2 Market-Beating Stocks Trading for Less Than $3

Newbies or Canadian investors with limited capital have profitable options this year-end in two price-friendly but market-beating stocks.

| More on:
Hand arranging wood block stacking as step stair with arrow up.

Image source: Getty Images

Canadians with investment appetites but limited capital have two profitable buying opportunities this year end. InPlay Oil (TSX:IPO) and 5N Plus (TSX:VNP) are market-beating stocks trading for less than $3. Market analysts covering the small-cap stocks are bullish and have buy recommendations for both.

A dividend-growth stock in the making

Energy remains the top-performing sector as of mid-December 2022. It beats the TSX by a wide margin year to date at +46.05% versus -7.64%. InPlay Oil isn’t as popular as other energy stocks, but it’s up 36.16% thus far this year. Also, at only $2.94 per share, the total return in 3.01 years is 343.01%, or a compound annual growth rate (CAGR) of 64.02%.

Market analysts’ 12-month average price target for IPO is $6.75 — a 129.6% return potential. Since the board of directors recently approved a $0.15 monthly cash dividend, the overall return in one year could be higher. Also, management said that it’s the inaugural dividend base of InPlay.

This $256.22 million junior oil and gas exploration and production company operates in Alberta and focuses on light oil production. It boasts long-lasting, low-decline properties with high drilling development and enhanced oil recovery potential. InPlay can also pursue exploration possibilities in underdeveloped lands.

Like most energy players, InPlay has had record-setting financial and operating results this year. In the third quarter (Q3) of 2022, comprehensive net income climbed 85.2% to $15.35 million versus Q3 2021. The average quarterly production increased 58% year over year to 9,495 barrels of oil equivalent per day (boe/d) — a new company record.

In the nine months that ended September 30, 2022, free adjusted funds flow soared 1,333.4 % to $36.58 million compared to the same period in 2021. At the end of Q3 2022, InPlay’s net debt is down 36% to $45.6 million versus the same quarter last year.

Because management remains upbeat about future commodity prices, it expects the strong operational results to continue. InPlay commits to providing top-tier production per-share growth and a return of capital to shareholders. Moreover, the energy stock is well positioned to deliver meaningful returns to shareholders over the long term through the base dividend and share-buyback program. 

Niche: Fast-growing markets

5N Plus supplies specialty metals, alloys, and related chemicals globally. The products of this $223.5 million company are vital components in various consumer and industrial products. At $2.53 per share, the year-to-date gain and trailing one-year price return are 6.3% and 15.53%, respectively.

By deploying proprietary and proven technologies to meet customer demand and specifications, 5N hopes to secure long-term sourcing contracts with primary producers. It also offers value-added services like cradle-to-cradle recycling and research and development partnerships.

While the net loss in Q3 2022 widened nearly 750% to US$7 million versus Q3 2021, revenue rose 30.6% to US$66.37 million. Still, management said 5N has a built-in advantage and is well positioned in fast‐growing markets. Double-digit growth rates should sustain in the coming years.

Price friendly

InPlay Oil and 5N Plus are exciting, price-friendly stocks that can deliver massive gains in the near term. The former is an upcoming dividend-growth stock with strong upside potential. Meanwhile, the latter is scratching the surface but should eventually realize its full potential by growing its captured markets.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Stocks for Beginners

retirees and finances
Dividend Stocks

How to Create a Million-Dollar TFSA in Two Decades

Your TFSA could create riches you didn't know were possible, but only if you commit again and again to your…

Read more »

Coworkers standing near a wall
Stocks for Beginners

2 Unassailable Earnings Growth Stocks for a Wobbly Economy

Aritzia and another top growth stock that could be hot performers through 2023 and beyond.

Read more »

Chalk outline of two arrows pointing in opposite directions
Stocks for Beginners

2023 Is a Terrible Time to Be a Saver: Here’s What to Do With Your Money Instead

You can hold short-term GICs for your liquidity needs but also consider investing your money in quality businesses for the…

Read more »

edit Sale sign, value, discount
Stocks for Beginners

3 Cheap Stocks I’d Buy in Bulk When a Recession Hits

Not only would I grab these cheap stocks during a recession, I would then hold them for the next decade…

Read more »

Female hand holding piggy bank. Save money and financial investment
Stocks for Beginners

Millennials: How to Take Full Advantage of That “RRSP” Thing

I get it; it's hard to invest for the future when the present is stressful, but there are present benefits…

Read more »

Man with no money. Businessman holding empty wallet
Stocks for Beginners

Canadians Investors: How to Know When We’ve Hit a Recession

A recession is coming in 2023, but what does that even mean? And how can investors protect themselves before it…

Read more »

man slides
Dividend Stocks

TFSA Investors: Where to Put That New $6,500 Contribution Room

These stocks may be trading high, but they still offer value for TFSA investors seeking out the best stocks to…

Read more »

A bull and bear face off.
Stocks for Beginners

3 Cheap Stocks I’d Buy Before the 2023 Bull Market Arrives

Investors seeking out value should consider these cheap stocks, which could be some of the best stocks to buy before…

Read more »