10 Most Volatile Stocks Under $5 For Day Trading
In this article we present the list of the 10 Most Volatile Stocks Under $5 For Day Trading. Click to skip ahead and see the 5 Most Volatile Stocks Under $5 For Day Trading.
Braemar Hotels & Resorts Inc. (NYSE:BHR), Alto Ingredients, Inc. (NASDAQ:ALTO), and Pitney Bowes Inc. (NYSE:PBI) are a few of the most volatile cheap stocks for day traders to consider adding to their watchlists.
Day trading has become an increasingly popular pursuit for those looking to escape the constraints of a traditional job or simply make some extra money on the side.
Unfortunately, many people get into day trading for the wrong reason (to get rich), and either don’t put in the work needed to understand the craft, or simply don’t have the discipline to execute it and avoid the pitfalls that will inevitably pop up, like a trade turning sour. The harsh reality is that about 90% of day traders lose money, so it needs to be undertaken with the proper diligence and respect.
It’s only fairly recently that retail traders could even consider getting into day trading, given the previous lack of high-speed trading platforms. Being able to execute trades within minutes is all but a pre-requisite for day traders to capitalize on the opportunities they uncover, allowing them to get in and out of stocks at just the right moments to realize gains from their short-lived holdings.
Another pre-requisite is finding volatile and relatively active stocks to monitor, which have the greatest potential for generating recognizable or sought-after trading patterns that day traders feel comfortable playing. While any stock can be volatile or active on any given day, some stocks are consistently more volatile than others and are worth monitoring daily.
Given how cheap they are, many of the best volatile stocks to buy featured in this article have smaller market caps and far less trading activity than more prominent companies. While the lack of trading activity can be a downside at times, they also lack the kind of heavy institutional money in them that can anchor other stocks in place. There’s also far less algorithmic or high-frequency trading of these stocks, which can routinely trap day traders with false signals, so that’s another positive of trading stocks like this.
The following list of the best volatile stocks to trade for day traders all feature 5-year monthly betas over 2, meaning they’re at least twice as volatile as the broader market. All of them also trade for less than $5, some of them significantly so, which can help contribute to wild price swings.
Photo by Adam Nowakowski on Unsplash
Our Methodology
The following volatile stocks are ranked based on hedge fund sentiment. We follow a select group of hedge funds because Insider Monkey’s research has uncovered that their consensus stock picks can deliver outstanding returns.
All hedge fund data is based on the exclusive group of 900+ funds tracked by Insider Monkey that filed 13Fs for the Q3 2022 reporting period.
10 Most Volatile Stocks Under $5 For Day Trading
10. CBAK Energy Technology, Inc. (NASDAQ:CBAT)
Number of Hedge Fund Shareholders: 4
5-Year Monthly Beta: 2.62
Pitney Bowes Inc. (NYSE:PBI), Braemar Hotels & Resorts Inc. (NYSE:BHR), and Alto Ingredients, Inc. (NASDAQ:ALTO) are some of the most volatile cheap stocks that have the most hedge fund support. An equally cheap and volatile stock, though one with much less hedge fund backing is CBAK Energy Technology, Inc. (NASDAQ:CBAT).
Just four of the hedge funds that are tracked by Insider Monkey’s custom database were long CBAK Energy Technology, Inc. (NASDAQ:CBAT) on September 30. Of those four, three sold off some of their CBAT shares during Q3, including Israel Englander’s Millennium Management and Jim Simons’ Renaissance Technologies, each of which unloaded more than half of their former position.
CBAK Energy Technology, Inc. (NASDAQ:CBAT) shares don’t have very high daily volume, at about 200,000 shares traded hands per day, which doesn’t make it ideal for day traders, but the stock is certainly volatile. Shares of the Chinese lithium-ion battery maker are down 25% this year and a look at the stock’s price chart reveals a stock that routinely posts noteworthy gains or losses on any given day.
9. Creative Realities, Inc. (NASDAQ:CREX)
Number of Hedge Fund Shareholders: 4
5-Year Monthly Beta: 2.87
Just four hedge funds were also long Creative Realities, Inc. (NASDAQ:CREX) at the end of Q3, including the aforementioned Millennium Management and Renaissance Technologies. Another was John Zaro’s Bourgeon Capital, which took a stake in CREX during the first quarter of this year.
Creative Realities, Inc. (NASDAQ:CREX) is an even lower volume stock than CBAT and doesn’t feature the same wild daily price swings that characterize that stock. It’s nonetheless been highly volatile over the last five years, with an average monthly beta of close to 3. During that time, it’s lost 90% of its value, including a 57% drop this year, which occurred entirely during the first half of 2022.
Creative Realities, Inc. (NASDAQ:CREX), which operates an advertising management platform that delivers more than a billion ads per month, merged with Reflect Systems last year, which has bolstered its comparable results significantly. The company pulled in record revenue of $11.2 million during Q3, a 135% year-over-year increase. The boost wasn’t solely due to the merger however, as on a pro forma combined company basis, it grew sales by 73%.
8. Canaan Inc. (NASDAQ:CAN)
Number of Hedge Fund Shareholders: 9
5-Year Monthly Beta: 3.22
There’s been the slightest of upticks in hedge fund ownership of Canaan Inc. (NASDAQ:CAN) over each of the last two quarters, with Millennium Management and Schonfeld Strategic Advisors adding CAN to their 13F portfolios during Q3. Douglas Harold Hart Polunin’s Polunin Capital owned the largest stake in Canaan on September 30, consisting of 1.4 million shares.
Canaan Inc. (NASDAQ:CAN) is a much higher volume stock than the prior entrants, with about 1.92 million shares trading hands daily. It’s also exhibited much stronger daily price fluctuations this year than CREX has. Overall, CAN shares have fallen by 52% this year to sit at two-year lows, but traded nearly 200% higher as recently as early April.
H.C. Wainwright analyst Kevin Dede believes Canaan Inc. (NASDAQ:CAN) are undervalued, noting at the time (late August) that the company has a cash balance of nearly $2.60 per share, more than its current share price. The risk of the Chinese bitcoin mining company being delisted has weighed heavily on shares, but those risks have lessened in light of the Public Company Accounting Oversight Board’s transparency agreement with Chinese regulators earlier this year. Given that, the stock could be poised for an intense battle between bulls and bears in the coming months, which should suit day traders just fine.
7. Tupperware Brands Corporation (NYSE:TUP)
Number of Hedge Fund Shareholders: 11
5-Year Monthly Beta: 2.25
The smart money has been bailing on Tupperware Brands Corporation (NYSE:TUP) in recent years, with the number of long positions in the stock falling by 57% since the first quarter of 2018. TUP shares crashed to less than $3.50 in the second quarter of 2020 but surged to over $30 with the next year. They’ve since given back most of those gains.
Tupperware Brands Corporation (NYSE:TUP) is one of the more iconic companies to make this list due to having fallen on hard times in recent years to say the least. TUP shares have fallen by 93% over the last five years and by 72% this year. The food storage products company’s sales have deteriorated in recent years, falling from $2.09 billion in 2018 to just $1.39 billion over the trailing twelve month period.
Tupperware Brands Corporation (NYSE:TUP) is scheduled to be removed from the S&P 600 on December 19, to be replaced by NuVasive, Inc. (NASDAQ:NUVA), which should make both companies’ shares more volatile in the coming weeks. DA Davidson has a $4.50 price target on TUP shares, right in line with where they currently stand, citing the company’s Q3 misses, its demand weakness in Europe, and rising costs as some of the reasons for why it lowered its price target on the stock from $10.
6. The Lion Electric Company (NYSE:LEV)
Number of Hedge Fund Shareholders: 12
5-Year Monthly Beta: 2.96
Hedge fund ownership of The Lion Electric Company (NYSE:LEV) has doubled this year on the heels of hedge funds bailing on the stock during the second-half of 2021, which suggests they may feel the bottom is near. LEV shares have crumbled from more than $22 to less than $5 in the span of less than two years.
Shares of Canadian electric vehicle maker The Lion Electric Company (NYSE:LEV) have been extremely volatile since the company debuted on the NYSE in October 2020. LEV shares gained close to 250% during their first three months on the market, but quickly ran out of gas, losing 92% of their value since. The stock has a decent amount of daily trading action at a little over one million shares a day, making it a viable candidate for day traders.
While The Lion Electric Company (NYSE:LEV) has a promising path to growth in the field of zero emission electric trucks and school buses, the business projects to be highly capital intensive given that the company plans to be vertically integrated, producing not only its vehicles, but also their battery packs internally. The likely need to consistently raise money is expected to weigh on shares for the foreseeable future, which should create fertile ground for bulls who like the company’s growth potential to battle the bears who think it already has one foot in the graveyard of EV manufacturers.
Alto Ingredients, Inc. (NASDAQ:ALTO), Pitney Bowes Inc. (NYSE:PBI), and Braemar Hotels & Resorts Inc. (NYSE:BHR) are some of the most volatile day trading stocks that have stronger hedge fund support. Check them out by clicking the link below.
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Disclosure: None. 10 Most Volatile Stocks Under $5 For Day Trading is originally published at Insider Monkey.
