Stocks under $20 offer investors and traders a lower-cost alternative to more expensive stocks. Despite the misperception that lower-priced stocks carry more risk, the risk profile of many stocks under $20 compares favorably with stocks trading at much higher prices, as does the opportunity for profiting from investing in them.
In addition, well-established stocks under $20 often pay dividends, which can be ideal for income-minded investors. Some stocks under $20 even have listed options, which can give you additional avenues of income if you wish to sell covered call options.
Whatever your investing or trading goals might be, stocks under $20 cover a wide range of companies and can offer great opportunities for profit.
Highlighted Best Stocks Under $20:
Overview: Best Stocks Under $20
Our picks for best stocks under $20 include a precious metals and mining fund, a large computer manufacturer, an online retail outlet, a family entertainment company and an international e-commerce and internet business. Each of these stocks represents a company with a unique product or service or one that already holds a prominent position in its field.
Best Online Brokers for Stocks Under $20
If you’d like to start trading or investing in stocks under $20, as well as stocks under $10 and stocks under $5, you can through any reputable broker with access to U.S. stock markets. Many online brokers, such as Charles Schwab, Vanguard, TD Ameritrade, E*TRADE, Robinhood and Firstrade, offer commission-free trading. More experienced, active and well-funded traders can use Interactive Brokers, although it charges inactivity fees and has a high minimum deposit requirement. A broker comparison table to help you choose among them appears below.
Features to Look for in Stocks Under $20
- Desirable product or service: To achieve success with stock investments, one of your first and foremost considerations should be whether the company has a viable product or service with significant current or anticipated demand for future earnings growth.
- Good financials: Reviewing the financial profile of the companies whose stocks you’re considering buying will give you a sense of the firm’s assets and liabilities. Pick companies with a solid and improving financial situation and avoid those facing serious business challenges. You can also look for companies whose earnings per share (EPS) do not yet reflect the future business scenarios you expect for them.
- Analyst ratings: Because liquidity tends to be higher with stocks under but close to $20, many market analysts take the time to review and rate them. Their professional analysis can give you a good idea of whether a stock shows promise as an investment. Also, when a company’s stock receives a good review from a reputable analyst, it tends to attract buying interest in the stock. This then causes the stock’s market price to rise.
Stocks to Watch Out for This Year
Most of the stocks covered below sold off considerably due to the COVID-19 pandemic and associated shutdowns, although they have now begun to increase in price as reopenings continue — a promising sign for their future valuation. One of the stocks, Dave & Buster’s Entertainment, has almost tripled since March 2020. Other stocks have not yet fully recovered so they can still be bought at levels lower than they were at the beginning of 2020 when markets had not yet fully reacted to the shutdown and its severe economic implications.
1. ASA Gold and Precious Metals Limited (NYSE: ASA)
Given the recent rally in the gold and precious metals market, ASA Gold and Precious Metals stock could be a good way to invest in the gold market. The company runs a closed-end, nondiversified fund with long-term capital appreciation derived from its investments in the global mining sector. ASA stock has recovered considerably after it traded as low as $8.70 in March 2020.
2. HP Inc. (NYSE: HPQ)
According to some analysts, the demise of the PC has been greatly exaggerated. Although the former tech giant Hewlett-Packard has probably seen better times, its stock seems poised for a rebound. The company recently declared a quarterly dividend of $0.1762, which yields 4.74% with the stock at current levels above $15 per share. While you may not double your money on your investment, HPQ stock could make for a solid investment with substantial dividend income.
3. Overstock.com (NASDAQ: OSTK)
Overstock.com was founded in 1999 and has rather quickly evolved from a startup to a billion-dollar online retailer. The company offers discounts on a wide variety of goods that can be purchased online for home delivery. Despite negative earnings, some analysts think OSTK stock has considerable upside potential from its current level just under $17 toward a considerably higher 12-month target ranging between $32.50 to as much as $40 per share.
4. Dave & Buster’s Entertainment (NASDAQ: PLAY)
Hit hard by the effects of the lockdown amid the pandemic, Dave & Buster’s operates venues that feature family gaming facilities, spectator sports and other televised events. The venues feature menus of entrees and appetizers, as well as alcoholic and non-alcoholic beverages. PLAY stock sold off hard in March but currently trades at significantly higher levels around $14. The company’s business and its shares are expected to continue its rebound as states re-open, making owning the stock a prime post-pandemic play.
5. Prosus N.V. ADR (OTCMKT: PROSY)
Based in the Netherlands and formerly known as Myriad International Holdings, Prosus N.V. operates internet platforms for international e-commerce. It also owns other businesses in the retail, travel, fintech and food delivery sectors. The international company has operations in China, Russia, India, Central and Eastern Europe, Latin and North America, Southeast Asia, the Middle East and Africa. Since the stock has its base in the Netherlands, you can buy American Depository Receipts (ADRs) on this stock in the OTCMKT stock market.
Biggest Stocks Under $20 Movers of the Day
Of the stocks mentioned, one of them has its base in the Netherlands and one has a direct correlation with the price of gold. These stocks, PROSY and ASA, are the most likely premarket movers among our picks. Stocks with premarket volatility generally have their base abroad or their business tied to an underlying commodity like gold, which trades round the clock.
Although stocks are generally more vulnerable after earnings announcements, an extraordinary event that directly affects the company could also make the stock extremely active. For example, a sharp move in the gold market, news of product development by HP or a takeover bid on Overstock.com could be events that would probably move some of these stocks significantly.
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Are Stocks Under $20 Worth Buying?
While some stocks under $20 are definitely worth buying and holding in your portfolio, you do need to do your research on a company before pulling the trigger. You also need to choose carefully because some stocks are on their way to 0 as their companies head toward insolvency, while others could be the next rising star.
Consider looking for inexpensive companies to invest in with a popular product or necessary service and a respectable financial position. Also, if you plan on taking a large position or engaging in short-term trading in stocks under $20 per share, then choose those with decent market liquidity.
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