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TheStreet Open House

5 Stocks Under $5 That Could Soar

MINNEAPOLIS ( Stockpickr) -- I love small-cap stocks, in particular those that trade for less than $5 a share. In my long history of publishing stock recommendations, I can honestly say that the biggest money made over the years came from stocks that were trading for less than $5. While I've had many large-cap winners, the dollars made were not the same.

To be fair, it is also true that some of the biggest losers also were smaller stocks. They are certainly risky, but given the potential reward, the risk can be worth it.

A good friend of mine who has been a subscriber of many of my prior publications use to hound me for my top picks under $5. He liked the idea that I could recommend Apple (AAPL), but he didn't want to hear about it. He wanted the small stock that nobody else was talking about.

Related: 5 Dividend Stocks for Any Portfolio

The thinking behind such picks is that they allow you to pounce on an opportunity before a particular stock became popular with the rest of the market -- that is, before its price increases dramatically. In this way, you can rake in the returns.

It has been some time since I focused on under-$5 stocks. Generally speaking, at this stage of the market recovery, my own bias is to larger stocks. That said, there are plenty of interesting names to consider, including these five stocks trading for under $5.

Moneygram International

The financial crisis has left some significant holes in the banking system around the globe. Filling the gap are companies such as Moneygram International (MGI), a U.S.-based company that provides money transfers to consumers across the globe.

Shares of Moneygram trade below $3 per share today, but in my opinion, the company is worth more than $5 per share. Although Moneygram has had its issues over the last few years and is losing money, its fortunes are on the rise as losses evaporate and profits eventually return.

Earlier this month, the company reported earnings that beat expectations by 12 cents per share. The market yawned at this news, and shares have traded sideways in the month subsequent to the report being released.

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