Five Stocks Under $5 to Buy Now

Low-priced stocks can present immense opportunities if purchased at the right time. Several factors affect stock prices, including broader market disruption, negative news, bad quarters, or temporary product failures. Even slight delays in product launches can knock down stock prices, as can technical trading run amok, presenting a great opportunity for buyers who know when to pounce on declines.

Low-priced stocks do not necessarily equate to low-market cap companies and greater risk, as the stock price is a combination of number of shares in circulation and market cap. Nonetheless, low-priced stocks may also have an undeserved reputation among inexperienced investors as being too volatile to invest in.

In this article we will share 5 of the best under-$5 stocks which you can buy now. These stocks have huge potential for growth in the future, which is why they’re extremely popular among the collection of top hedge funds in our database, which includes many of the 140 Biggest and Most Famous Activist Hedge Funds in the world. Read on to find out what stocks made the list.

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5. Genworth Financial Inc (NYSE:GNW)

Genworth Financial Inc (NYSE:GNW) is a Fortune 500 insurance company. Back in October, China Oceanwide Holdings Group Co. agreed to buy Genworth Financial Inc for $2.7 billion in cash. China Oceanwide pledged to help Genworth tackle its debt and strengthen its life insurance operations. The deal is expected to be completed by mid-2017. Genworth’s stock is presenting a very nice spread from its proposed purchase price and its current price, as shares have actually declined substantially since the deal was announced. 25 hedge funds in our database reported ownership of Genworth Financial Inc(NYSE:GNW) as of the end of the fourth quarter, up from 18 funds a quarter earlier, as multiple hedge funds appear to like the deal’s chances (or the stock price in general, which is also well below the company’s expected value now).

4. Zynga Inc (NASDAQ:ZNGA)

California-based mobile and social game developer Zynga Inc (NASDAQ:ZNGA) has been on a decline for years, but analysts expect better times ahead. In the fourth quarter, the company’s revenue came in at $190.5 million, a 3% increase on a year-over-year basis, and above the high-end of its guidance. Operating expenses decreased by 9% year-over-year, while operating cash flow totaled $27.7 million, up by $24.3 million year-over-year. Zynga’s games like Words With Friends, Dawn of Titans and Zynga Poker have achieved a lot of success, though the company has struggled to build out a more robust stable of successful titles. Of the 742 hedge funds tracked by Insider Monkey which filed 13Fs for the December quarter, 27 held long positions in Zynga Inc (NASDAQ:ZNGA) at the end of 2016. Last month, Wedbush reiterated an ‘Outperform’ rating on Zynga shares, with a price target of $4.25.

On the next page we will reveal our top three stocks which you can buy for under $5 right now.

3. SUPERVALU INC. (NYSE:SVU)

SUPERVALU INC. (NYSE:SVU) is trading at new lows and presents an attractive bargain. The Minnesota-based retail company’s earnings per share in its fiscal third quarter came in at $0.05, on $3 billion in revenue, worse than the Street’s projections of $0.13 in EPS and $3.79 billion in revenue. SUPERVALU’s CEO Mark Gross said in a statement that the sale of its Save-A-Lot supermarket business in the fourth quarter will help the company grow its business and operations. In January, RBC Capital analyst William Kirk reiterated his ‘Buy’ rating on SUPERVALU INC. (NYSE:SVU) and said that the company’s macro trends are beginning to improve. As of the end of the fourth quarter, 29 hedge funds in our database were long SUPERVALU INC. (NYSE:SVU), including Cliff Asness’ AQR Capital, which owned 2.64 million shares on December 31.

2. Office Depot Inc (NASDAQ:ODP)

Office Depot Inc (NASDAQ:ODP) recently posted upbeat results for its fourth quarter and fiscal year 2016, though the market has been rather tepid towards the stock this year. The office supplies retail company posted sales of $2.73 billion for the fourth quarter, versus the FactSet consensus of $2.70 billion, while EPS of $0.11 was also above the Street’s forecast of $0.10. Full-year sales of $11 billion were down by 6% from 2015. Office Depot’s new CEO Gerry Smith said in a statement that he has developed a three-year ‘strategic plan’ for profitability improvement and shareholder returns. A total of 31 hedge funds tracked by Insider Monkey were long Office Depot Inc (NASDAQ:ODP) as of the end of the fourth quarter, with their positions valued at over $277 million.

1. Avon Products, Inc. (NYSE:AVP)

Avon is a New York-based company which sells beauty and personal care products. Last month, Avon shares lost a lot of value amid a disappointing fourth quarter report. Avon’s revenue declined by 2.4% during the period to $1.57 billion, while analysts’ were expecting revenue of $1.61 billion. However, investment firm Jefferies reiterated its ‘Buy’ rating on the company, along with a price target of $8, suggesting nearly 100% upside potential. The firm thinks that Avon’s valuation is compelling and that its long-term goals are achievable. A total of 31 hedge funds tracked by Insider Monkey were bullish on Avon Products, Inc. (NYSE:AVP) heading into 2017, owning 12.7% of the company’s shares.

Disclosure: None