As one of the most controversial initial public offerings (IPOs) in recent memory, Robinhood Markets (NASDAQ:HOOD) basically attempts to become the TD Ameritrade of a new generation. On the basis of brand awareness, the company has arguably succeeded exceptionally. Better yet, despite the boon in the equities sector, you can still pick up Robinhood stocks to buy that are priced below five bucks.
Prior to the platform popularizing the concept of gamified investing — or the use of psychologically satisfying graphics and sounds whenever a user completes a trade — financial analysts bemoaned that younger generations were not getting involved in equities like prior generations. However, due to the novel coronavirus pandemic, this narrative was flipped on its head — boosting the profile of Robinhood stocks to buy.
What’s more, the underlying platform made investing easier and far more accessible to younger folks, who may not have as robust an income as older generations. Through innovations like fractional share ownership, the list of popular Robinhood stocks were not always what you might term “garbage plays.” Indeed, quite a surprising number of equity choices are names that investors of any demographic would find sensible.
Nevertheless, that doesn’t mean Robinhood stocks don’t at times cater to speculative fare. Furthermore, the gamified platform has attracted criticism since the visual and audible gimmicks could psychologically induce poor decisions. And Robinhood itself has courted controversy over its alleged halting of meme-stock trades. Naturally, this action didn’t endear the platform to the social media crowd.
Like it or not, though, the investing interface has changed the underlying landscape. Should work-from-home initiatives be a permanent fixture in the professional landscape (personally, I think the jury’s out on that one), then Robinhood might have implemented a paradigm shift. Either way, there are still low-cost Robinhood stocks to buy even after all this madness. With that in mind, these seven companies stand out among the rest.
- Borr Drilling (NYSE:BORR)
- Hecla Mining Company (NYSE:HL)
- Ocugen (NASDAQ:OCGN)
- Globalstar (NYSEAMERICAN:GSAT)
- OrganiGram (NASDAQ:OGI)
- Lottery.com (NASDAQ:LTRY)
- Allied Esports Entertainment (NASDAQ:AESE)
While cheap fare exist, sometimes, they’re that way for a reason. Moreover, you must ask yourself why these Robinhood stocks are below $5 when myriad other names soared into the stratosphere. In other words, exercise due diligence as these ideas are extremely risky.
Robinhood Stocks Under $5: Borr Drilling (BORR)
Admittedly, I was running out of ideas to fill the requirements of this list of Robinhood stocks under $5 until I came across InvestorPlace contributor Alex Sirois’ take on an identical topic but back in July last year. In it, he noted that Borr Drilling was a high-risk, high-reward idea that actually did really well, albeit with an initial sharp bout of volatility.
It turns out, BORR stock is still below $5, indeed well below as I write this. So thanks to Alex for helping a fellow contributor out!
As my colleague mentioned, Borr Drilling is a company that operates jack-up rigs, which are platforms capable of drilling wells to incredible depths. Obviously, due to the uncertainties back then of the pandemic and its resultant impact on the economy, multiple energy-related investments suffered choppy trading. That’s still the case now, although you can make the argument that with fears of Covid-19 fading, physical activity will bounce back.
In my opinion, there’s a strong possibility that companies can recall their employees. As I’ve argued about the burgeoning intersectionality of the global economy, workers should seriously consider going back. If so, oil demand would rise — thus making BORR stock one of the more viable Robinhood stocks to buy under $5.
Hecla Mining Company (HL)
Sure, the past week has been excellent for Hecla, with HL stock actually climbing above the $5 mark. But when I said that these Robinhood stocks represented extremely risky ideas, I wasn’t messing around. Although I believe in the long-term fundamental concept undergirding Hecla Mining Company, that doesn’t necessarily mean that HL stock is going to be a solid investment.
Before you even think about pulling the trigger, you should note that HL stock has shed more than 13% in the trailing six-month period. That said, on a year-to-date (YTD) basis, shares have actually gained 11% –including a massive 12% gain just on Wednesday. True, the year is young. But believe me, it gets a lot worse for these cheapo Robinhood stocks from here on out.
According to its website, Hecla Mining is the largest primary silver producer in the U.S. It also carries historical clout, being the oldest North American precious metals mining firm listed on the New York Stock Exchange. Presumably, to keep this status going, HL stock will need to break out of its long-term horizontal channel that extends back to the 1990s.
It just might do that, eventually. Because money velocity is near all-time recorded lows, a possibility exists that the Federal Reserve can implement dovish policies down the line to counteract deflationary trends. That would be cynically positive for HL stock, though such a narrative may take years to pan out, if ever.
Robinhood Stocks Under $5: Ocugen (OCGN)
Once known as a speculative biotechnology firm specializing in the treatment of rare eye diseases, Ocugen made a sharp pivot to Covid-19 vaccines, to the delight of the social media trading community and fans of Robinhood stocks. Admittedly, OCGN stock’s turnaround was nothing short of remarkable. Throughout most of 2020, shares were priced in literal penny stock territory.
Then, the company partnered with Bharat Biotech to co-develop and distribute the Covaxin vaccine candidate in the U.S. and Canadian markets. From there, things went wild, as many happy stakeholders of OCGN stock will tell you.
Unfortunately, the issue with Covid-19 vaccines is that whoever crossed the finish line first — or in close proximity to first place — would command the greatest addressable market. That means, at least in the North American segment, the best chance for success is to meet the needs of the vaccine hesitant or resistant.
Here, Ocugen may have a slight advantage in that Covaxin’s whole-virion inactivated approach is one with a proven, established track record. It’s possible that this could be attractive for those straddling the fence, especially as high-profile Covid-related deaths occur. Still, be super careful with this risky idea.
On paper, you’d think that Globalstar would represent one of the best Robinhood stocks to buy. Per its website, Globalstar is a “leading provider of satellite solutions for business and individuals.” Its specialties encompass satellite commercial Internet of Things (IoT) solutions, mobile and field personnel connectivity, fleet asset tracking, equipment monitoring and improving business efficiencies beyond the scope of cellular-based platforms.
As you might suspect, Globalstar also covers myriad industries, ranging from government and public safety, energy, commercial maritime and agriculture. For instance, the oil and gas industry often features projects in far-flung places throughout the world where communication is impossible with traditional cellular networks. Through Globalstar’s satellite network, on-the-field workers can communicate with headquarters, improving business flow and enhancing worker and environmental safety.
Despite the obvious utility undergirding GSAT stock, it remains one of the worst-performing yet popular Robinhood stocks. On a YTD basis, shares are already down nearly 14%, which is not the start you’re looking for. Over the trailing six months, it’s down more than 29%. Keep in mind, shares trade for slightly below a buck at this very moment.
However, if you believe in the economic recovery narrative, GSAT stock may be worth checking out due to its wide-ranging relevance.
Robinhood Stocks Under $5: OrganiGram (OGI)
With OrganiGram, we’re going to dive into some of the truly risky ideas among Robinhood stocks. That’s not to say the other ideas didn’t feature significant problem areas. But you will certainly want to adhere to strict money management protocols if you decide to wade through these treacherous waters.
Founded in 2013, OrganiGram started its journey as a medical cannabis provider, per its website. Currently, the company focuses on “producing high-quality, indoor-grown cannabis for patients and adult recreational consumers in Canada, as well as developing international business partnerships to extend the Company’s global footprint.”
For me, the speculative angle for OGI stock would be the latter point about international business partnerships. In recent years, it’s not just the U.S. that is considering rethinking its botanical policies. Indeed, a surprisingly large number of countries are loosening their restrictions regarding cannabis.
However, will this translate to profitability for OrganiGram and OGI stock? That’s where I’m having difficulties with certain cannabis-related Robinhood stocks. For example, on a YTD basis, OGI is down almost 10%. In the trailing six months, it’s hemorrhaged more than 37%. However, if further legal breakthroughs occur — perhaps driven by economic need or desperation — OGI stock could be a lottery ticket.
Speaking of lottery tickets, I have an excellent segue for you, Lottery.com. Initially, I was surprised to see LTRY stock pop up as one of the popular Robinhood stocks priced under five bucks. But then I remembered that the controversial company launched its IPO via a reverse merger with a special purpose acquisition company (SPAC).
As you certainly know, SPACs have had their moment during the new normal. Folks couldn’t get enough of these shell companies, perhaps in part because they represent the poor man’s private-equity fund. Though ungenerously coined by Bloomberg, it does have a ring of truth. SPACs allow retail investors to acquire shares of private enterprises at the ground-floor level.
The kicker is that they’re incredibly dilutive due to the issuance of warrants. Long story short, SPACs have been underperformers relative to benchmark indices and that’s the case for LTRY stock. It’s down almost 25% YTD if you want to argue the point.
Now, the cynically bullish thesis for Lottery.com is that, as the buoyant equities sector confirmed, people love to speculate, even in times of crisis. Therefore, LTRY stock may perform well in the future. However, lotteries tend to prey upon the poor and disenfranchised, making them the antithesis of ESG (environmental, social, governance).
Robinhood Stocks Under $5: Allied Esports Entertainment (AESE)
Honestly, I was about to include a different idea from popular Robinhood stocks to round out this list. However, after looking closely at its chart, I felt that the downside risk far outweighed the upside. Indeed, it was something I would even consider shorting with put options. So, in good conscience, I decided to go with Allied Esports Entertainment, another company that my colleague Alex Sirois mentioned.
Surely, I do not want to double-dip from someone else’s ideas. However, the framework for possibly viable Robinhood stocks under $5 is very limited in my opinion. So, I’d rather provide an idea that I find workable than something original purely for originality’s sake.
Of course, the basic thesis for Allied Esports Entertainment sells itself. The business centers on a live in-person social experience similar to what you find with sporting events but with video games as the focus. Now, I should say the thesis sells itself for the pre-pandemic era. When the Covid-19 crisis first struck, AESE stock naturally plummeted.
However, underlining the retail revenge phenomenon is a desire among Americans — and presumably most everyone else — to reclaim lost social experiences. That’s why Halloween-related sales were up massively last year: people wanted to feel normal again.
That sentiment can easily spill over in favor of Allied Esports, so AESE stock is definitely a name to watch.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.