Every once in a while, a blind squirrel finds a nut. The same can be said about the best $5 stocks. While I wouldn’t recommend putting more than one or two percentage points of your portfolio in $5 stocks, like a blind squirrel, you sometimes can hit paydirt. It’s not often, mind you, but all it takes is one to get you hooked for life. 

Which are the best $5 stocks to buy now? According to Finviz.com, 344 stocks in the Russell 2000 Index are trading below $5. Of these, 126 have a market capitalization between $300 million and $2 billion.  

Here are three of the best $5 stocks to buy in April that could reach $10 or more in short order.

Chimera Investment Corp (CIM)

Chimera Investment Corp (NYSE:CIM) is a credit-focused hybrid mortgage real estate investment trust (REIT) that invests in residential mortgage loans, agency and non-agency mortgage-backed securities. 

In May 2023, Mad Money’s Jim Cramer suggested that investors get rid of CIM stock because it had been a “terrible stock for a very long time.”

As I write this, its shares are down 78% over the past five years, but up 4.5% in the past week. It suffered most of the losses between February 2020 and October 2023. 

According to its February 2023 presentation, it purchased $1.4 billion in residential mortgage loans in 2023. Further, approximately 81% of its residential mortgage loans were originated before 2008, providing lower delinquencies on these loans. 

What makes it worth the risk?

The REIT currently pays out a quarterly dividend of 11 cents. Its annual payment of 44 cents yields a high 10.5%. A lack of capital gains becomes less problematic when you get above-average dividend income. It last traded above $10 in July 2022. 

Ring Energy (REI)

Ring Energy (NYSEAMERICAN:REI) is an independent oil and natural gas company in Texas’s Permian Basin. It has a market capitalization of nearly $400 million. 

Its shares are down 61% over the past five years but up more than 36% year-to-date (YTD). As recently as May 2022, they traded around $5. 

Founded in 2012, the company acquired 66.6 million barrels of oil equivalent (BOE) of reserves in July 2022 from Stronghold Energy II Operating LLC. It paid $200 million in cash upfront, $15 million in cash six months after closing, $20 million for Stronghold’s existing hedge liability and $230 million in REI stock. 

The acquisition was expected to increase its size and scale, leading to higher free cash flow, higher debt repayments and a stronger balance sheet. As a result of this acquisition, it now has 130 million BOE of proved reserves, with 63% oil and 37% natural gas.  

Thanks to the addition of Stronghold, Ring Energy finished 2023 with $361 million in revenue, up 4% from 2022. Unfortunately, due to a 29% reduction in the BOE price to $54.60 from $76.95 a year earlier, its adjusted net income declined by 7% to $100.5 million. 

However, its adjusted free cash flow was $45.3 million, 30% higher than a year earlier. Based on its enterprise value of $830 million, its free cash flow yield is 5.4%. Anything between 4% and 8% is fair value.

OppFi (OPFI) 

OppFi (NYSE:OPFI) is a Chicago-based provider of a specialty finance platform that facilitates access to credit for the 63 million Americans with few or no other options.

“The average installment loan facilitated by OppFi with its OppLoans platform is approximately $1,500, payable in installments and for an average contractual term of 11 months,” states page five of its 2023 10-K. The company’s 10-K says that 89% of its underwriting decisions in 2023 were automated, ensuring the loan is approved and funds transferred within a day or two. 

Over the past month, OPFI shares have gained 21%, although they are still down 39% YTD. Its shares fell by more than 30% in early March due to weak guidance for 2024. 

Analysts were expecting 2024 revenues of $550 million. The company is targeting $520 million at the midpoint of its guidance. On the bottom line, the analyst estimate for 2024 was 59 cents a share, while OppFi is expecting 55 cents. 

Persistent inflation will remain a major issue in 2024. As loan recipients fail to repay their loans, the company will incur higher charge-offs. But, at least OppFi is a shareholder-friendly company. On April 9, it announced a special dividend of 12 cents a share to be payable on May 1. In addition, it announced a new $20 million share repurchase program. 

While it’s got its work cut out for it in 2024, I love a special dividend.

On the date of publication, Will Ashworth 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.