3 ASX shares below $5 with huge potential

You can barely buy a coffee in the Melbourne CBD for under $5 these days. Yet on the ASX, there are still shares trading below that price point, making them accessible to many investors.

Here are three ASX shares below $5 that I think have serious long-term potential.

PLS Group Ltd (ASX: PLS)

PLS Group has benefited from a strong rebound in lithium prices over the past year, and that recovery is now flowing through to its financial results. This has seen its share price rise to $4.72 this month at the time of writing.

In its FY26 half-year result, the company reported a 40% increase in realised pricing and a 47% lift in revenue to $624 million. Underlying EBITDA jumped to $253 million, with margins expanding to 41%, highlighting the leverage in the business when pricing improves.

Importantly, PLS continues to operate as a low-cost producer, with unit operating costs falling 8% during the half. It also ended the period with $954 million in cash, giving it a strong buffer through the cycle.

Lithium will always be volatile, but with pricing momentum restored and margins recovering, I think PLS offers meaningful exposure to the long-term electrification trend at a sub-$5 share price.

SiteMinder Ltd (ASX: SDR)

SiteMinder is a very different type of opportunity. At the time of writing, it trades at $3, which is down from its high of $7.96.

This is a global hotel distribution and revenue platform with a strong recurring revenue model. It now serves tens of thousands of properties worldwide and continues to expand its Smart Platform offering.

While software stocks have been volatile amid AI disruption fears and valuation resets, SiteMinder has been accelerating annual recurring revenue growth and improving profitability. That combination is not easy to find at this price point.

To me, this looks like a structural growth business trading below $5 due more to market sentiment than a collapse in fundamentals.

DroneShield Ltd (ASX: DRO)

DroneShield is arguably the highest-risk name on this list, but also potentially the most rewarding. Its shares are trading at $2.99 at the time of writing, down from a high of $6.71.

The company develops counter-drone technology designed to detect and defeat unmanned aerial systems. With geopolitical tensions elevated globally, defence spending is increasing in many regions.

DroneShield has been building its sales pipeline and strengthening its product offering, particularly in radio frequency detection and defeat systems. If large contracts convert from its pipeline, revenue growth could accelerate quickly.

At just a few dollars per share, investors are not paying a blue-chip price for this business. But they are getting exposure to a niche defence technology segment that could expand meaningfully over time.

Foolish Takeaway

A share trading below $5 does not make it cheap in the valuation sense. Market capitalisation and earnings power matter far more than the sticker price.

However, when I see companies like PLS, SiteMinder, and DroneShield trading for less than the price of a Melbourne CBD coffee, I cannot help but think there is potential upside if their respective industries move in their favour.

The post 3 ASX shares below $5 with huge potential appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has positions in DroneShield. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield and SiteMinder. The Motley Fool Australia has positions in and has recommended SiteMinder. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.