4 Stocks Under $5 To Buy Now

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Are you looking for stocks to buy with low price tags? While there are thousands of stocks that trade for under $5 per share to choose from, it can be difficult to find winners with low sticker prices. After all, stocks that trade for under $5 per share are considered penny stocks. And if you’re an investor, you know that penny stocks come with increased risk.

On the other hand, penny stock investments can be fruitful if you make the right picks.

With that said, while I do invest in various industries, some of my favorite penny stocks to follow are in the biotechnology industry . These companies are usually in the development stages, which opens the door to several catalysts that could send their prices up. Below, we’ll talk about why penny stocks are risky and why I like investing in biotech penny stocks.  I’ll also share four biotech picks trading under $5 per share that you should consider buying now.

Key Points

• Stocks under $5 come with added risk but can produce meaningful returns.
• I enjoy biotech penny stocks, as they tend to come with a laundry list of catalysts that could send them higher.
• MIST, RLYB, TSBX, and LVTX are all stocks that are worth considering right now.
• There’s another stock pick you should know about that can produce NVIDIA-like gains. Read the report here .

Why Are Penny Stocks Risky?

Penny stocks are risky because they typically represent underdeveloped and unprofitable companies. These companies typically rely on investors to provide the funding they need to develop products. If that funding dries up or the products they develop don’t work well, these companies could fail, leading to losses for their investors.

Why I Like Biotechnology Penny Stocks

Biotechnology penny stocks typically represent biotechnology companies in the development phases. These companies are either researching new potential treatments or taking part in clinical trials surrounding those treatments. That’s exciting for me since that means there may be several catalysts to look forward to. Some of the most important catalysts to watch out for include:

• Enrollment News : Biotechnology companies must enroll patients into clinical trials. The stocks that represent these companies may spike upon the completion of enrollment for a clinical trial.
• New Data : Any positive new data surrounding a biotechnology product in development could send the price of the stock up.
• Application Submissions : Biotechnology companies must receive FDA approval to sell the majority of the products they develop. As such, FDA application submissions and acceptance can lead to gains.
• Drug Approvals : Biotech penny stocks often see dramatic gains when they achieve new drug approvals.

4 Stocks Under $5 to Buy Now

Here are four biotechnology stocks trading under $5 that may be worth adding to your investment portfolio:

Milestone Pharmaceuticals

Milestone Pharmaceuticals (Nasdaq: MIST) is a clinical-stage biotechnology company. That means it has research programs that have made it to clinical testing. The company is working to develop treatments for two indications, both of which have to do with the rhythm of the heart. Those indications include atrial fibrillation and PSTV.

On the atrial fibrillation side of the coin, Milestone Pharmaceuticals is currently taking part in Phase 2 clinical trials. Positive data from those trials could send the stock on a run for the top. But in my opinion, there’s even more exciting news to watch for.

The company announced that the FDA accepted its New Drug Application (NDA) for CARDAMYST on May 29, 2024 . Upon acceptance, the FDA set the PDUFA date (the date by which it must decide whether to approve or deny the drug) to March 26, 2025, 10 months following the acceptance of the application.

With that in mind, several catalysts may be ahead. Not only could positive data from the company’s Phase 2 clinical trial lead to gains, but any news (like a committee vote) having to do with the potential approval of CARDAMYST could send the stock up.

Analysts seem to be excited about that possibility. Four analysts are currently weighing in on the stock, one who rates it a Buy, two who rate it an Outperform, and one who rates it a Hold. The median price target is $7, suggesting that there’s plenty of room for growth from the current price of under $1.40 per share.

Rallybio Stock

Rallybio (Nasdaq: RLYB) is an early clinical-stage biotechnology company. That means the company is working on early clinical trials which are generally used as proof-of-concept trials. So, why did Rallybio make it to this list of stocks under $5 to buy right now? It has to do with the number of catalysts that could be ahead for the company and its investors.

The company currently has six ongoing research programs addressing blood disorders. Those disorders include maternal-fetal bleed disorders, complement dysregulation, anemia, and metabolic disorders. Two of the company’s research programs have already made it to Phase 1 clinical trials. Those include RLYB212 and RLYB116. Of course, any positive data from these two clinical trials could send Rallybio shares up.

It’s also worth noting that the company has two programs in the preclinical phases — the phases in which further research is done before testing the treatments on humans. The company also has two programs in the discovery phases.

With six ongoing programs surrounding potential therapeutics, the likelihood that the company will release data in the near term is relatively high. Since that data has the potential to send the stock on a run for the top, this stock is well worth watching.

Analysts are also bullish on the stock. Three of them rate the stock a Buy, two rate it an Outperform, and one rates it a Hold. The median price target is $12, pointing to significant potential growth over the current stock price that’s just shy of $1.20.

Turnstone Biologics

Turnstone Biologics (Nasdaq: TSBX) is an early clinical-stage biotech company with a central focus on the treatment of solid tumors. That’s important because solid tumor cancers typically have high mortality rates in late stages, even with the vast advancements that have been made in the field of oncology in recent decades.

The company currently has four research programs, two of which are in Phase 1 clinical trials and two of which are in preclinical development phases. With four ongoing programs, several catalysts could be ahead. After all, any positive data surrounding the company’s candidates could lead to significant gains in the value of the stock.

And growth is exactly what analysts are expecting to see. Three analysts are currently weighing in on TSBX, one of whom rates the stock a Buy, one who rates it an Outperform, and one who rates it a Hold. The median price target of $12 per share suggests that the stock could climb more than 400% in the next year.

Lava Therapeutics

Lava Therapeutics (Nasdaq: LVTX) is another early clinical-stage oncology company. Like Turnstone Biologics, the company is developing T-cell therapies that are designed to precisely focus on tumor activity.

Lava Therapeutics currently has five ongoing clinical and preclinical research programs. Two of those programs, LAVA-1207 and PF-08046052, are in Phase 1 clinical trials. It’s also worth noting that the latter is a trial in partnership with Pfizer, the leading pharmaceutical company in the potential treatment of solid tumors. Outside of these programs, the company has preclinical programs focused on hematological malignancies and three undisclosed indications.

As is the case with any company on this list, any positive news having to do with Lava Therapeutics research and development therapeutics could send the stock to the top. Perhaps that’s why analysts have such a positive opinion of LVTX.

Four analysts currently cover LVTX. Two of them rate it a Buy, while the other two rate it an Outperform. The median price target is currently $5.57. Considering the current price of $1.84 per share, the stock could gain in multiples over the next year if analysts are correct.

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