In this article, we discuss the 7 best NASDAQ stocks under $5 along with the latest updates around the market.
Job Market Cools Yet Economists Remain Optimistic About Stability
A Yahoo Finance report on September 28 reveals that consumers are beginning to feel the effects of a cooling labor market, according to the latest Consumer Confidence Index, which shows a narrowing gap between those finding jobs plentiful and those finding them hard to get.
Economist Stephanie Guichard noted that this shift is not unexpected given the recent rise in the unemployment rate to 4.2% and a drop in job openings. While the labor market has cooled compared to 2022, Guichard suggested that it remains strong, with consumers reacting to the change from a previously “super hot” market.
Despite the labor market’s slowdown, Fed Chair Jerome Powell expressed confidence in the economy, noting its solid growth, decreasing inflation, and strong labor market. While economists acknowledge signs of a slowdown, they agree the labor market isn’t in bad shape yet.
Key Driver of the Economy
AI was the key driver for the economy and helped recover the market after the huge market downturns of 2022. In one of our February articles, 11 Cheap AI Stocks to Buy in 2024, we discussed how the AI stocks kept the broader market afloat. Here is an excerpt from the article:
“The AI stocks also performed quite well in 2023 and are still trending in 2024. The Magnificent 7 stocks outperformed the rest of the S&P 493 heavily in the year, and analysts like Goldman Sachs’ David Kostin are positive that the gains will continue in 2024. The seven big tech stocks, including Meta Platforms, NVIDIA, which were the top performers of the group, collectively gained around 75% during the previous year compared to 12% gains for the rest of the 493 stocks in the S&P 500 index.”
While we are seeing a broadening out in the market from the tech stocks that benefitted due to the AI theme, the industry’s strong momentum is still expected to be at a steady pace, especially after the rate cuts. While AI technology fueled tech sector growth, it is also helping other sectors grow significantly.
In a September 27 interview with CNBC, Bain & Company’s head of global technology practice, Anne Hoecker discussed the growing use of generative AI in businesses and noted that while it is still in the early stages, significant progress is being made.
AI is driving notable cost savings, such as 20-30% in customer service and call centers, 30-50% in content creation and marketing, and improvements in software development and back-office functions.
Companies are transitioning from small pilot projects to scaling larger initiatives that will further improve productivity. Hoecker identified key drivers behind the anticipated billion-dollar AI market, including hyper scalers, enterprise-level AI models, and AI integration into everyday software products.
Although concerns about AI replacing jobs persist, Hoecker suggested that AI will also create new opportunities and roles as businesses innovate, with a focus on upskilling workers and building the necessary digital infrastructure to support these advancements.
With that, we look at the 7 Best NASDAQ Stocks Under $5.
7 Best NASDAQ Stocks Under $5
Our Methodology
For this article, we used the Yahoo Finance stock screener to identify nearly 80 stocks listed on NASDAQ with over 20% year-over-year revenue growth and share price under $5 as of September 27. Next, we narrowed our list to 7 stocks most widely held by institutional investors. The stocks are listed in ascending order of their hedge fund sentiment.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
7 Best NASDAQ Stocks Under $5
7. Taysha Gene Therapies, Inc. (NASDAQ:TSHA)
Stock Price as of September 27: $2.07
Number of Hedge Fund Holders: 21
Taysha Gene Therapies, Inc. (NASDAQ:TSHA) is a dynamic gene therapy company dedicated to creating innovative treatments for rare genetic disorders affecting the central nervous system. Founded in 2020, it aims to transform the landscape of healthcare by addressing significant unmet medical needs, particularly in conditions such as Rett syndrome and Giant Axonal Neuropathy (GAN).
It has a focus on adeno-associated virus-based gene therapies and is working to develop solutions that target the genetic root causes of these diseases. The lead product candidate, TSHA-102, is currently in clinical trials specifically designed for the treatment of Rett syndrome, a condition that currently lacks approved therapies aimed at its underlying genetic causes.
The company’s focus highlights the urgency of its mission and the potential for meaningful advancements in patient care. The company’s commitment to addressing rare genetic disorders positions it uniquely within the biotech industry, as these conditions often receive less attention and funding.
According to Insider Monkey’s database, 21 hedge funds held stakes in Taysha Gene (NASDAQ:TSHA) in the second quarter, with positions worth $119.850 million. With 18,65 million shares of the company, valued at $41.776 million, VenBio Select Advisor is the largest shareholder of the company, as of June 30.
For the second quarter, Taysha Gene (NASDAQ:TSHA) reported a GAAP EPS of -$0.09, which slightly surpassed analyst expectations by $0.01, along with revenues of $1.12 million. Taking its place on our list of the best NASDAQ stocks under $5, it has a Strong Buy rating from 11 analysts and its average price target of $7.00 implies an upside of 238.16%, as of September 27.
Lastly, as of June 30, 2024, it had a cash position of $172.7 million, which is projected to support the company’s operating expenses and capital needs well into the fourth quarter of 2026.
6. Standard BioTools Inc. (NASDAQ:LAB)
Stock Price as of September 27: $1.92
Number of Hedge Fund Holders: 23
One of the best NASDAQ stocks under $5 on our list, Standard BioTools Inc. (NASDAQ:LAB), previously known as Fluidigm Corporation, is a company dedicated to advancing scientific research and clinical diagnostics through cutting-edge instruments and services.
It operates globally across the Americas, Europe, the Middle East, Africa, and Asia Pacific and focuses on two main segments, Proteomics and Genomics. Through its expertise in mass cytometry and high-throughput genomics, it offers a diverse range of products, including integrated fluidic circuits, assays, reagents, and analytical instruments, all focus on improving research capabilities in clinical laboratories, biopharmaceuticals, and academic institutions.
The recent merger with SomaLogic marks a significant development for Standard BioTools (NASDAQ:LAB), as it moves forward in the multi-omics space. The merger advances the product offerings by integrating advanced multi-omic tools, especially the SomaScan assay, which enables the simultaneous analysis of thousands of protein biomarkers.
Management has mentioned that the partnership with Illumina is particularly noteworthy, as it aims to fully commercialize the SomaScan assay on Illumina’s NovaSeq platform by the first half of 2025.
The platform is already widely utilized, with an installed base of approximately 2,200 instruments, which provide researchers with the means to conduct comprehensive multi-omic studies that blend genomic and proteomic data.
In its latest earnings call, management highlighted a keen focus on optimizing the cost structure and expediting synergies following the merger with SomaLogic. The company has accelerated its target for an $80 million cost reduction to the end of 2024, a year ahead of schedule.
The efficiency is critical as the company aims for breakeven adjusted EBITDA by the end of 2026. With nearly $400 million in cash reserves, it is well-capitalized to pursue its vision of becoming a profitable leader in the multi-omics life sciences market.
5. Geron Corporation (NASDAQ:GERN)
Stock Price as of September 27: $4.57
Number of Hedge Fund Holders: 26
Geron Corporation (NASDAQ:GERN) is a biopharmaceutical company that has recently made significant strides in the treatment of certain blood disorders, specifically lower-risk myelodysplastic syndromes (LR-MDS).
With the recent approval of its first drug, Rytelo (imetelstat), it has introduced a groundbreaking telomerase inhibitor into the market. The innovative treatment is aimed at adult patients suffering from LR-MDS who experience anemia and require frequent blood transfusions.
The approval marks a historic moment, as Rytelo is the first telomerase inhibitor to gain clearance from the U.S. Food and Drug Administration (FDA), setting a new standard in the management of this condition.
The mechanism of Rytelo focuses on inhibiting telomerase, an enzyme that cancer cells exploit to promote uncontrolled growth. By targeting this enzyme, Rytelo aims to affect the cancerous cells present in the bone marrow, offering a potential lifeline to patients with limited treatment options.
Many individuals suffering from LR-MDS deal with symptoms such as fatigue and a heightened risk of infections, often made worse by ineffective standard therapies. The introduction of Rytelo could significantly improve the quality of life for these patients by reducing the frequency of blood transfusions they require.
In the initial weeks following its launch in June, Geron’s (NASDAQ:GERN) management expressed optimism regarding Rytelo’s reception within the medical community. As of July 31, management estimated that approximately 160 patients had already received the treatment, a promising start for a new product in its early stages. The early adoption reflects a positive response to Rytelo and suggests that it may quickly become an essential option for treating LR-MDS.
Additionally, as of June 30, 2024, the company had approximately $430.4 million in cash, cash equivalents, and marketable securities. The company is 5th on our current list of stocks.
In the second quarter, 26 hedge funds tracked by Insider Monkey had stakes in Geron (NASDAQ:GERN), with total positions worth $907.925 million. As of June 30, RA Capital Management is the most significant shareholder in the company with a stake worth $195.898 million.
4. Verve Therapeutics, Inc. (NASDAQ:VERV)
Stock Price as of September 27: $4.98
Number of Hedge Fund Holders: 26
Verve Therapeutics, Inc. (NASDAQ:VERV) is a clinical-stage company focused on revolutionizing the treatment of cardiovascular disease through innovative gene-editing approaches. The company takes 4th place among our current list of best NASDAQ stocks under $5.
Rather than relying on chronic management therapies, it aims to develop single-course genetic medicines that can significantly lower low-density lipoprotein cholesterol (LDL-C), a key contributor to cardiovascular issues. The company’s pipeline includes three promising programs, VERVE-101, VERVE-102, and VERVE-201, each targeting well-validated genes for cholesterol reduction.
Dr. Sekar Kathiresan, co-founder and CEO of Verve Therapeutics (NASDAQ:VERV), emphasizes the importance of not only reducing cholesterol levels but also maintaining that reduction over time. Current therapies often fail to provide sustained cholesterol control for many patients, creating a significant unmet need.
The company is dedicated to addressing this gap, positioning itself to establish a new standard of care for millions of individuals suffering from heart disease. With a strong financial foundation that is expected to support operations through late 2026, the company is well-equipped to pursue this ambitious vision.
The second quarter of the year has seen Verve Therapeutics (NASDAQ:VERV) make significant strides in its clinical development efforts. The Heart-2 Phase 1b trial of VERVE-102 is progressing steadily, with a focus on patient enrollment and expanding the trial’s reach, especially with regulatory approval to operate in Australia.
Initial results from this trial are expected in the first half of 2025, which marks an important step forward in the development of its gene-editing therapies. Additionally, the initiation of the Phase 1b clinical trial for VERVE-201, targeting the ANGPTL3 gene, is set to initiate in the latter half of this year.
3. Esperion Therapeutics, Inc. (NASDAQ:ESPR)
Stock Price as of September 27: $1.68
Number of Hedge Fund Holders: 26
One of the best NASDAQ stocks under $5 on our list, Esperion Therapeutics, Inc. (NASDAQ:ESPR) is dedicated to developing innovative medications aimed at improving the health outcomes of patients facing cardiovascular and cardiometabolic diseases.
The company has successfully launched several products, including NEXLETOL and NEXLIZET. These once-daily oral medications target primary hyperlipidemia in adults with conditions like heterozygous familial hypercholesterolemia and atherosclerotic cardiovascular disease.
They provide an effective alternative for patients who need further lowering of LDL cholesterol levels. Additional products in the lineup include NILEMDO, an ATP Citrate Lyase (ACL) inhibitor that reduces LDL cholesterol by impacting cholesterol biosynthesis, and NUSTENDI, another combination medication aimed at managing elevated LDL-C.
At a stake value of $98.59 million, 26 hedge funds tracked by Insider Monkey held positions in Esperion Therapeutics (NASDAQ:ESPR) in the second quarter. As of Q2, Millennium Management is the top shareholder in the company and has a position worth $14.46 million.
Esperion Therapeutics (NASDAQ:ESPR) recent financial results indicate a significant upward trend in revenue, which reflects the company’s expanding market presence and product acceptance.
For the second quarter, it reported total revenue of $73.8 million, an impressive increase of 186% compared to $25.8 million during the same period in 2023. For the first half of the year, revenues soared to $211.6 million, a remarkable 322% rise from the previous year’s $50.1 million.
The growth is largely attributed to collaboration revenues, which surged by approximately 727% and 1138% for the three and six months ended June 30, 2024, respectively. The increase was driven by revenue from a Settlement Agreement with DSE, along with heightened product sales to international partners.
The company maintains its operational expense guidance for 2024 and projects expenses between $225 million and $245 million, which includes $20 million in non-cash stock compensation. The disciplined financial management, combined with rapidly growing revenues, positions the company for sustained growth.
2. Grab Holdings Limited (NASDAQ:GRAB)
Stock Price as of September 27: $3.85
Number of Hedge Fund Holders: 34
Grab Holdings Limited (NASDAQ:GRAB), headquartered in Singapore, operates a super-app that combines ride-hailing, food delivery, and digital payment services. It caters to a diverse customer base across eight Southeast Asian nations, including Singapore, Malaysia, Indonesia, and Vietnam.
The multifaceted platform provides transportation, on-demand food services and extends to financial offerings, which makes it a comprehensive “everyday everything app.” By integrating various functionalities, the company improves convenience and accessibility for users in the region. It ranks 2nd on our current list of best NASDAQ stocks under $5.
What makes Grab Holdings (NASDAQ:GRAB) a possibly attractive investment opportunity is its dominant market position in Southeast Asia. Following the acquisition of Uber’s operations in the region in 2018, the company has solidified its near-monopoly status.
The stronghold allows the company to capture a significant share of the growing demand for digital services in one of the world’s most dynamic markets. With a strong user base and a strong brand presence, the company is well-positioned to capitalize on future growth opportunities.
A key factor setting Grab Holdings (NASDAQ:GRAB) apart is its deep integration of artificial intelligence across its operations. The company employs AI technologies to improve various aspects of the user experience, including content creation, driver management, and predictive service suggestions.
In May, it announced a partnership with OpenAI to develop advanced AI solutions, aiming to improve experiences for users, partners, and employees alike. The collaboration involves deploying tools tailored specifically for Southeast Asian markets, which is evidence of its focus on leveraging cutting-edge technology.
During the second quarter, the company introduced AI-powered dish descriptions in five of its eight markets, resulting in improvements in checkout rates among long-tail merchant partners. CEO Anthony Tan emphasized that such innovations are just a glimpse of how the company is using foundational AI capabilities to enhance its marketplace.
1. TeraWulf Inc. (NASDAQ:WULF)
Stock Price as of September 27: $4.94
Number of Hedge Fund Holders: 37
TeraWulf Inc. (NASDAQ:WULF) is a digital asset technology company based in the United States, primarily focused on Bitcoin mining. The organization operates two mining facilities, the wholly owned Lake Mariner Facility in New York and the Nautilus Cryptomine Facility in Pennsylvania, a joint venture with Cumulus Coin, LLC. It tops our list of the best NASDAQ stocks.
Its commitment to sustainability is evident in its strategy to generate Bitcoin using predominantly zero-carbon energy sources, such as nuclear and hydroelectric power. The emphasis on clean energy aligns with the growing demand for environmentally responsible practices in the cryptocurrency sector.
One of the company’s standout features is its substantial infrastructure, which consists of 600 megawatts of owned and scalable resources. The capability not only supports current Bitcoin mining operations but also positions the company to expand into alternative compute hosting.
As the need for high-capacity data centers continues to rise, TeraWulf’s (NASDAQ:WULF) extensive infrastructure is an important asset that can facilitate growth in this segment.
The company’s second-quarter results pointed to its dedication to operational excellence and growth initiatives. Achievements during this period included the completion of Building 4 at the Lake Mariner Facility, progress on AI and high-performance computing projects, and efforts to optimize its capital structure.
In the second quarter, the company self-mined 539 Bitcoins at the Lake Mariner Facility, which is evidence of its operational capabilities and commitment to increasing output. The production level not only shows efficiency but also reflects the potential for profitability in a market that values sustainable mining practices.
TeraWulf (NASDAQ:WULF) was held by 37 hedge funds tracked by Insider Monkey in the second quarter and the stakes amounted to $227.158 million.
While we acknowledge the potential of TeraWulf Inc. (NASDAQ:WULF) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than WULF but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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