Stocks with share prices under $5 are typically too risky to buy. Considering penny stocks by the Securities & Exchange Commission (SEC), such low-cost stocks trade at these depressed prices for a reason. Often, it indicates significant financial woes.  

They require an extremely keen attention to detail and the regulatory agency rightly urges caution before buying them.

Yet, don’t write them all off. Advanced Micro Devices (NASDAQ:AMD), for example, has traded below $5 a share several times since its 1972 initial public offering. As recently as 2008 amid the financial markets collapse, AMD stock traded down to almost $2 a share. So while rebounds like the chipmaker can happen, investors should understand they are also rare. 

Still, it doesn’t mean you can’t find good stocks under $5 to buy. Below are three such companies to consider. 

Grab Holdings (GRAB)

Singapore-based ride sharing and third party delivery specialist Grab Holdings (NASDAQ:GRAB) is on a run higher. The stock is up 26% from its 52-week low and Wall Street thinks it turned a corner.

After its most recent earnings report, Grab Holdings boosted its profit outlook. It forecasted EBITDA in the range of $250 million to $270 million. That’s a significant increase from its prior guidance of $180 million to $200 million.

Also, GRAB was able to achieve this impressive increase due to further embedding artificial intelligence (AI) into its operations. Previously it used AI and machine learning to improve its mapping technology to increase efficiency for drivers. It hasn’t revealed its AI specifics. However, management says it is “one of the key reasons why we are confident about how we can continuously optimize cost levels in our regional corporate costs.”

Revenue last quarter jumped 24% to $653 million and is at $3.67 per share. Therefore, Grab Holdings appears it’s on the road to breaking through the $5 per share threshold this year.

Iamgold (IAG)

Gold miner Iamgold (NASDAQ:IAG) had been trekking higher earlier this year. And, it was within sight of $5 before pulling back in recent weeks. With gold trading at elevated levels around $2,323 per ounce, the Canadian miner is expecting production levels to rise.

Part of that will come from its Cote gold mine in Ontario, which when fully operational, could be Canada’s third largest gold mine. Iamgold is expecting ​​production to reach between 220,000 ounces to 290,000 ounces this year. 

Further, Cote has a total estimated measured and indicated mineral resource of 16.5 million ounces with an additional 4.2 million ounces inferred. The mine has an estimated life expectancy of 18 years with significant growth opportunities.

Yet, Cote is part of the reason for the pullback in Iamgold’s stock. Recently, it announced a bought deal stock sale with a syndicate of underwriters. A bought deal means the buyer is taking the entire lot of stock being offered before a prospectus is issued. Iamgold is selling 70 million shares at $4.17 per share, which explains the drop in IAG stock. The syndicate can also purchase an additional 10.8 million shares.

The miner wants to repurchase from Sumitomo Metal Mining (OTCMKTS:SMMYY) its portion of ownership in Cote, giving Iamgold a full 70% stake in the mine. 

Tilray Brands (TLRY)

The third stock under $5 to buy is marijuana company Tilray Brands (NASDAQ:TLRY). The stock rallied on various marijuana legalization efforts internationally and in the U.S. but has since given back all the gains it made. The stock is now down 24% for the year.

That’s okay because Tilray Brands has strong tailwinds behind it as the best-positioned marijuana stock to capitalize on the ongoing legalization efforts. Recently Germany approved legalization and TLRY has extensive operations in the country that will enable it to hit the ground running.

The U.S. is inching closer to full legalization, too, though moving at a glacial pace. Two dozen states have already legalized cannabis. And, the federal government is lowering the classification of marijuana from a Schedule I controlled dangerous substance to a Schedule III. Still, that’s not legalization, and with the U.S. arguably the biggest pot market should that happen, Tilray will languish until it does.

It didn’t help that Tilray Brands also reduced its fiscal 2024 forecast for EBITDA to a range of $60 million to $63 million from its previous target of $68 million to $78 million. Revenue growth is expected to ease as the year progresses.

Tilray is seeing good traction in beverages, though, with revenue surging 165% year-over-year (YOY). In the meantime, however, investors can pick up this leading marijuana stock cheap.

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Read More: Penny Stocks — How to Profit Without Getting Scammed

On the date of publication, Rich Duprey did not hold (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.