Best stocks under $20 of May 2024
“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.
“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.
BLUEPRINT
Updated 9:00 a.m. UTC May 30, 2024
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Stocks under $20 make investing more accessible than the most expensive stocks.
With many stocks carrying price tags of four, five or even six digits per share, you might think stocks under $20 would be low quality. That isn’t necessarily the case. These stocks can offer price appreciation and even pay dividends.
For the best stocks under $20 in 2024, we selected the following based on set criteria: a market capitalization of at least $2 billion, positive or improving earnings, and a “buy” consensus recommendation. If you’re looking for a bargain on your next stock, here are some to consider.
Robinhood
Best stocks under $20
- Infosys (INFY).
- Blue Owl Capital Inc. (OWL).
- Permian Resources Corp. (PR).
- Vipshop Holdings Ltd. (VIPS).
- iQIYI Inc. (IQ).
Why trust our investing experts
Experienced stock analysts select our best stock selections based on screening for several must-have metrics. These metrics often include but are not limited to forward price-to-earnings, risk, earning stability and Wall Street “buy” consensus. Among all of our stock selections, the average return beats the S&P 500. But investors should note that before purchasing any stocks, it’s important to do plenty of research and ensure their selections align with their financial goals and risk tolerance. You can read more about our methodology below.
- 4,000+ companies screened.
- 3 levels of fact-checking.
- 3-step editorial review.
- Altimeter stock grade of B or higher.
Infosys (INFY)
Market cap
YTD performance
Blue Owl Capital Inc. (OWL)
Market cap
YTD performance
Permian Resources Corp. (PR)
Market cap
YTD performance
Vipshop Holdings Ltd. (VIPS)
Market cap
YTD performance
iQIYI Inc. (IQ)
Market cap
YTD performance
Compare the best stocks under $20
Methodology
The best stocks under $20 included above all trade on a major U.S. stock exchange and meet the following criteria:
- Consensus analyst recommendation of “buy” or better. A high number of analyst “buy” ratings indicates an expectation the stock will outperform the overall market among industry experts.
- Market capitalization of at least $2 billion. If a company has a strong market share and competitive advantages in a sizable industry, it will typically have a market cap of greater than $2 billion. Companies at least this size are generally more stable and tend to be less susceptible to market swings than smaller companies.
- An Altimeter overall grade of at least a B. We applied a screen to select the best stocks for this list, considering only those graded B or higher by Altimeter. The overall grade considers profitability, earning stability, valuation and earning expectations. Grades of B or higher are stocks that are ranked in the top quarter of more than 5,000 stocks in Altimeter’s database. This indicates that these companies have strong valuations with the ability to improve returns.
- Positive or improving earnings. Often, companies with share prices under $20 are new or have struggled recently. If a company’s earnings are improving, this suggests it is moving toward profitability (if not already there) and can be a strong investment going forward.
Why other stocks didn’t make the cut
Stocks under $20 can be subject to volatility, and they don’t always garner recommendations from Wall Street analysts. Of course, these companies may also have a market cap below $2 billion, which could make them more vulnerable to market conditions. While other stocks under $20 could be worth considering, they weren’t the right fit for this list.
Final verdict
Stocks under $20 offer investors with limited funds the chance to enter the market with a more affordable investment. While these stocks could be volatile in some cases, that’s sometimes because they are newer companies that are still growing. Others may have taken a hit due to economic conditions but are now on the rebound. Some of these companies even pay dividends, potentially making them a solid source of income.
While stocks under $20 aren’t always a good investment opportunity, it’s possible to find some strong picks in the bunch. For instance, Blue Owl Capital (OWL) is tough to beat among stocks under $20. While the company is small for now, its earnings momentum is very strong. Plus, its share price is up year over year, and it even pays a 3.6% dividend.
Are stocks under $20 worth it?
Some stocks under $20 are worth it, while you’re better off avoiding others. As with any investment, consider factors such as capital structure, earnings momentum and intrinsic value. Also think about whether the investment aligns with your risk tolerance and overall investment goals.
If a stock under $20 looks good when considering these factors, it may be worth it. Again, this depends more on whether the stock is a good buy in general and less on its price tag.
Frequently asked questions (FAQs)
There can be risks associated with cheaper stocks, depending on how cheap they are. For instance, penny stocks may have liquidity issues and can be extremely volatile. Stocks under $20 a share may have less risk than penny stocks, but keep in mind that investing in the stock market always carries a certain level of risk. Market conditions, bad management decisions and competition can threaten any company’s bottom line.
Yes, some stocks under $20 can generate huge returns for investors, but just because a stock’s share price is low doesn’t mean it’s a bargain if the company isn’t performing well or the stock does not have attractive fundamental valuation metrics. In fact, many stocks with share prices under $20 are cheap for good reason, and investors should proceed with caution.
There are many ways to research stocks, but one of the best places to start is by checking company financials, including balance sheets, income statements and cash flow statements. Also take a look at quarterly and annual reports, the company’s management, and what kind of competition the company faces. These are just a few factors to consider.
Cheap stocks can be good investments, but many of them are cheap for good reason. Just because a stock’s share price is down or lower than its competitors doesn’t mean it represents an attractive buying opportunity for investors. If the company’s business fundamentals and balance sheet are not sound, it’s usually better to take a pass.
The best stocks to buy under $20 generally trade on a major U.S. exchange and have an attractive market presence in a consistent or growing market. They also typically generate stable profits or are trending toward profitability, have a healthy balance sheet, and are attractively valued based on fundamental metrics. The stocks mentioned above are five examples of stocks under $20 that may have a higher chance of success because they meet these criteria, but there are no guarantees on Wall Street. Investors should always conduct research before buying stocks.
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
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