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Best $5 Stocks in 2019

The best $5 stocks in 2019 may be sitting right under your nose. That’s because some of them make the products you use on a daily basis.

That smartphone in your pocket? You may have bought it from a huge company like Apple (NSDQ: AAPL) or Alphabet’s (NSDQ: GOOGL) Google. However, many of its parts are made by tiny suppliers.

The same is true for the car you drive and even the food that you eat. In fact, most of the products you buy consist of dozens of smaller products that are bundled into a single object.

Most investors can’t afford to buy 100 shares of a $200 stock like Apple, much less pay more than $1,000 per share for Google. But just about everyone can cough up $500 or less to buy a round lot of small growth stock.

And if that $5 stock becomes a $10 stock a few years down the road? Well, then you’ve just doubled your money.

The Best $5 Stocks in 2019

If you’re in a hurry, below are the best $5 stocks in 2019:

  1. Himax Technologies (NSDQ: HIMX). Partnership with Qualcomm (NSDQ: QCOM) should yield huge payoff in 2019.
  2. T2 Biosystems (NSDQ: TTOO). Revenue from sepsis product could double next year.
  3. USA Technologies (NSDQ: USAT). Disrupting the cashless payment systems sector.

What are the Best $5 Stocks in 2019?

The mainstream media fawns over expensive stocks like Amazon (NSDQ: AMZN) and Alphabet, both recently trading well in excess of $1,000 per share. But share price alone tells you very little about a company’s true worth.

Instead of focusing on share price, a better way to evaluate a company’s value is to examine its performance on a per share basis. For example, Amazon earned nearly $6 per share during the quarter ending September 30, 2018. However, at a share price of $2,000 that worked out to a PER (price to earnings ratio) of more than 80 times earnings on an annual basis.

That’s a lot to pay for a stock.

But what if I told you that there are some stocks priced under $50 that are valued at less than 10 times forward earnings? That’s a lot less to pay for your share of a company’s profits.

Of course, just because a stock is cheap doesn’t mean it’s a good investment. You need to know what to look for, and what to avoid when evaluating inexpensive stocks.

Read Also: Top 3 Best Dividend Stocks to Own

How Do You Determine What Qualifies for the Best $5 Stocks in 2019?

You need to careful here. Just because a stock is cheap doesn’t mean it is a bargain. So, you need to look at what the company is doing and how strong it is financially.

The best $5 stocks in 2019 will be those that post big gains in revenue. Although earnings are also important, a jump in sales almost always results in bigger profits later on.

The best way to increase revenue quickly is by using technology to scale production. Building new plants is expensive, but owning intellectual property that can be licensed is cheap.

Look at the company’s cash flow to debt ratio to make sure it will remain solvent. A business burning through a lot of money will soon hit a wall.

It also helps if a product is critical to improving quality of life. Fashionable trends come and go, but good business ideas never go out of style.

Below are three companies that we believe will among the best $5 stocks in 2019.

Himax Technologies

What is it?

Himax Technologies designs integrated circuits used primarily for display screens in televisions, laptops, smartphones, and most other portable computing devices. Its cutting-edge technologies work especially well with high definition imaging and 3D apps.

Nearly 90% of the company’s 2,200 employees are engineers. Himax holds thousands of patents on designs and processes that are licensed to product manufacturers. Its customer list includes Google, Microsoft (NSDQ: MSFT), Sony (NYSE: SNE), Samsung (OTC: SSNLF), Sharp (OTC: SHCAY), and Panasonic (OTC: OCRFY).

In 2017, Himax announced a joint venture with Qualcomm to develop a new 3D depth-sensing camera system. Due to its low price point and high resolution, it can be used in phones, drones, and laptops to create detailed three-dimensional images. Initially, the company indicated revenue from this project would materialize during the second half of 2018 that has been delayed to 2019.

Why is it one of the best $5 stocks in 2019?

Himax’s share price dropped steadily throughout 2018 as the Qualcomm partnership got pushed back due to a variety of factors beyond the company’s control. However, the business still produced a profit and continued to pay its dividend. In fact, revenue increased during the third quarter of 2018 by nearly 4%.

Himax holds about $100 million in cash compared to long term debt of $164 million. Its current ratio of 1.75 implies that Himax has plenty of money to keep the business going until the Qualcomm partnership starts to pay off. Himax shares are as cheap as they have been in a long time.

On November 30, the company announced that its chairman bought $5 million of Himax stock. Admittedly, $5 million is not a lot of money compared to Himax’s market cap of more than $700 million, but it is a lot for one person to put into the stock of a single company. Especially when that person is the company’s chairman, who presumably has a very good idea of its business prospects in 2019.

T2 Biosystems

What is it?

T2 Biosystems develops diagnostic products in the United States. The company’s products enable detection of pathogens, biomarkers, and other abnormalities in different patient sample types, including whole blood, plasma, serum, saliva, sputum, and urine.

The company’s competitive advantage is the speed of detection. In many cases, delays in detection can have a significant impact on patient mortality, and T2’s diagnostics can be completed in hours versus days for competitors.

The company has several commercial products (and more in the product pipeline) capable of directly detecting bacterial and fungal pathogens from the blood. The company sells proprietary diagnostic kits for its FDA-cleared T2Dx® Instrument. A major market opportunity is in the rapid detection of sepsis, an overreaction of the body’s inflammatory response to an infection as explained in this video:

Why is it one of the best $5 stocks in 2019?

According to the Centers for Disease Control and Prevention, sepsis is responsible for one in three hospital deaths. It kills 270,000 Americans each year. That’s more annual deaths than from prostate cancer, breast cancer, and AIDS combined. Sepsis affects at least 1.7 Americans each year, and results in health care costs of $27 billion annually.

The key to reducing mortality in the event of sepsis is rapid detection. Conventional sepsis diagnostics require up to five days and detects at only a 50%-65% rate. It has been estimated that 80% of sepsis deaths could be avoided with faster diagnosis and treatment.

Total targeted revenue for 2018 is $10.5 million to $12 million. This would be a huge step from 2017 revenues of $4.7 million, but trailing 12-month revenues have already risen to $9 million. The company is further guiding to an additional doubling of revenue in both 2019 and 2020.

USA Technologies

What is it?

USAT develops and provides cashless acceptance technologies, running on its ePort Connect service. This platform entails a suite of services designed for the self-serve, unattended market — e.g., vending machines, kiosks, and point-of-sale terminals.

USAT’s ePort Connect wirelessly facilitates electronic payment for consumers, allowing payment via credit, debit, or digital wallets. The company’s QuickConnect is a web service that provides OEMs of unattended, self-serve technology a secure plug-and-play integration into USAT’s ePort Connect suite. The firm also offers operators telemetry and machine-to-machine (M2M) services.

We like USAT because it’s a “disruptor” in a large market with established incumbents that are vulnerable to attack. The company is nimble enough to capitalize on the opportunities in cashless payments and it has the financial flexibility to access capital markets while investing for growth.

Why is it one of the best $5 stocks in 2019?

About 234 million Americans over the age of 13 use mobile devices. Nearly two-thirds of U.S. smartphone owners use their phones to aid in shopping. These smartphone users also leverage value-added services, such as loyalty programs.

USAT is pursuing a “scale” strategy. It’s expensive on the front end, but this model is paying off. The more of its electronic payment devices it deploys in the field, the more fixed costs scale and the stronger the financials become.

USAT sold off during the second half of 2018 after the company announced a delay in filing its Form 10-K. At this point, we believe the stock has become oversold and poised to rebound strongly in 2019 once this matter has been resolved.

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