Some of the greatest opportunities can be found in beaten down, ignored stocks under $5.
Especially those with solid long-term growth and strong fundamentals.
- Digital Turbine (APPS) ran from about $1.20 to a high of $102.56 for 8,447%.
- Harmonic (HLIT) ran from $4.30 to a high of $12.22
- Marathon Oil (MRO) ran from a low of $3.64 to $25.58
While we often hear that sub-5 stocks are “there for a reason” and “should be avoided at all costs,” that’s bad advice. Instead, with a little digging, you may just uncover the Digital Turbine.
In fact, here are three hot opportunities trading under $5 we believe could pop with patience.
Opportunity No. 1 – B2Gold Corp. (BTG)
Canada-based 2Gold has traded flat over the past year as gold prices have traded in a big range.
BTG operates as a gold producer with three operating mines in Mali, the Philippines, and Namibia. B2G has grown revenues to $1.8 billion in the 12 months between mid-2022 and mid-2023.
2022 saw B2Gold mine 1,027,874 ounces in total, the company’s first year of production over 1 million. They continued keeping their costs in line, with operating costs of $660 per ounce of gold produced. That allowed B2Gold to earn a profit, one that can likely continue.
B2Gold isn’t stingy with its profits. They pay a 4.6 percent dividend at today’s prices, and shares appear undervalued relative to their costs, their operational growth, and the potential for more gold price appreciation in the coming years.
Opportunity No. 2 – Cazoo Group Ltd. (CZOO)
Don’t count out beaten down shares of direct-to-consumer online car retailer, CZOO just yet.
While shares have lagged the market rally in 2023, Bank of America analyst David Amira is still optimistic on the stock, as the company attempts to expand outside of the UK. At the moment, the firm has a buy rating on CZOO, with a price target of $6.60.
Earnings growth has been modest, as used car prices have dropped from their shortage levels in 2021. However, Cazoo has over $240 million in cash on the balance sheet, which gives it enough to navigate the current market environment.
A move to profitability in the years ahead could lead to big returns for investors today. As an early stage company, and one taking the direct-to-consumer concept in the auto market, it will take time to fully determine the potential size of this market. But chances are it’s substantially higher than the company’s current market cap today.
Opportunity No. 3 – Tellurian Inc. (TELL)
Tellurian is involved in the natural gas business worldwide.
The company is developing a portfolio of natural gas production, liquefied natural gas (LNG) marketing, and infrastructure assets that includes an approximately 27.6 million tons per annum LNG export facility and an associated pipeline.
It owns interests in 11,060 net acres of natural gas assets and 78 producing wells located in the Haynesville Shale trend of northern Louisiana.
President and CEO Octávio Simões noted, “The global economy is in the early stages of an energy super cycle driven by strong demand for natural gas and several years of underinvestment in energy infrastructure. Tellurian is optimally positioned with fully executed market-based LNG SPAs and a permitted project.”
Shell recently said global LNG demand is expected to cross 700 million mt/year by 2040, a 90% increase on 2021 demand. That makes TELL a potential big winner here, as it has the ability to grow with that trend, and could even get bought out by a bigger player in the wider energy industry.
Opportunity No. 4 – Arrival (ARVL)
ARVL focuses on the design, assembly, and distribution of commercial electric vehicles (EVs) worldwide.
While most investors in the EV space are interested in cars, Arrival’s portfolio includes EV vans and buses. That could create an automaker that isn’t as cyclical as the consumer car space, as local governments, company fleets, and other big organizations build out a portfolio of EVs.
According to the company, “We have kicked off 2022 with a major achievement as our first Van skateboard structure was assembled robotically using both our technology cell and AMRs in our Bicester Microfactory – an important step towards full vehicle production using our unique production process. In addition, our non-binding orders and LOIs have doubled to c.134k1 vehicles – further proof of the rapid global transition to electric vehicles and the capability of our products to enable this transition.”
While the market has been slow to start, this early-stage company could become a big winner for non-car EVs. The company could even get an offer from a bigger player to get bought out as they build out their EV technology.
Opportunity No. 5 – Bit Digital (BTBT)
Bit Digital operates as a cryptocurrency miner, focusing on bitcoin. They also offer digital asset staking and treasury management services.
There are several publicly-traded ways to play the growth of cryptocurrencies. These companies tend to move based on the price of bitcoin, and to a lesser extent other cryptocurrencies. Following a wipeout in 2022, crypto prices are now trending higher, which should help Bit Digital’s revenues.
The company has already reduced most of its losses from 2022, and looks set for a stellar move in the months ahead.
Opportunity No. 6 – Ginkgo Bioworks Holdings Inc. (DNA)
With a market cap of $4.8 billion, DNA develops platform for cell programming.
Its platform is used to program cells to enable biological production of products, such as novel therapeutics, food ingredients, and chemicals derived from petroleum.
That could make for a massive winner in the year ahead, given how little work has been done on cell programming so far.
As TheFly.com noted in 2022:
“Cowen analyst Steven Mah initiated coverage of Ginkgo Bioworks with an Outperform rating and $12 price target. Synthetic Biology, or ‘SynBio’ is a high-growth vertical and Ginkgo has a significant lead in scalable genetic engineering, Mah tells investors. The company also has increasing technical success and its ‘attractive’ Foundry downstream economics will derisk as programs scale and diversify.”
This is one early stage company with tremendous promise that could upend the entire biotech industry.
Opportunity No. 7 – Ashford Hospitality Trust (AHT)
Investors looking to invest in real estate can get started with just a few dollars, thanks to real estate investment trusts. They trade much like stocks. But REITs are also required to pay out nearly all their earnings as dividends, so they can offer high yields over time.
One early stage REIT is Ashford Hospitality Trust. They’re investing in upscale, full-service hotels in the U.S. They currently have 100 hotels located in 26 states, operating 22,316 rooms.
They have provided financing for hotels across a number of well-known brands, such as Hilton, Marriott, and Hyatt.
With business travel demand returning, investors can focus in on high-end hotels with Ashford. And in time, Ashford will start earning a profit and paying investors dividends.
Opportunity No. 8 – MultiPlan Corporation (MPLN)
With a market cap of $1.3 billion, MPLN provides data analytics and technology-enabled cost management, payment, and revenue integrity solutions to the healthcare industry in the U.S.
The company is still in its early stages, and isn’t turning a profit. But it has the ability to tap into the healthcare space, nearly 20 percent of U.S. GDP, and profit from the need to upgrade products and services in that space into the 21st century.
Operationally, shares may struggle for a bit, as implementing new ideas in the heavily regulated healthcare space can take time. But if they can grab a tiny fraction of the tech needs for that market, this could become a major tech service company in the years ahead.
Opportunity No. 9 – Mizuho Financial Group (MFG)
Sometimes, a low share price masks a large cap company.
With a market cap of $43 billion and a dividend yield of 3.6 percent, MFG engages in banking, trust, securities, and other businesses related to financial services in Japan, the Americas, Europe, Asia/Oceania, and internationally.
The financial services company looks like a global value play, with shares going for about 11 times forward earnings. Plus, shares trade at a 33 percent discount to their book value, which gives some downside protection.
Investors looking for an inexpensive way to get some international exposure can find it with MFG – and be well paid to wait for financial assets to make new highs in the years ahead.
Opportunity No. 10 – W&T Offshore (WTI)
As the name implies, W&T Offshore looks for oil and gas exploration opportunities, focused on the lucrative Gulf of Mexico area.
Developing and moving offshore energy resources can be more expensive than land-based opportunities. So it’s no surprise that a lagging energy market in the past year has caused shares to underperform too.
However, with the stock trading at 3 times earnings, and carrying a 30 percent profit margin, the market may be undervaluing shares substantially here. Especially if energy prices trend higher.
This could be a big winner for a move higher in energy stocks in the months and years ahead. It’s also possible that a big energy find could lead to a buyout from a larger energy company down the line.