To clearly set expectations from the get-go, these top stocks under $5 represent extraordinary risks. As either small or even micro-capitalization enterprises, you automatically should assume volatility when entering this arena. It’s just a fact of life, nothing more: higher risks, (maybe) higher rewards.
At the same time, walking the path of being a volatility luddite might not be suitable for everyone. We’re all humans. Every now and then, we get the itch to speculate. That’s why places like Las Vegas – which otherwise would just be someplace in the middle of the desert – thrive.
Of course, the difference between chronic gambling and the occasional wager comes down to personal control and maturity. If you can handle the unpredictable nature of these penny stocks – and most importantly know when to quit – then these ideas could be for you.
On that note, below are risky but enticing top stocks under $5.
Jerash Holdings (JRSH)
First up on the list is apparel manufacturer Jerash Holdings (NASDAQ:JRSH). At the surface level, Jerash appears wildly risky because of concerns tied to the consumer economy. With inflation continuing to be stubbornly high and the Federal Reserve basically flirting with more interest rate hikes, the desire for discretionary spending may diminish. Unsurprisingly, JRSH has suffered a sizable loss since the beginning of this year.
Of course, the red ink symbolizes the challenges associated with even the so-called top stocks under $5. However, the ace up Jerash’s sleeve may be its brand partnerships. Essentially, the company provides custom-branded apparel for well-known global enterprises, including Timberland and Tommy Hilfiger. And while volume growth for the apparel market in 2024 is projected at only 1.7%, Jerash could get a good size of the pie due to its relationships.
Here, it’s worth pointing out that the company features a three-year revenue growth rate of 10.2%. That’s above 72.22% of its peers. To conclude, D.A. Davidson’s Michael Baker rates JRSH a “buy” with a $6 target, implying 90% growth.
VAALCO Energy (EGY)
Before you say anything, I understand that I’ve mentioned VAALCO Energy (NYSE:EGY). It’s just that when the topic is top stocks under $5 – specifically with the criteria of growth and strong forward price projection – the opportunities are limited. Basically, you’re looking for small fish in the vast waters of the Pacific Ocean.
Fortunately, you can get a hit every now and then and Vaalco could be the next one. Fundamentally, I appreciate the narrative despite its cynical nature. As the AP pointed out in September, Saudia Arabia and Russia agreed to extend their voluntary oil production cuts through year’s end. Naturally, the artificial supply constraint should help the hydrocarbon industry to which VAALCO belongs.
True to form, Vaalco might not be that exciting in the charts. However, on the income statement, it prints a three-year revenue growth rate of 54.2%, above 93.59% of sector rivals. Also, its EBITDA growth rate during the same period impresses at 73.4%.
Lastly, analysts peg EGY as a unanimous strong buy with an $8.31 target, implying over 100% upside potential.
Carisma Therapeutics (CARM)
Easily one of the riskiest ideas among top stocks under $5, Carisma Therapeutics (NASDAQ:CARM) at first glance does not seem like a great candidate, just to keep it real. Although the company enjoys a strong cash balance relative to debt, it doesn’t really have great balance sheet scores. Also, its profitability margins are deeply negative. Plus, it lacks a history of revenue generation.
Oh yeah, CARM stock is all over the map. When looking at its candlestick chart, it almost seems like a rollercoaster blueprint imagined by the criminally perverse. Nevertheless, the underlying science is undeniably compelling. Specializing in chimeric antigen receptor (CAR) macrophages, this therapeutic platform eats away at cancerous tumors and leads to long-term anti-tumor immunity.
Just to give an idea of potential, the more commonly known CAR T-cell therapy reached a market size of $3.82 billion last year. Per Precedence Research, the sector could hit $88.52 billion by 2032. Finally, analysts rate CARM a unanimous strong buy with a $10.33 target, implying 141% growth.
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Read More: Penny Stocks — How to Profit Without Getting Scammed
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.