Trigger warning for Los Angeles Angels fans: the case for high-growth stocks to buy under $5 can perhaps best be made by the Seattle Mariners’ Cade Marlowe. A few weeks ago, if you responded with who? that would be the only acceptable answer. However, Marlowe hit a grand slam against the Angels in early August. Subsequently, he helped send the “LA” (actually Anaheim) club down into a death spiral.
So, what’s the point of this baseball diatribe? Absolutely bonkers things can happen with growth stocks to buy, especially if they’re priced below five bucks. At the same time, I’m sure the Mariners’ manager is begging Marlowe not to push his luck. It’s a funny thing about high-growth stocks. On one hand, many of these securities align with hidden-gem enterprises that could make it to the big show. Plus, if you have time on your hands, it might be worth popping some spare change into this sector.
At the same time, don’t go overboard with high-risk stocks. Investing, like baseball, is about the long haul. Take your shots but be smart about it.
Marygold Companies (MGLD)
Based in San Clemente, California, Marygold Companies (NYSEAMERICAN:MGLD) is a global holding company that invests in and builds great businesses, per its website. Further, its mission centers on identifying and acquiring established, profitable and undervalued companies in diverse sectors. Priced at a few cents above a buck, MGLD symbolizes one of the riskiest but most compelling high-growth stocks.
Financially, Marygold benefits from its three-year revenue growth rate (per-share basis) of 11.2%. This stat outpaces 61.38% of its peers. At the same time, shares trade at only 1.19x trailing sales. In contrast, the sector median stat stands at a much loftier 7.13x. What’s more, investment data aggregator Gurufocus states that Marygold features excellent financial strengths. I’m not sure I’d go that far. However, it does print an Altman Z-Score of 8.07, indicating a very low risk of imminent bankruptcy.
Still, because MGLD ranks among the stocks to buy under $5, investors should prepare for volatility. Since the start of the year, shares tanked 30%. However, much of the wildness has died down recently.
RF Industries (RFIL)
Headquartered in San Diego, California, RF Industries (NASDAQ:RFIL) offers an enticing take for high-growth stocks to buy thanks to its relevant business. Per its website, RF designs and manufactures a broad range of interconnect products across diversified, growing markets. These include wireless and wireline telecommunications, data communications, and industrial applications.
Operationally, RF features a three-year revenue growth rate of 14%, outflanking 70.78% of its rivals. Nevertheless, RFIL trades at only 0.44x sales. In contrast, the sector median stat comes in at 1.58x. In addition, the market prices its shares at 12.78x free cash flow. However, the industrial products space prints a median price-to-FCF ratio of 23.46x.
As one of the growth stocks, RF isn’t exactly a powerhouse of profitability. Still, it has posted eight years of net income over the past decade. On a parting note, RFIL slipped about 26% since the Jan. opener. Therefore, while it’s promising, RF should be considered one of the high-risk stocks to trade carefully.
Flexible Solutions (FSI)
Hailing from British Columbia, Canada, Flexible Solutions (NYSEAMERICAN:FSI) specializes in researching, innovating, and manufacturing products that promote various critical solutions. These include systems that foster increasing crop yields for farmers to water usage reduction. As well, the company offers products that make energy consumption at oil and natural gas companies more efficient, all while decreasing their environmental footprint.
Given the wider political and ideological focus on sustainability, Flexible Solutions ranks among the most relevant high-growth stocks to buy. At the same time, it’s also very speculative. Since the start of the year, FSI gave up more than 15% of its equity value. Much of that damage came in the last five sessions, with shares eroding 12%. Unfortunately, volatility is the name of the game here.
Fortunately, the redeeming quality comes in the form of its growth picture. Right now, Flexible prints a three-year sales expansion rate of 17.4%, better than 72% of its peers. Nevertheless, FSI trades at only 0.71x sales, comparing favorably to the sector median of 1.36x.
Jerash Holdings (JRSH)
As an enterprise tied to the consumer discretionary sector, Jerash Holdings (NASDAQ:JRSH) understandably carries skepticism. Per its website, Jerash manufactures and exports custom, ready-made sport and outerwear from Jordan. It provides products for some of the world’s leading apparel brands. Still, JRSH is quite volatile, fading more than 15% since the start of the year.
In the trailing one-year period, the equity slipped over 37%. Therefore, it’s a tempting example of high-growth stocks but it’s also risky. Having said that, the beauty of Jerash centers on its financials. For starters, the company benefits from a strong balance sheet. Notably, its cash-to-debt ratio pings at nearly 5x, better than 80.77% of its peers.
In addition, the company expanded its top line over the past three years to the tune of 10.2%. This stat beats out 72.38% of sector rivals. Nevertheless, JRSH trades at only 0.31x sales. This compares quite favorably to the sector median stat of 0.79x. Thus, it’s one of the growth stocks to buy under $5.
Wah Fu Education (WAFU)
Based in China, Wah Fu Education (NASDAQ:WAFU) is a holding company principally engaged in the provision of online education services and technology research and development services. Per its public profile, Wah Fu’s business units include Online Education Cloud Services and Online Training Services. The former unit provides online education platforms to academic institutions while the latter provides online training directly to students.
Ample resources point to the importance of education in China. Combined with the underlying government’s efforts to dominate technology sectors, WAFU in theory ranks among the best high-growth stocks to buy. Priced at just a bit above $2 – and with a market capitalization of less than $10 million – it’s also a massive risk. Still, if you want a grand slam, this might have your name on it.
Financially, Wah Fu features a surprisingly solid balance sheet, backed by a cash-to-debt ratio of 30.43x. In addition, the enterprise prints a top-line expansion rate over the past three years of 22.4%, better than nearly 83% of its peers. Thus, it’s a compelling case for stocks to buy under $5.
Operating out of Brazil, Ultra (NYSE:UGP) operates in multiple industries and sectors through subsidiary branches. Primarily, the Ultra umbrella focuses on fuel distribution and the production of specialty chemicals. In addition, the company features a subsidiary that specializes in liquid bulk. As well, it owns a pharmacy business. It’s also one of the best-performing high-growth stocks, gaining over 71% since the Jan. opener.
Admittedly, though, a concern rises about holding the bag. In the trailing month, UGP slipped more than 8%. Thus, interested buyers may want to wait for the volatility to subside before moving in. That said, UGP attracts as one of the stocks to buy under $5. All thanks to its pertinent businesses and upward mobility, speculators will be eyeballing shares.
Perhaps not surprisingly given its wide applications, Ultra features 10 years of profitability over the past decade. It also prints a three-year revenue growth rate of 19.8%, above 70.29% of sector rivals. It also trades at a subterranean revenue multiple of 0.16x.
Gulf Resources (GURE)
Another China-based enterprise among growth stocks to buy under $5, Gulf Resources (NASDAQ:GURE) is best reserved for speculators. Founded in 1993, Gulf is a holding firm engaged in the manufacture and trading of bromine and crude salt, and natural gas. As well, it manufactures and sells chemical products used in oil and gas field exploration and distribution. Given its broad relevancies, Gulf deserves a closer look.
However, when prospective investors do have that look, they’ll discover that GURE ranks among the high-risk stocks. Specifically, since the Jan. opener, shares tumbled 37%. In the trailing one-year period, they cratered more than 57% of equity value. Obviously, we’re not talking about a confidence builder here.
At the same time, Gulf carries a cash-to-debt ratio of 11.36x, better than 82% of its rivals. Operationally, the company expanded its top line over the past three years by a whopping 80.5%. Now, that growth rate will surely decline in future years as the business matures. Still, GURE trades at only 0.31x sales. Finally, Gurufocus states GURE is significantly undervalued. If you believe the same, the proposal could be too tempting to ignore.
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.