To find stocks under 5 dollars, investors need to look for smaller, riskier companies in sectors that are still undiscovered or have not yet been recognized by the market. Some of these companies will not look very attractive at the time of research. However, such investments are also not about short-term gains, but long-term performance over several economic cycles. To give you a little overview, we have created a list of stocks under 5 dollar (penny stocks) with potential for you.
Some investors overlook these cheap stocks because they are afraid of the volatility of the so-called penny stocks. But even though investing in penny stocks comes with a higher risk, the same applies here: conscientious research, coupled with some investment know-how, can help you find a cheap stock with great upside potential.
Stocks under 5 dollars
If you want to do your own research on penny stocks, read our article on “How to Find Penny Stocks“.
Should you buy stocks under 5 dollars?
Without your own know-how and a plan or guidance from an expert in the field, you should generally not invest in stocks; not even penny stocks. However, with the right knowledge, stocks are an excellent investment that can even be more solid than real estate. While the stock market is very volatile in some areas, historically stocks are subject to an upward trend.
Read our article “Why buy stocks?” for more information.
Never put all your capital on just one stock, but diversify as much as possible. The majority of your portfolio should consist of solid and stable companies. The stocks under 5 dollars are only a small part of a diversified portfolio, which contributes to value investing and can give your money some growth.
The strategy determines your portfolio
However, investing in undervalued, emerging companies is only one of the many trading strategies. For example, some investors focus on stocks that pay dividends. In this type of investing, the large number of shares held creates a solid cash flow.
Other investors, again, like to buy stocks in certain industries, such as tech stocks. Still others choose to take advantage of daily price fluctuations and thus day trade. Which trading strategy you choose therefore also determines the structure of your portfolio and whether it contains stocks under 5 dollars at all.
In our article “Penny Stocks 2021” we take a closer look at some cheap stocks.