Great stocks don’t have to cost a lot. You can find some great stocks to buy under $20 if you know where to look.
While high-flying growth stocks such as Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and Shopify (NYSE:SHOP) cost more than $1,000 to own a single share, there are plenty of affordable and reasonably priced stocks that can be purchased for less than $20.
In this article, we explore four great stocks to buy for under $20 in April.
These are great options for thrifty investors who want strong returns.
- Ares Capital Corp. (NASDAQ:ARCC)
- The Geo Group (NYSE:GEO)
- JetBlue Airways (NASDAQ:JBLU)
- Ford Motor Co. (NYSE:F)
Stocks to Buy Under $20: Ares Capital Corp. (ARCC)
Ares Capital Corp. is a New York-based private equity firm. While the company tends to fly under the radar, it has caught the attention of a number of successful investors and hedge fund managers.
Michael Burry of the “Big Short” fame recently added ARCC stock to his portfolio, and 15 hedge funds held the stock at the end of last year. Arrowstreet Capital is the biggest stakeholder in Ares Capital Corp. with 2.3 million shares worth nearly $40 million.
What’s attracting attention right now seems to be Ares Capital’s impressive earnings and fundamentals. In the fourth quarter of 2020, the company’s earnings per share came in at 54 cents, blowing past the consensus expectation of 40 cents per share.
Ares Capital, which invests in first lien senior secured loans, mezzanine debt and some consumer products, has seen its share price rise 9% this year. ARCC stock has pulled back with the market recently but is currently trading at $18.40 a share, making it an affordable option for investors. Ares Capital also has a sky-high dividend yield of 8.6%.
The Geo Group (GEO)
This pick may sound a little grim, but has the potential for some decent returns going forward. Based in Boca Raton, Florida, The Geo Group is a real estate investment trust that owns and operates private prisons and mental health facilities all over the world, from North America to Australia and the United Kingdom.
The company’s assets include illegal immigration detention centers, minimum security prisons, mental health facilities and substance abuse treatment centers.
As one would expect, The Geo Group has a lot of government contracts to operate and manage these facilities. More than 200,000 offenders are currently housed in its facilities and more than half (50%) of the company’s revenue comes from contracts with the U.S. federal government.
While managing prisons, detention centers and drug treatment facilities may not sound glamorous, the government contracts that The Geo Group has represent a stable, reliable and long-term source of revenue for the company. And incarceration remains a big business in the U.S. and around the world.
The U.S. spends $80 billion a year incarcerating 2.2 million people. The Geo Group is a prime beneficiary of this industry, which has helped to buoy the company’s stock. Year-to-date, GEO stock is down 10% but still trades at just $8 per share.
Stocks to Buy Under $20: JetBlue Airways (JBLU)
Airlines are coming back, and one of the cheapest ones to buy that has great upside potential is low-cost carrier JetBlue Airways. Headquartered in Queens, New York, JetBlue flies to several popular sunny destinations in the Caribbean, Mexico and throughout South America.
In total, JetBlue services more than 100 domestic and international destinations, operating more than 1,000 flights a day. Like all airlines throughout the world, JetBlue Airways suffered throughout the global pandemic of the past year. JBLU stock bottomed at $7.22 a share in early April 2020.
The good news is that a recovery in JBLU stock is underway. JetBlue Airways stock has climbed as much as 55%. While it has slumped recently, the share price remains up 34% year-to-date at $19.60 a share. And, at under $20, the stock is much more affordable than many other U.S. air carriers that cost more than $40 per share to buy.
Goldman Sachs recently raised its price target on JetBlue shares to $24 from $15, and maintained a “buy” rating on the stock, noting that travel demand within the U.S. and abroad are improving at a fast clip.
Ford Motor Co. (F)
After begging, pleading and praying to a higher power, long suffering shareholders of the Ford Motor Co. are finally being rewarded as the automaker’s stock breaks out and climbs above $10 a share for the first time in two years.
Since the start of January, F stock has risen as much as 60% to a 52-week high of $13.62. While down with broader market weakness, Ford shares are holding strong at $12.25. And they remain attractive at their current price.
Ford’s stock is certainly a lot more affordable than Tesla (NASDAQ:TSLA) stock at $620 a share. Investors wanting exposure to the automotive sector and the emerging electric vehicle market should finally feel good about purchasing shares of Ford.
After years of languishing and flirting with penny stock territory, F stock has finally turned around due to the company’s global restructuring and aggressive push into electric vehicles. Multiple analysts, including at Barclays Bank, have upgraded Ford in recent weeks. Barclays raised its price target on Ford stock to $16 per share from just $3 previously, noting that the Detroit-based automaker should benefit significantly from its electric vehicle partnership with German automaker Volkswagen (OTC:VWAGY).
While Ford has struggled along with all automakers this year with a global shortage of semiconductor chips, the company’s long-term potential clearly outweighs any short-term challenges it faces.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article.