In this article, we examine the 11 Best NYSE Stocks Under $5 to Buy.
Investors often refer to stocks trading below $5 per share as small capitalization stocks. According to a MEKETA Investment Group whitepaper, these stocks may be small in size, but taken together, “they represent a large opportunity set.” The whitepaper cites academic research that found that US small-cap stocks have outperformed large-cap stocks over the long-term.
In 2025, however, large-caps have dominated the market. According to LSEG, 2025 is the year that US giants got bigger. This is in reference to the 2025 Russell US Indexes reconstitution (Russell recon), which gave more prominence to mega-cap companies, especially those in tech. LSEG noted that one thing stood out in this year’s Russel recon: “As at the 2025 rank day, the Russell 1000 index (which represents US large-cap stocks) had risen 11.9% since the 2024 rank day, while the Russell 2000 index (which represents US small caps) had risen only 0.9%. It’s been another year of large-cap dominance.”
Be that as it may, Franklin Templeton’s analysts think time has come for market leadership to broaden beyond mega-cap technology. And when this happens, the shift will lift underappreciated and undervalued small-cap equities. “After several years of narrow market leadership dominated by mega-cap technology names, we believe market breadth is poised to expand. Elevated valuations at the top end have prompted investors to rediscover opportunities in mid- and smaller-cap equities, which now trade at multi-decade valuation discounts,” the analysts stated in the global equity outlook 2026 report.
Things are already looking up for small caps, according to Morningstar’s David Sekera. In his December 2025 stock market outlook, Sekera noted that small caps outperformed in November and that they trade at a notably larger discount to fair value than mid- and large caps. He cited the Morningstar US Small Cap Index, which gained 2.48% in November, beating the US Mid Cap Index at 0.64% and the US Large Cap Index, which slipped 0.05%. This outperformance happened in a month when the broad US equity market was essentially flat; the Morningstar US Market Index was up only 0.24%.
Sekera also described small caps as the most undervalued capitalization segment in Morningstar’s coverage. They trade at about a 15% discount to fair value, versus 3% for large caps and 2% for mid-caps.
Against this backdrop, this article highlights 15 NYSE-listed small caps trading under $5. The focus is on names with substantial institutional interest.
Our Methodology
From the Finviz screener, we compiled NYSE penny stocks under $5 and selected 15 backed by elite hedge funds. The hedge fund data was obtained from Insider Monkey’s Q3 2025 database. We ranked the stocks in ascending order of the number of hedge funds holding stakes in them.
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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
Note: The stock price data is as of December 26, 2025.
Best NYSE Stocks Under $5 to Buy
11. Baytex Energy Corp. (NYSE:BTE)
Number of Hedge Fund Holders: 11
Stock Price: $3.16
Baytex Energy Corp. (NYSE:BTE) is one of the best NYSE stocks under $5 to buy. On December 22, TD Cowen’s Menno Hulshof reaffirmed a Buy rating on Baytex Energy Corp. (NYSE:BTE) with a C$5.00 price target.
On the same day, Baytex Energy Corp. approved a 2026 exploration and development budget ranging from C$550 million to C$625 million. The company said this budget is designed to adapt to oil price fluctuations with about 45% of spending front-loaded in the first half of the year; that is assuming a $60 per barrel WTI price. The company aims for average annual production of 67,000 to 69,000 barrels of oil equivalent per day in 2026, a 3% to 5% increase from 2025 levels. According to Baytex, roughly 55% of the budget will go to light oil assets and 45% to heavy oil assets.
Financially, the plan lowers the sustaining breakeven price to $52 per barrel. This will be supported by an optimized cost structure, strong liquidity, and an extended C$750 million credit facility maturing in 2030. Over a three-year outlook, assuming a $60-65 WTI price, the company expects sustainable growth through investments in exploration and infrastructure.
Separately, on December 1, the company launched a cash tender offer to buy back its 7.375% senior notes due 2032. It also outlined plans to fully redeem its 8.500% senior notes due 2030. This, it said, is part of efforts to optimize its debt structure using funds from divesting US assets.
Baytex Energy Corp. (NYSE:BTE) is a Canadian independent oil and gas company engaged in the acquisition, development, and production of crude oil and natural gas. Its operations span across Western Canada and the Eagle Ford shale in Texas. And its production mix is heavily weighted toward crude oil.
