenue also increasing by 91% showing strong momentum.
Looking to the second half of 2021 and beyond, PXLW is looking to further expand its smartphone mobile division by aiming to launch double the amount of smartphones that was released to consumers in 2020. Alongside, Pixelworlks is also predicting stronger demand within the projector industry and is anticipating a solid rise in revenue over the next coming quarters.
Currently trading slightly down by 0.9% from yesterday's close at $2.90, and holding an average trading volume of 873,734, this gives investors the indication that momentum is slowly creeping up for this stock and one that shouldn't be discounted in 2021 and the coming years ahead.
7. Vinco Ventures Inc (BBIG)
Share Price: $3.93
Vinco Ventures Inc (BBIG) is an American-based digital marketing and consumer products company that aims to leverage new market opportunities by applying the company’s ‘B.I.G’ strategy.
Following Vinco Ventures announcement back in January 2021 that the stock is due to merge with Zash Global Media, a global media and entertainment organisation that has their hands involved with TikTok and other leading entertainment platforms, BBIG stock has been on the upward trend. The merger will see Zash Global Media being the leader but will still retain Vinco’s name and will operate under Vinco Ventures ticker (BBIG). The main aim for this venture is to cover BBIG’s losses in order for this stock to seek to expand.
Additionally, the merging company looks to acquire the fastest growing social video platform Lomotif, which sits within the same market space as the leading social video platform TikTok. Lomotifi is currently looking to enter the Indian market, the second-largest market in the world for users to participate in this entertainment bubble, a country that rivals TikTok are currently banned from.
When it comes to BBIG’s liquidity position this is currently okay at present. Reporting at the end of March a liquid position of $5.5 million, then on top seeing a further $5.75 million being generated from an investor exercise, ways in nicely as the company is still trailing behind in losses. Nevertheless, with the new and exciting partnerships in the pipeline should progress Vinco Ventures to capitalise on these exciting adventures.
As it stands BBIG is currently sitting on a pre-market price of $3.93, up by approximately 3.42% from its previous close of $3.80. And holds a respectable average volume of over 12 million trades per day.
For its new partnerships and its exciting growth prospects into new avenues makes this penny stock one that investors should strongly consider to buy in 2021.
Overview: Best Cheap Stocks to Buy Now Under $5
Despite penny stocks holding stronger risk factors, alongside holding stronger volatility compared to small-cap stocks on the market, investing in these exciting 7 best penny stocks under $5 in 2021 can and do look to be the best little additions that can offer shareholders great value as they seek to evolve over time.
However, whilst all of the above 7 top stocks under $5 do hold and show many positive factors from both past and current performances, it is still worth conducting additional research before looking to invest in these assets. Keep in mind that penny stocks are known to see and witness sudden price movements at any given moment is one of the key elements investors have to consider when looking at these stocks, which is why it pays to sound out any negative factors before seeking to add penny stocks to your portfolio collection.
Having said all of that, with due diligence and the right stocks under $5 to hand, you are vastly on your way to becoming a part of what these exciting assets have to offer.