Stocks that are priced low can often have a lot more potential to earn capital appreciation for investors, if for no other reason than it being easier for their prices to rise than stocks that are more expensive. A stock doubling from $5 is a lot easier than one that’s already trading at $1,000. A high price can price out many investors, which is why I’ve listed three stocks below that are currently trading below $5 that could produce good returns for investors.
Westport Fuel Systems Inc (TSX:WPRT)(NASDAQ:WPRT) is trading around $2 a share at writing, and the stock has fallen mightily in the past year, losing around half of its value. Like many stocks on the TSX, Westport saw its price drop sharply since October, and while it has seen a modest recovery since the start of 2019, investors haven’t been buying up the stock despite it recently coming off a 52-week low.
Although the company’s financials have not shown any real growth lately and is still generating losses, the business itself doesn’t seem to be in a worse position than it was back in October. Westport was always going to be a stock that will take years to see much growth as the world slowly moves toward cleaner technologies and engines. And with the stock trading at around two-year lows, it could be a good buy on what’s been a very big dip in price.
Roots Corp (TSX:ROOT) has been on a disastrous run since it listed on the TSX back in 2017, dropping nearly 60% of its value over the course of that time. Although the apparel company is a popular brand throughout the country, investors have not been given much reason to get excited about how it’s been doing. With small profits in three of its last five quarters and no sales growth in its most recent earnings, it’s not a big surprise to see that the stock has struggled so much.
However, the stock has been gaining momentum lately, rising 33% year to date and showing some signs of life. And with earnings coming out in early April a good quarter and finish to the year could be what the stock needs to get up to over $5. Currently, Roots is trading below book value and could be a good value pickup for a stock that still has a lot of potential.
Auxly Cannabis Group Inc (TSXV:XLY) is trading below $1 at writing, and the diversified cannabis stock could provide investors with some solid growth opportunities. Auxly has forged strategic agreements with multiple cannabis companies to help it expand its business and ensure it has a strong presence in the industry. However, with the stock up just 7% in 2019, it still has a long ways to go in making up for the big decline that the stock went on in 2018.
Although the company hasn’t generated much revenue during its last four quarters, it has yet to report on results since legalization took place in October. With results for the full year expected to come out next week, we’re likely to see a big jump in sales, which could help give the stock a much-needed boost in price. As the cannabis industry continues to grow, so too will Auxly and at its current price it could have a lot of upside.
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Fool contributor David Jagielski has no position in any of the stocks mentioned.