Investing in companies that are below £5 a share

Is there an easy way to find companies that are publically listed below £5 a share.
The 2 UK companies that have the strong potential I have identified is Rightmove and BooHoo.

Feel free to add to this list, or send over any material.

1 Like

You can use a stock screener, such as Yahoo’s.

1 Like

What does the actual share price have to do with anything? Some companies never split their shares, others split at the slightest opportunity. The share price means nothing in isolation.

1 Like

That’s an important point. The only real advantage that I can think of is that a low unit price could allow you to keep more of your money invested.

i was thinking more in terms statistics and maths.
To rise from £5 to £10 is a lot more significant of a move compared to rising from £300 to £400.

But if the company is worth twice as much the £300 would go to £600!

The share price is simply the value of the company divided by the number of shares. So you could have 1 million shares at £5 or 1 share at £5million or anything in between.

If the company value grows by x% the shares will grow by x% no matter what the absolute value of the share is.

4 Likes

Personally I always ignore the share price per unit. A company could be valued exactly the same, (same market capitalisation) but have a share price a tenth of the price to another company only because they have ten times the amount of shares in circulation.

1 Like

Thanks guys, this makes a lot more sense.

It would be great in the Freetrade app if they showed the valuation of the company.

Surely using the same model i mentioned earlier, the rise for a company to go from 100 million to 200 million is a lot greater than a company going from 500 million to 600 million.

Is there not a risk that a high unit price will taper demand (at least from retail investors)?

Yes it can if it is too high. Berkshire A shares are ludicrously expensive, $318500 per share!

But most companies keep their share price in a realistic range, so it becomes irrelevant to investing decisions.

A company like Amazon where the shares are reaching $2000 per share, makes it really hard to even own 1 share. But the valuation of the company is ridiclously high and for them grow further the returns are going to be a lot smaller.

That’s where fractional shares come in. Once that’s been introduced it will mean you can invest in companies with a huge share price

1 Like

Low priced shares are easier to buy if you only have a few quid per month or whatever. If you can only save £30 companies that are £40/share aren’t much use

2 Likes

how comes they are not that much use? Surely just higher risk?

because you can’t afford one a month

At £30 a month I’d be buying an ETF.

Actually at £3k a month I’d be buying an ETF!

1 Like

an ETF such as Gold, Silver or Oil?

An ETF such as

S&P 500
FTSE 100
STOXX 600

1 Like

Aren’t gold, silver, oil etc. Exchange traded commodities? (ETC)

Personally, I start with VWRL, add VUKE for a touch of home bias, VGOV for some smoothing and a touch of physical gold ETFS for doomesday.

I’m a big fan of https://portfoliocharts.com/portfolio/golden-butterfly/ but haven’t found the ideal funds to replicate it yet.

The more I look though, the more I realise that any properly diversified portfolio is going to see you well over the long term, you’ll see arguments over which massively diversified fund to pick over the others and to be honest you really can’t know.

So VWRL, its competitors, the lifestragey funds, all of them are going to be way better than not investing in the market (over suitably long time periods). Just make sure you are in the market not just guessing which part of the market is going to do better than the others.

4 Likes