Unfortunately, there's no one magic stock that is 'best' for everyone. Instead, you should look into your own portfolio, individual needs and investment strategy to decide what stock is right for you. Further, nobody can say for certain which direction a share will go as past performance is no guarantee of future results. So keep in mind these are stock ideas only and should not be taken as personal financial advice.
It's not easy picking quality stocks.
To help identify stock picks that are currently under $5, we used Finder's proprietary algorithm to filter Australian-listed companies that have strong performance.
We only include companies with a stock price of no more than $5.
This doesn't mean these are the best stocks for you or your personal situation. Always do your own research and chat with a professional when in doubt.
We use a proprietary algorithm that rates ASX-listed stocks based on price performance, profit, revenue and dividends. For more information about our methodology, head to our stock ranking page. The companies displayed on this page may not be the best for you and you're encouraged to do your own research. Investments can go up and down and we do not guarantee the performance of or returns of any investment.
It's a common misconception that a higher price means a share is better quality.
Businesses with a higher share price are in many cases older, more established and have a long history on the ASX. While there's nothing wrong with buying these businesses, due to the size of the business/industry dominance, they might not have room to grow.
Remember in most cases over the long term, share price growth is a reflection of earnings growth. If a business keeps growing its earnings over time, its share price in theory will increase.
On the flip side, finding the right share under $5 could mean it is smaller but has a greater opportunity to grow. It could even take market share from the larger incumbents.
It is also not always the case that a smaller company based on its share price is in a worse position financially than larger blue chip businesses. In some instances it is simply the market mispricing a business. Once again though, it is important to find the right smaller company.
If you're looking to buy "cheap" stocks you should still follow the same investment formulas and investment themes that you would for any other stock. After all, when it comes to buying shares, you're investing your hard-earned money into a business that you hope will grow.
In order to understand a "fair value" for a share, there's a plethora of different metrics you can use.
It's important to remember each of these have their own limitations and few businesses will tick every single one of them.
Even if a business is on paper ticking every box it does not guarantee the price of the shares will rise.
But here are a few tips you can look out for:
We've scored over 30 share trading platforms assessing them for their core features, fees, customer experience and accessibility. Our experts give each platform a score out of 10.
Important: The standard brokerage fee displayed is the trade cost for new customers to purchase $1,000 of either Australian or US shares. Where a platform charges different fees for both US and Australian shares we show the lower of the two. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.
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