In this piece, we discuss the 11 Most Volatile Stocks Under $5 for Day Trading.
Morningstar released its Q1 2026 U.S. Stock Market Outlook report last month. Led by Chief U.S. Economist Preston Caldwell and Chief U.S. Market Strategist David Sekera, the discussions made a case for volatility, which is expected to surpass the levels seen in 2025.
First, Sekera highlighted the sharp swings seen in early 2025 due to concerns related to DeepSeek and tariffs. Secondly, he described the second half of the year as relatively stable. However, he projects higher volatility in 2026, attributing this to elevated valuations, concentrated mega-cap influence, shifting monetary policy, trade negotiations, political uncertainty, and tightening credit conditions. He also touched upon overvalued stocks, which he believes could experience further and faster declines. Moreover, he said, leading AI stocks remain susceptible to sharp declines if they fail to meet expectations.
At the same time, Caldwell highlighted resilience shown in the previous year’s GDP growth, yet expressed his belief that uncertainty surrounding tariffs, consumption trends, underutilized labor capacity, and inflation dynamics remain key concerns in 2026.
Amid a macro environment marked by elevated valuations, tightening spreads, and broader uncertainty, volatility remains a key driver for active traders focused on price swings. With 2026 expected to be a year of sharp moves, in this list, we will highlight the most volatile stocks under $5 for day trading.
Stock market data. Photo by Alesia Kozik on Pexels
Our Methodology
To curate our list of the 7 most volatile stocks under $5 for day trading, we used a screener to identify companies with a share price under $5.00, an equity beta above 2.0, and an average daily trading volume of at least 1 million shares. In addition, to assess consistent volatility, we narrowed down the list to stocks featuring an average daily trading range of over 5%.
Finally, we ranked the shortlisted stocks in ascending order by the number of hedge funds that are bullish on each stock. To assess hedge fund sentiment, we used Insider Monkey’s hedge fund database, which tracks 978 stocks as of Q3 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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
7. Caribou Biosciences, Inc. (NASDAQ:CRBU)
Number of Hedge Fund Holders: 19
Caribou Biosciences, Inc. (NASDAQ:CRBU) is included in our list of the 7 most volatile stocks under $5 for day trading.
On February 2, 2026, Clear Street began covering Caribou Biosciences, Inc. (NASDAQ:CRBU) with a ‘Buy’ rating and a $13 price target. The firm’s bullish stance was attributed to the company’s off-the-shelf allogeneic CAR-T program, which was described as the primary value generator. The investment bank projected 2040 peak sales of $992 million with a 30% chance of success for the lead candidate, vispa-cel. Caribou is preparing to begin a registrational Phase 3 trial in second-line or later large B-cell lymphoma. Additionally, with a 20% chance of success, Clear Street forecasts that CB-011 may reach $734 million in peak 2040 sales, highlighting both clinical risk and upside potential.
On January 6, 2026, BofA cited a wider reset in U.S. biopharma valuations, cutting its price target on Caribou Biosciences, Inc. (NASDAQ:CRBU) from $8 to $6 while keeping a ‘Buy’ rating. Although durability remains the main point of contention for investors, the investment firm argued that better access to capital, M&A activity, and encouraging data catalysts indicate a biotech turnaround.
Caribou Biosciences, Inc. (NASDAQ:CRBU) focuses on advancing an internal oncology pipeline and supporting broader therapeutic and biotech research uses by leveraging CRISPR genome-editing technology to develop off-the-shelf CAR-T and CAR-NK cell treatments.
6. Bit Digital, Inc. (NASDAQ:BTBT)
Number of Hedge Fund Holders: 20
Bit Digital, Inc. (NASDAQ:BTBT) is one of the 7 most volatile stocks under $5 for day trading.
Bit Digital, Inc. (NASDAQ:BTBT), on February 6, 2026, released January Ethereum treasury numbers, which reflect both volatility and size risk.
On January 31, 2026, Bit Digital, Inc. (NASDAQ:BTBT) had 155,239.4 ETH, which was worth around $380.2 million at a closing price of $2,449, compared to an average acquisition cost of roughly $3,045 at that time. By staking about 138,266 ETH, or 89% of holdings, the company generated rewards of 344.0 ETH throughout the month, resulting in an annualized yield of about 2.9%. As of January 31, 2026, there were 324,202,059 shares outstanding.
In addition to exposure to cryptocurrency, management is reinforcing its equity strategy. On January 29, 2026, Bit Digital, Inc. (NASDAQ:BTBT) reiterated that, even after the IPO lockup expires on February 2, 2026, it will not sell its roughly 27.0 million WhiteFiber (WYFI) shares. These holdings had a market value of over $527.6 million as of January 31, 2026, which was more than the value of its ETH treasury. Accordingly, the company maintains WhiteFiber’s position as a key balance-sheet pillar.
Bit Digital, Inc. (NASDAQ:BTBT) provides digital asset mining, Ethereum staking, AI-focused cloud computing, and colocation services. The company combines crypto treasury exposure and infrastructure platforms to diversify income in the blockchain and high-performance computing industries.
