With growth stocks under $5, the focal point is rather obvious: putting woodwork on the ball as aggressively as possible. Of course, swinging for the fences comes with significant risks. You can end up missing slightly and ruining a perfectly good opportunity to add in a run or two. Still, the rewards for getting it right are quite enticing.
When you’re behind in the ballgame by a big score, you need a big inning. That’s just the reality of the situation. In most other circumstances, you probably should adopt a more conservative approach. In other words, the very concept of growth stocks under $5 is narrow and thus speculative. You’re hoping for capital gains. Dividends? Don’t even bother.
Of course, one of the big advantages of “cheap” equities is the law of small numbers. A news event, even a minor one, could potentially yield significant upside. On the other hand, the opposite is also true. If you can handle the unpredictability, these are the growth stocks under $5 to consider.
Elutia (ELUT)
Falling under the broad healthcare umbrella, Elutia (NASDAQ:ELUT) specializes in medical devices. Specifically, it’s a commercial-stage entity, developing and commercializing drug-eluting biologic products for neurostimulation. In addition, it also focuses on wound care and breast reconstruction. Fundamentally, healthcare plays are always enticing because of the underlying permanence of the narrative.
Still, that doesn’t guarantee upside for Elutia and the idea – being one of the growth stocks under $5 – carries risks. In particular, the company isn’t profitable, incurring a loss per share of 59 cents during the past four quarters. What’s worse, analysts anticipated an average loss per share of 38 cents in the period. That led to a negative “earnings” surprise of 64.35%.
However, where it redeems itself is in the top-line expansion. In the trailing 12 months (TTM), Elutia generated sales of $25.05 million. For fiscal 2024, experts are projecting revenue to hit $27.55 million. If so, that would be up 11.3% from the prior year. Also, in fiscal 2025, sales could rise to $39.05 million, up 41.7%.
Archer Aviation (ACHR)
Operating in the aerospace and defense sector, Archer Aviation (NYSE:ACHR) is best known for its work in electric vertical takeoff and landing (eVTOL) aircraft. Such vehicles could play a huge role in tomorrow’s urban air mobility landscape. Mainly, the issue with the current use of helicopters is the pollution, both the emissions and the noise. However, eVTOLs may address both concerns.
What makes ACHR stock so intriguing is that electric vehicles are changing mobility, arguably for the better. The same may happen for the skies. Still, investors will need to exercise patience. In the past four quarters, Archer incurred a loss per share of 41 cents. This was worse than the experts’ consensus average view, which called for a loss of 32 cents per share.
However, the focus is on the top line. Right now, Archer is a pre-revenue enterprise. However, it’s possible that by the end of this year, it may generate $2.25 million. In the following year, analysts see revenue hitting over $55 million, with a high-side estimate of $78 million. Thus, it’s one of the growth stocks under $5 to consider.
ADC Therapeutics (ADCT)
Conducting business in the biotechnology sphere, ADC Therapeutics (NYSE:ADCT) focuses on advancing its proprietary antibody drug conjugate (ADC) technology platform. Ultimately, it aims to transform the treatment paradigm for patients with hematologic malignancies and solid tumors. With oncology being a rapidly growing field, it’s possible that ADC could carve out a viable niche.
As with many (if not most other) growth stocks under $5, patience will be critical. In the past four quarters, ADC incurred a loss per share of 69 cents. However, analysts were hoping for a loss of only 54 cents per share. Bad misses in the second quarter and Q4 2023 led to a negative “earnings” surprise of 31.05%.
Even the growth area is encountering some friction, with the latest quarterly sales growth (year-over-year) rate coming out to 4.9% below breakeven. That said, experts are looking for a recovery later this year. Sales could hit $77.82 million, which would be up 11.9% from last year. In fiscal 2025, analysts are aiming for $90.53 million, up 16.3%.
PaySign (PAYS)
Based in Henderson, Nevada, PaySign (NASDAQ:PAYS) operates in the infrastructure software space. Per its public profile, PaySign provides prepaid card programs. It also brings to the table patient affordability offerings (for the healthcare sector), digital banking services and integrated payment processing solutions. With so much flexibility in the transactional ecosystem, PaySign may be able to resonate with a core group of clients.
While patience will still be required for PAYS stock – since it’s very much a speculative idea – the positive here is that the company is bring some substance to the table. In the trailing year, PaySign posted an average earnings per share of 2 cents. This beat out the consensus view of 1 cent.
In the TTM period, PaySign posted net income of $6.93 million on sales of $50.32 million. Looking out to the end of the year, analysts are hoping for sales of $56.82 million. If so, that would imply a growth rate of 20.2%. Further, fiscal 2025 sales could hit $63.91 million, up 12.5%. Therefore, it’s a solid candidate for growth stocks under $5.
Grab (GRAB)
Easily one of the most exciting plays among growth stocks under $5, Grab (NASDAQ:GRAB) made its public market debut in Dec. 2020. To be fair, the Singapore-based enterprise – which focuses on providing super apps in key emerging markets in Southeast Asia – hasn’t enjoyed the best debut. As of this moment, GRAB stock is down more than 71% lifetime. However, that could change for the better.
Sure, its financial state isn’t the most promising. In the past year, the company posted a loss per share of 2 cents. On average, that’s exactly what experts were anticipating. However, it’s worth noting that the individual quarterly performances have been mixed: some quarters saw big gains and others saw huge losses relative to expectations.
Still, in the most recent quarter, the sales growth rate clocked in at an impressive 24.4%. In the TTM period, revenue stood at $2.49 billion. For fiscal 2024, experts believe that the top line could expand by 17.8% to $2.78 billion. And in the following year, revenue could rise to $3.24 billion. It’s a top-tier speculative idea for growth stocks under $5.
PowerFleet (AIOT)
Headquartered in Woodcliff Lake, New Jersey, PowerFleet (NASDAQ:AIOT) conducts work in the infrastructure software ecosystem. Per its corporate profile, PowerFleet provides Internet-of-Things (IoT) solutions in the U.S., Israel and other international markets. Specifically, it offers cloud-based applications data from IoT devices to present actionable information for customers. This process helps increase efficiencies and improves safety and security.
With so much data migrating to cloud networks, PowerFleet may become a relevant niche player. As with many other ideas for growth stocks under $5, patience will be required. In the past four quarters, the company posted a loss per share of 8 cents. However, analysts during this time expected an average loss of 6 cents.
No matter – the focus is on what the company can do moving forward. Revenue in the TTM period came in at $133.74 million and it could go much higher. Already, it’s on pace to slightly exceed the fiscal 2024 sales target. What’s more, in fiscal 2025, analysts believe that revenue could soar to $292.05 million, up 119%. This is one to keep on the radar.
National CineMedia (NCMI)
Arriving at the final and most speculative – some might say irrational – idea for growth stocks under $5, National CineMedia (NASDAQ:NCMI) operates in the communication services sector, specifically under advertising agencies. Long story short, the company runs a cinema advertising and entertainment show. It’s the stuff you see on screen before the trailers.
Of course, this is where investors may start tuning out. NCMI stock is risky, there’s no getting around this point. It’s not just about the company losing 29 cents per share on average in the past year. And it’s also not about experts anticipating a loss of 27 cents during the period. Rather, the box office just doesn’t have the same allure as it used to during the pre-streaming era.
At the same time, people still are going to the movies. Certain blockbusters draw big crowds and that’s where National Cinemedia could regain its relevance. Further, analysts expect big things, forecasting sales to hit $242.63 million by year’s end. If so, that would imply nearly 47% up from last year.
Also, fiscal 2025 revenue could rise to $282.69 million, up 16.5%. If you want to gamble, NCMI may be your ticker.
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On the date of publication, Josh Enomoto 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, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.