This article looks at the 10 most undervalued stocks to buy for under $5.
Stock markets around the world tumbled on Friday following Israel’s strikes on military targets in Iran, sparking inflows in safer investments such as gold and the U.S. Dollar.
The latest escalation in the Middle East has added further uncertainty to the markets, following heightened pressure from the ongoing tariff wars.
The rush to safety from investors was reflected in the broad market index dropping 1.13%. European shares fell 0.9% on Friday, while major Asian markets in Hong Kong, Japan, and South Korea also dipped by over 1% each.
Jessica Amir, market strategist at Moomoo, shared the following remarks on the stock selloff:
“We’ve seen equities stalling for some time, and it just appears that this is the catalyst that will probably send equities down lower. Stocks are up 30% globally, and you’ve got the MSCI World Index at a record, so there’s room for fat to be taken off the table.”
James Rossiter, the head of global macro strategy at TD Securities, stated the following:
“This is a flight-to-safety event. But markets are struggling a bit and in the fixed income space you have an oil-price shock that is inflationary and so you should see markets expecting an even more hawkish Fed. On the other hand, you have the flight-to-safety, which should push bond yields lower. On the dollar side, it seems like a cleaner move. The U.S. was very quick to come and say ‘this has nothing to do with us’ and then we have Trump’s comments. He’s still clearly pushing for the Iranians to talk. There are these talks that have been scheduled for Sunday.”
With that said, let’s now head over and discuss the most undervalued stocks to buy.
Methodology
For this article, we identified stocks with a forward price-earnings ratio of less than 15 and a share price of under $5. From there, we selected the top 10 stocks in descending order of their price-earnings ratio. All figures are as of the close of business on Thursday, June 12, 2025.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10 Most Undervalued Stocks to Buy for Under $5:
10. Gerdau S.A. (NYSE:GGB)
Share Price (June 12): $3.01
Forward P/E (June 12): 8.15
Earlier this week, UBS upgraded Gerdau S.A. (NYSE:GGB)’s rating from Neutral to Buy and also lifted the stock’s price target to $3.8 per share from $2.9 previously. The new price target represents a 26% upside potential from its current trading levels.
The revision follows the Trump administration’s decision to increase import tariffs on steel to 50%. Analysts at UBS view this as a significant development for Gerdau S.A. (NYSE:GGB), considering the company’s substantial operations in the U.S., which provide it a hedge against the current protectionist policies.
UBS analysts highlighted the tight demand and supply dynamics for steel in the US, due to higher import tariffs, which are expected to increase end-product spreads and improve producer margins. This has prompted analysts to increase their 2026 EBITDA estimates for Gerdau S.A. (NYSE: GGB) by 32% from their previous levels.
They also anticipate a reduction in capex from 2026 onwards, resulting in a significant expansion in free cash flow. With a forward price-earnings ratio of 8.15, Gerdau S.A. (NYSE:GGB) is one of the most undervalued stocks to buy for under $5.
9. Banco Bradesco S.A. (NYSE:BBD)
Share Price (June 12): $3.00
Forward P/E (June 12): 7.37
Banco Bradesco S.A. (NYSE:BBD) is a São Paulo-based company that provides banking products and services to individuals and corporations in Brazil and internationally. It is one of the largest financial services groups in Latin America, having been in the market for over 80 years.
The stock has returned nearly 57% year-to-date on the back of strong earnings, resulting in positive investor sentiment. Last month, Banco Bradesco S.A. (NYSE:BBD) reported financial results for the first quarter of fiscal 2025, with recurring net income growing 39% year-over-year to BRL 5.9 billion, whereas the bank’s revenue surged 15% to BRL 32 billion.
Recent analyst ratings are also driving positive momentum for Banco Bradesco S.A. (NYSE:BBD). On May 28, Citigroup upgraded the stock’s rating to Buy from Neutral, citing an encouraging outlook for the company’s ROE in the short and mid-term. Analysts also expect an improvement in the bank’s risk-adjusted revenues.
This follows HSBC’s revision earlier in the year, when it signalled confidence in Banco Bradesco S.A. (NYSE:BBD) by upgrading the stock from Hold to Buy. The bank’s low forward P/E ratio and share price also make it an attractive entry point for investors. It is among the most undervalued stocks to buy for under $5.
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