Joel Anderson
Joel Anderson
Verified by an expert
“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.
Hannah Alberstadt
Hannah Alberstadt
Verified by an expert
“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.
BLUEPRINT
Updated 2:32 p.m. UTC April 1, 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.
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)
Sector
Technology
Market cap
$72.95 billion
YTD performance
-2.45%
What you should know
Infosys is an Indian company that provides several information technology consulting services around the world, including consulting, engineering, technology and outsourcing. It also provides software solutions for the banking industry.
Infosys may not put up impressive growth numbers or have as much upside as many other tech stocks trading under $20, but the company is consistently profitable and has a leading position in the massive global digital services and consulting markets.
In the most recent quarter, Infosys reported 0.09% year-over-year revenue growth, $733 million in net profit and 22.15% operating margins. The company also reported a record $7.7 billion in large and mega-deal total contract volume in the quarter, suggesting it is scoring large, impressive customers.
Pros and cons
Pros
- Automated tech solutions should help expand profit margins over time.
- Infosys should benefit from the growing demand for more flexible IT infrastructures.
- Opportunities to increase market share in Europe as the region outsources more IT workloads.
Cons
- Cost risks associated with rising IT wages in India.
- The company could face growing IT services competition from Amazon and other international tech giants.
- Year-over-year revenue growth has slowed for four consecutive quarters to the low single-digit percentage range.
More details
P/E: 24.74.
Blue Owl Capital Inc. (OWL)
Sector
Financial services
Market cap
$26.66 billion
YTD performance
27.56%
What you should know
Blue Owl Capital is an alternative investment company that provides businesses with private capital solutions. Its products focus on credit, private equity and private equity real estate.
While Blue Owl has a slim profit margin, it’s nevertheless moving in the right direction and has become more profitable in recent quarters. The company’s shares are up more than 20% year over year, and many analysts recommend buying the stock. It also pays a sizable dividend yield of 2.97%.
Pros and cons
Pros
- Increase of 20% in assets under management in the past year.
- Increase of 24% in year-over-year revenues in the first quarter.
- Shares pay a sizable dividend.
Cons
- Slim profit margin.
- Very high P/E ratio.
- Total AUM is smaller than other alternative asset management firms like Blackstone (BX).
More details
P/E: 164.13.
Permian Resources Corp. (PR)
Sector
Energy
Market cap
$13.68 billion
YTD performance
31.07%
What you should know
Permian Resources is an oil and natural gas company focused on delivering sustainable returns through the responsible acquisition, optimization and development of oil and natural gas properties. Its operations are focused in the Permian Basin, located in western Texas and southeastern New Mexico. Most of the company’s assets are concentrated in the core of the Delaware Basin.
Permian Resources is growing its production numbers. In the third quarter of 2023, total production increased by 4% on a quarterly basis, while average daily crude oil production was up 6% compared to the previous quarter. It also increased average completed and drilled feet per day by 14% and 4%, respectively, compared to the second quarter of 2023. The stock pays a dividend yield of 3.4%, even after its stock price gained more than 25% in the past year.
Pros and cons
Pros
- Second-largest pure-play exploration and production company in the Permian Basin.
- Recently closed a $4.5 billion acquisition of Earthstone Energy Inc. to boost its asset portfolio.
- Began paying dividends in 2022.
Cons
- Net change in cash is down significantly compared to third quarter of 2022.
- Low cash flow per share.
- Debt-to-equity ratio is nearly 30% higher than industry peers.
More details
P/E: 14.32.
Vipshop Holdings Ltd. (VIPS)
Sector
Consumer discretionary
Market cap
$9.45 billion
YTD performance
-4.49%
What you should know
Vipshop Holdings is a Chinese company that operates the e-commerce website VIP.com. Products include food, clothing, bags and electronics. The company provides special offers and deep discounts on branded products. Vipshop was founded in 2008 and has since become one of the largest e-commerce platforms in China by market cap.
Though VIPS is now selling at around a third of its 2021 peak of about $45 a share, there’s a lot to like about this stock. Its net profit margin has ranged from 5.3% to 7.5% in the past four quarters, with a net income ranging from $1.2 billion to $2.2 billion per quarter. In the most recent quarter, net income was up 32.16% year over year, and revenue was up 9.18% on an annual basis. The company’s earnings yield of 15.4% far outshines its competition, as does its cash flow per share.
Pros and cons
Pros
- Effectively attracts customers with flash-sale events.
- Earnings yield suggests the stock is undervalued.
- Strong cash flow per share.
Cons
- Faces stiff e-commerce competition from larger companies with greater resources, such as Alibaba and JD.com.
- Negative net income growth in the most recent quarter.
- Geopolitical risks associated with U.S.-listed Chinese stocks.
More details
P/E: 8.528.
iQIYI Inc. (IQ)
Sector
Communication services
Market cap
$4.14 billion
YTD performance
-13.32%
What you should know
iQIYI (formerly QIYI) is a video streaming service that offers TV shows and movies from several Asian countries. It has free video streaming and paid subscription tiers with benefits like the ability to skip ads. iQIYI is partially owned by Chinese tech giant Baidu and headquartered in Beijing.
The company’s revenue increased 1.50% year over year in the most recent quarter. Its operating income margin in the quarter was 9%, more than double its 4% margin in the same period in 2022. Its earnings yield of 10.9% is relatively strong, while its cash flow per share of $1.25 is slightly below the industry average. Still, the stock appears to be undervalued, with many analysts recommending a buy.
Pros and cons
Pros
- iQIYI has transitioned from a net loss in the third quarter of 2022 to positive net income in the third quarter of 2023.
- Reported an average daily subscriber count of 107.5 million in the most recent quarter, up from 101 million a year ago.
- GAAP operating income more than doubled year over year in the third quarter.
Cons
- High D/E ratio relative to industry peers.
- The share price has declined in the past 12 months.
- Geopolitical risks associated with U.S.-listed Chinese stocks.
More details
P/E: 15.53.
Compare the best stocks under $20
| COMPANY | SECTOR | MARKET CAP | YTD PERFORMANCE |
|---|---|---|---|
Infosys (INFY) | Technology | $72.95 billion | -2.45% |
Blue Owl Capital Inc. (OWL) | Financial services | $26.66 billion | 27.56% |
Permian Resources Corp. (PR) | Energy | $13.68 billion | 31.07% |
Vipshop Holdings Ltd. (VIPS) | Consumer discretionary | $9.45 billion | -4.49% |
iQIYI, Inc. (IQ) | Communication services | $4.14 billion | -13.32% |
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.
Blueprint has an advertiser disclosure policy. The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.
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Wayne Duggan is a regular contributor for Forbes Advisor and U.S. News and World Report and has been a staff writer for Benzinga since 2014. He is an expert in the psychological challenges of investing and frequently reports on breaking market news and analyst commentary related to popular stocks. Some of his prior work includes contributing news and analysis to Seeking Alpha, InvestorPlace.com, Motley Fool, and the Lightspeed Active Trading blog. He’s the author of the book "Beating Wall Street With Common Sense," which focuses on practical investing strategies to outperform the stock market. He resides in Biloxi, Mississippi
BLUEPRINT
Joel Anderson is a business writer who has been living and working in Los Angeles for over a decade. His work has appeared on sites like MSN.com, GoBankingRates and Equities.com, writing about subjects ranging from basic investing knowledge to tech start-ups. He’s focused on spreading financial literacy with his work, helping more people learn how to make their money work for them.
BLUEPRINT
Hannah Alberstadt is the deputy editor of investing and retirement at USA TODAY Blueprint. She was most recently a copy editor at The Hill and previously worked in the online legal and financial content spaces, including at Student Loan Hero and LendingTree. She holds bachelor's and master's degrees in English literature, as well as a J.D. Hannah devotes most of her free time to cat rescue.
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