Despite their low stock prices, these five businesses offer significant growth potential.

It’s simple to see why cheap stocks, particularly those under $5, are so alluring. Low-priced shares appeal to investors because of the very real potential for large percentage returns on slight price fluctuations. When a stock is trading for only a few dollars, even very tiny rises of a few pennies can have a significant impact.

The psychological gratification that comes with holding a sizable number of shares is another. Owning 100 or 200 shares of a stock, as opposed to just one or two, makes some people feel better. This is the case even though the majority of investors are aware that lower-priced stocks do not inherently or fundamentally benefit from their cheap price. The performance of a stock will ultimately depend on supply and demand, the company’s financial foundation, and its capacity to carry out its business plan. In and of itself, a stock’s price is not a reliable indicator of quality.

Nevertheless, there are cheap stocks, particularly those under $5, as many mutual funds and institutional investors are either not allowed to purchase them or choose to overlook them in favor of well-known firms that are trading at higher prices. There may be a lot of money to be made in cheap equities instruments if you research your options, make the appropriate investments, and have the financial means to take on the dangers involved with cheap stock.

Although this list of five stocks that are trading for less than $5 isn’t meant to be all-inclusive, the following businesses certainly have genuine potential and are definitely worth investing .

RBBN, or Ribbon Communications Inc.

With a market valuation of over $845 million, Ribbon Communications, a dynamic communications and information technology firm, is headquartered in Plano, Texas. The business creates and markets cutting-edge software solutions to serve our high-tech economy’s vitally important digital infrastructure sector.

The current organization was formed by the 2017 merger of Genband and Sonus Networks, and it has been assisting its customers in increasing their competitiveness by updating and modernizing their networks ever since.

Ribbon specializes on IP optical networking systems and cloud computing communication tools designed for 5G wireless networks and beyond. Verizon Communications Inc. (VZ) is a reliable partner of the company. The two businesses have collaborated on a number of projects to improve Verizon’s consumer and corporate customers’ connectivity, speed, and performance.

ACRE stands for Ares Commercial Real Estate Corp.

Ares Commercial is a $265 mortgage real estate investment trust, or mREIT, with a high yield of about 12.3% at the moment and a comparatively low stock price.

This business is not a typical mREIT that provides conventional commercial mortgages or owns agency bonds backed by residential or commercial mortgages. ACRE resembles a specialty financing firm more. Senior mortgage loans, subordinate debt, preferred equity loans (high-interest loans with an equity component), and mezzanine loans are among its direct interests in commercial real estate.

According to a September 2024 report, ACRE has made 40 loans so far this year, totaling almost $2 billion. The company’s financing solutions are in high demand, as evidenced by its performance, which also shows how diversified its portfolio is.

RRTS stands for Roadrunner Transportation Systems Inc.

One logistics firm is Roadrunner Transportation Systems. Logistics includes every aspect of the transportation sector. The proper truck or commercial vehicle selection, driver scheduling, route planning, shipment tracking, and much more.

The $187 million business Roadrunner Transportation is dedicated to providing its customers with cutting-edge, client-centered logistical solutions. To put it briefly, it keeps its clients’ freight traveling across American highways from pickup to delivery.

The business was established in 2005, 20 years ago, and has achieved success by utilizing technology and creating effective transportation management systems.

Roadrunner’s Less-Than-Truckload (LTL) service is valued by small freight companies. Small shippers can share space in vehicles with extra room thanks to the LTL system. Compared to the price of purchasing an entire truck that would be half empty, this saves clients a substantial amount of money.

BDN, or Brandywine Realty Trust

Since the COVID-19 outbreak, the office sector of the commercial real estate market has been especially difficult. To succeed in such market, real estate firms must be astute. Although it is not immune to the difficulties, the $835 million office REIT Brandywine Realty Trust has managed to survive and prosper in a challenging environment by implementing a clever plan.

Selecting desirable sites in and around expanding population centers has been the main emphasis of Brandywine’s approach. The business owns and manages premium, class-A office and mixed-use buildings. The business was first established in 1986 under the name Linpro Company, but in 1994 it underwent a name change and rebranding. Austin, Philadelphia, and Washington, D.C. are its main markets.

Over 125 properties totaling more than 19 million square feet of rentable space are part of Brandywine’s portfolio. Philadelphia’s Schuylkill Yards is its premier development. In collaboration with Drexel University, that $4 billion project is being built. With a 1.3-acre public park, science facilities, office towers, and upscale apartments, it is a 14-acre complex in the heart of Philadelphia’s academic and urban life.

The dividend yield on the stock is currently 12.5%.

B2Gold Corporation (BTG)

An uncommon instance of a multibillion-dollar business with a stock price below $5 is B2Gold Corp. In actuality, BTG is a well-known gold exploration, mining, and production firm with operations in Mali, Namibia, and the Philippines, and it has a market valuation of roughly $3.8 billion.

Its immaculate balance sheet is what makes this mining and metals company an attractive investment choice, but the precious metals industry and environmental campaigners have praised it for its effective use of natural resources and respect for the land.

In comparison to its competitors in the gold mining industry, BTG has a modest amount of debt. Its cash reserves and free cash flow are both high at the same time. The board of directors decided to establish the forward annual dividend at 8 cents per share, or 2.8% yield for shareholders, as a result of the company’s strong financials.