For many investors, it’s just more fun to buy “cheaper” stocks, i.e. stocks that are actually priced under $20 a share.
I get it. You can buy more shares. There’s something about owning 100 shares of a company versus just a handful even if you’re spending the same amount of money to get the shares.
But with most of the major stock indices hitting new all-time highs, and stock splitting being out of favor with most companies, many of the hottest stocks like Google (GOOG), Priceline (PCLN) and Tesla (TSLA) all trade much higher than $20 a share. In fact, those three are all trading above $200 a share.
Does that mean that an investor who wants to own a hot stock with good fundamentals but which trades under $20 is doomed to sit on the sidelines until a big correction comes?
There are plenty of good quality names still available but you have to dig a little deeper because they’re not the well-known bigger cap names. And that’s where the Zacks Rank can help.
Use the Zacks Rank to Find Stocks
I did a screen for companies with a Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy), which means the earnings outlook is solid, and also looked for companies which traded under $20.
That search yielded 308 stocks but that list is far too unwieldy to be usable. I had to narrow it further.
From that list, I narrowed it down by looking for companies with double digit earnings growth and respectable P/Es.
The following 3 companies have strong earnings growth and solid fundamentals and they’re also trading at or near their 52-week highs.
And you can buy each one of them at under $20.
Now that’s HOT!
3 Sizzling Growth Stocks to Buy Under $20
1. The Dixie Group
2. Strategic Hotels & Resorts
3. Hawaiian Holdings