Companies don’t go public with a share price below $5. Thus, if a stock is trading below $5, that means investors have sold it off to be below $5. That usually means there is something really wrong with the underlying growth story, the valuation, or both.
But if you pick right, you could be looking at huge gains. After all, once upon a time in 2001, Amazon.com, Inc. (NASDAQ:AMZN) was basically a $5 stock. And more recently Advanced Micro Devices (NASDAQ:AMD) was trading for less than $2 per share in early 2016. But today, just hit an all time high near $24 for a 1,200% gain.
So here it goes…
Novavax (NVAX)
Novavax's share price was below $1 just 12 months ago. Since then, though, the biotech stock has soared 68%. And the gains were even higher, but Novavax conducted a stock offering in April to raise additional cash. This caused its share price to pull back from the high levels reached earlier this year.
There are two reasons behind investors' excitement over Novavax. One is the company's lead pipeline candidate, a vaccine for the respiratory syncytial virus (RSV). Novavax is evaluating the vaccine in a phase 3 clinical study for maternal immunization of infants. Interim results from this study are expected in the first quarter of 2019. If all goes well, the company could submit the RSV vaccine for regulatory approval in the U.S. and in Europe by early 2020.
The second reason for Novavax's great stock performance is its nanoparticle-based influenza vaccine NanoFlu. Novavax announced highly encouraging results from a phase 1 study of the vaccine on Feb. 28, 2018. The company expects to advance NanoFlu to phase 2 testing in the third quarter of this year.
Novavax's opportunities are big if the company achieves success with either of these vaccines. RSV is the most common cause of lower respiratory tract infections in infants and young children worldwide and is the top cause of hospitalization of infants. But there's no approved vaccine at this point. The annual market for flu vaccines in the U.S., Japan, and leading European countries is projected to reach $5.3 billion by 2025 — a 65% jump over a 10-year period.
DHT Holdings, Inc. (DHT-US)
Our next recommendation with a price under $10 is DHT Holdings. Double Hull Tankers, Inc. is an independent crude oil tanker company, whose fleet trades internationally and consists of crude oil tankers in the VLCC and Aframax segments. All five metrics of value, growth, EPS revisions, profitability and momentum have a CressCap rank of B- or above, showing us that this is a favorable stock in the industrials sector. The 2 year forward EPS growth rate of this stock is crushing the sector at 435.89% to that of the sector at 30.99%. The P/B ratio of this stock at 0.72x compared to the sector 2.49x which shows that the stock is undervalued. Both the short and mid term price momentum are given an A+ grade, reinforcing the positive momentum of this growing company. The outlook on the stock is favorable, with its YTD performance up 30.50%. We view this stock as a good opportunity for under $10.
Zynga (ZNGA)
Why should investors consider buying Zynga (NASDAQ:ZNGA) stock now? Trading at about $4, there is seemingly not much to love about the name.
With its $3.5 billion market cap, Zynga is far from huge. When going off its trailing earnings valuation, ZNGA is not that attractive either. However, take a closer look. For instance, the company has more than $635 million in cash and short-term investments and no debt.
Currently, analysts expect Zynga to grow sales more than 14.4% this year and another 13.4% in 2019. On the earnings front, estimates call for 66% growth this year to 15 cents per share and another 33% in 2019. That prices ZNGA stock at about 26 times this year’s earnings.
Previously, we mentioned its trailing valuation — which is about 80 times the last 12 months of earnings — was expensive, and it is. But on the surace, 26 times for this year’s earnings isn’t too bad for such good growth. No one will argue that Zynga is a blue-chip stock, but double-digit revenue growth and no debt only makes it more attractive.
If Zynga can keep costs down and boost its margins, it will become even more attractive. Should legalized gambling continue to take more progressive steps, Zynga is sure to benefit and could be an M&A target down the road.
MEI Pharma, Inc. (MEIP-US)
MEI Pharma, Inc. is a San Diego-based oncology drug development company with a pipeline of three clinical-stage drug candidates and a management team with proven oncology drug development experience. This company has a regional universe rank of 53 out of 1,928 companies and a healthcare sector rank 8 out of 365 companies. The stock is recommended as a buy based on our quant model and is also supported by technical indicators and fundamental analysis. A market cap change of 213.97% relative to a sector change of 33.87%, means the momentum of the stock shows promise. The P/B ratio of 2.85 beats sector performance of 5.25, which suggests that the stock is of good value. As of March 31, 2018, the company had $36.2 million in cash, cash equivalents and short-term investments, with no outstanding debt. This company has strong financial metrics, and should be seen as an investment opportunity to investors.
The PERFECT Stock under $5?
Our last pick here is a little different. And if we were to bet on just one of them, it's probably this…
We've been tracking a story around perhaps the most unusual stock we've ever seen.
It's expected to see massive revenue in 2019 – $164 billion.
The company holds over 29,000 patents in the U.S.
It pays an enormous dividend.
And yet…
It's ultra-cheap – less than $3.
In fact, the stock literally trades under a secret name…
But now, thanks to an August 20th announcement – involving Trump, America's No. 1 tech company and $10 billion – this tiny $3 stock could could go main stream.
Stock-picking legend Alexander Green just gave the most shocking live presentation regarding this “perfect stock.”
He says this single stock alone could pay for your retirement… And in this case we actually believe him.
