A lot of people underestimate the potential of low share prices. Stocks under 20 dollars allow small-budget investors to greater returns when the company grows.
Stocks under $20 also fall into a sweet spot for value, price, and stability, so they can make great investments for smaller portfolios.
These are the best stocks under 20 dollars that we’re watching this month.
Best Stocks Under 20 Dollars for 2020
Here are our picks for the top stocks under $20. Make sure you add your favorite tickers to your watchlist because we update these picks regularly.
Canopy Growth (NYSE: CGC)
CGC is a rapidly growing cannabis stock that focuses on the sale and distribution of recreational marijuana.
Canopy Growth has shown tremendous growth throughout the global pandemic despite closing out last year with a poor fourth-quarter report.
The company has a healthy cash flow due to the cash-heavy nature of the cannabis industry.
Canopy Growth also has an ongoing partnership with Constellation Brands to produce THC and CBD-infused beverages and edibles.
This alliance has the potential to bring Canopy into a vast new growth market, and it signals strong potential revenue growth in the firm’s future.
Canopy Growth has excellent ratings from investment tracking sites, so it’s a great pot stock to get into your portfolio.
As the market of recreational cannabis continues to grow, this top-tier pot stock could become a sentiment barometer for the industry at large.
Enterprise Products Partners (NYSE: EPD)
Enterprise Products Partners is a company that provides energy services, including natural gas, crude oil, petrochemicals, and refined products.
The company is composed of four segments: NGL Pipelines & Services, Crude Oil Pipelines & Services, Natural Gas Pipelines & Services, and Petrochemical & Refined Services.
In total, EDP operates more than 19,000 miles of natural gas pipelines, 5,000 miles of crude oil pipelines, and a fleet of 360 trucks for transporting crude oil.
Those are valuable assets to have, especially in the U.S. market, where it’s often difficult to transport oil and natural gas.
Enterprise Products Partners is an excellent choice of stock under $20 and also has an excellent dividend yield.
The annual dividend yield for 2019 was 10.27%. That’s exceptionally high and marks EPP as a high-yield dividend stock.
Yext (NYSE: YEXT)
This software company helps companies monitor and manage their digital footprints.
Yext’s “Search Experience Cloud” tools allow organizations to coordinate and organize their company info across the entire internet.
The company made its IPO back in 2017, and it picked up some big-name clients since then, including Marriott and Yum Brands.
Yext is performing well in 2020, so far. The firm’s revenue grew 31% to reach $300 million in 2020, and sales growth is up to 24% for the year.
Customer count also grew 36% from last year’s totals, and the company recently announced a partnership with Adobe.
Despite this growth, Yext still has more room to expand as the stock is still below its most recent 52-week high.
Further, Yext’s projected losses are expected to shrink over the next few years.
This optimistic earning projection is potentially an excellent ‘buy’ indicator.
DouYu (NASDAQ NMS: DOYU)
Another lucrative gaming stock, DouYu, provides live streaming services with a focus on the esports market.
Based in China, DouYu has offerings on both PC and mobile.
The firm has earned a moniker as the “Chinese Twitch” because operates similarly to the American streaming platform Twitch, which was purchased by Amazon for nearly $1 billion.
DouYu managed to outperform its Q1 projection from last year, exhibiting a revenue increase of 53%.
A large part of this increase was due to the influx of mobile usage from the pandemic, which jumped 15% to 56.6 million this year.
The firm’s paying users rose to 26% for a total of 7.6 million this year.
Shares of DouYu are up nearly double since April, and it really picked up steam when streaming stocks rallied after the COVID-19 crash.
DouYu’s 2020 revenue is expected to grow by 30.5%, and the firm forecasts another 23.4% growth next quarter to reach an overall market cap of $1.68 billion.
That’s nothing because this obscure gaming stock could easily explode to a $200 billion market cap by 2023.
Best Dividend Stocks Under 20 Dollars
These are some of the best dividend stocks under $20. Their dividend yields are significantly higher than the S&P 500 average.
Amcor PLC (NYSE: AMCR)
This global packaging company that works in diverse industries, including food and beverage, pharmaceutical, and personal care.
Amcor recently acquired Bemis back in mid-2019 and has since changed its business model to focus on light-weight, recyclable, and reusable packaging made from recycled materials.
This change to a more sustainable model could help the company grow despite the growing pushback against packaging waste.
Aside from a mid-March dip, Amcor’s share price has stayed consistent and shown steady growth.
Packaging products will likely remain an essential component of the global economy for years to come, so Amcor has relatively secure revenues.
Amcor’s financial revenue for 2020 is expected to reach $12.68 billion—a 34% growth over the last year.
The relatively recent Bemis acquisition could drive strong growth for the company this year too.
Amcor’s share price has risen 30% since March and is still 24% off its 52-week high, indicating that there is still quite a bit of growth potential in this value stock.
Lastly, Amcor has a 4.16% dividend yield, so it’s in the upper tier of dividend stocks.
Medical Properties Trust Inc. (NYSE: MPW)
Medical Properties Trust is a real estate investment trust (REIT) that focuses specifically on net-leased hospital facilities.
EITs generally produce a lot of income because they tend to have high dividend payout standards.
Shares of MPW are up more than 30% over the past two years, and the stock pays a substantial 6.47% dividend yield, well above the S&P 500’s 2.01% average.
REITs are often more stable than traditional equities due to the nature of their investments. However, it depends on what kind of properties they deal with.
MPW focuses specifically on hospitals, so it’s significantly less volatile than REITs with riskier investment profiles.
MPW’s projected revenue is expected to jump to $1.3 billion in 2020, nearly 50% higher than the previous year.
One downside of MPW is that it is relatively non-diversified. Approximately 81% of assets from rent are generated from acute care facilities.
MPW suffered a substantial loss back in late-March due to the coronavirus crisis, but it quickly recovered to its original levels.
Why Buy Stocks Under 20 Dollars?
In general, share prices have increased in terms of raw price and valuation relative to earnings.
According to MarketBeat, most stocks in the market trade for close to 25 times their annual earnings.
Even small companies listed on the S&P 500 have market capitalizations exceeding $1 billion, so it’s often difficult to find value stocks that fit your risk appetite.
Some penny stocks have share prices lower than $1, so finding cheaper stocks is easy.
However, stocks under $1 are often extra risky and volatile. You can find some excellent value stocks in the $5 to $20 price range in our experience.
Today, we’re going to break down our picks for the best stocks under $20.
You might not know these stocks from CNBC, but you could generate strong long-term rewards if you have the patience and discipline to stay the course.
Pros of Trading Stocks Under 20
Cheap stocks receive relatively little play from Wall Street experts, so most of the public isn’t even aware they exist.
The lack of publicity can make for some volatility, but it also allows prudent investors to position themselves for extraordinary returns. Also, lower-priced stocks have more room to grow.
Large companies with high-priced shares already take up a considerable portion of the total market capitalization and consequently have less “space” to grow.
Low-priced stock, on the other hand, has plenty of space to stretch its wings and fly.
Additionally, some stocks under $20 from well-established companies pay dividends.
These cheap dividend stocks are ideal investments for income investors.
Stocks that cost $20 also tend to have exchange-traded options and futures, so you have more trading options.
Cons of Trading Stocks Under 20 Dollars
Experts don’t usually cover these cheaper stocks, so you could have difficulty finding timely information about the company.
As a result, you might get stuck sifting through company documents to find the information you need. All that extra research can take up a lot of your time.
What to Look for in Stocks Under 20 Dollars
There are a few key metrics to look out when gauging stock price value under $20.
What Does the Company Do?
The first thing you should look for is a company that makes a product or service with ample growth opportunities.
You do not want to invest in a company that offers products or services that may soon be obsolete.
Before buying any stock, you should look at the company’s financial reports to get an idea of their total assets and liabilities.
Financial sheets can tell you a lot about a company’s health.
You should also look for companies that have strong earnings and revenue growth.
If possible, try to find stocks with analyst ratings. Many analysts follow stocks near the $20 price range of their relatively high liquidity.
Interestingly enough, positive analyst ratings have a kind of feedback mechanism.
The more positive feedback a stock gets, the more people will buy it, and the further its value will rise.
You don’t necessarily have to limit your picks to stocks with favorable ratings, but you should look for companies that are getting some kind of attention from analysts, regardless of whether it’s good or bad.
When looking for stock, you should also focus on the company’s growth potential.
One way to gauge this aspect is to look at quarterly earnings and see if there is a consistent growth trend.
You also want to look at stocks that show a consistently increasing P/E (price-to-earnings) ratio.
Best Stocks Under $20: Conclusion
You don’t have to only invest in super-expensive stock to get the most out of the market.
The best stocks under 20 dollars include some excellent opportunities for entry-level investors to start their portfolios.
Our picks for the best stocks under $20 also have high growth potential, so it’s usually best to buy in early.
However, it might pay off to wait for a dip before you buy if a company is particularly hot. Generally, buy-and-hold is the best long-term approach.
If you’re in it for the long-haul, these stocks under 20 dollars could easily outperform the overall market over the next few years.