Stocks under $20 are appealing to investors looking for inexpensive equities with plenty of upside. This is similar to what investors look for in penny stocks as well. And indeed, many stocks under $20 are technically also penny stocks.
This article won’t include them, though. And I want to make a distinction here. Because these stocks are all well above $5, they’ve already passed a meaningful hurdle. They’re still risky, but less so since they’re out of that categorization.
What investors get is much of the same upside with less risk. Most of the equities on this list are priced around $10. And most of them have the potential to move upward on the order of 50%. That alone should make them attractive.
Further, they all possess catalysts that you could call externalities. That is, they have positive tailwinds beyond their control. In other words, they have internal qualities which make them attractive, and external forces that could propel them upward.
These equities are less likely to be found on money manager lists and hedge funds. That’s because they’re too little and considered too risky. Yet they possess primarily ‘buy’ ratings for the most part, meaning Wall Street analysts rate them well.
In short, for those looking for stocks under $20 to buy, these equities are attractive and worth your time:
- Himax Technologies (NASDAQ:HIMX)
- United Microelectronics (NYSE:UMC)
- Ford Motor Co. (NYSE:F)
- Cemex (NYSE:CX)
- AcuityAds Holdings (NASDAQ:ATY)
- Enerplus (NYSE:ERF)
- Energy Transfer LP (NYSE:ET)
Stocks Under $20 to Buy: Himax Technologies (HIMX)
Most conversations about Taiwanese semiconductor firms are likely to start with Taiwan Semiconductor Manufacturing (NYSE:TSM). That’s for good reason. The company is arguably the most important firm globally. It’s the world’s largest foundry, and serves a multitude of various semiconductor applications manufacturers.
While it’s worth considering itself, its size and scope also serve to bring its price well above the confines of this article.
But Taiwan is a semiconductor powerhouse. The small east Asian nation houses semiconductor firms that specialize in niche areas of the semiconductor industry. Himax technologies is one of them, with a focus on display imaging technologies.
And at a bit over $10 with a buy rating and a target stock price of nearly $21 it’s certainly worth considering. In fact, all three of the analysts with current coverage consider HIMX stock to be seriously undervalued. Their target prices range from a low of $19 to a high of $23.50.
Another reason investors should be interested is that Himax Technologies exceeded expectations recently. The firm posted $356.3 million in revenues, up 18% quarter-over-quarter. That was a beat over Wall Street guidance.
The positive news doesn’t stop there. The company is expected to post $424.3 million in revenues in Q3. That’s hard to bet against, and also suggests that analysts may well be onto something with their price targets.
United Microelectronics (UMC)
United Microelectronics is another Taiwanese semiconductor firm, so many of the same positives associated with Himax Technologies also apply to United Microelectronics.
Before jumping into the particulars of its business, let’s consider the many metrics that point to UMC stock as a strong one. It trades for around $10, carries an average target stock price of around nearly $14, and has a consensus overweight rating currently. There is even some suggestion that it too, like HIMX stock, has the potential to double with one analyst giving it a target price of $21.56. The company is also in a strong position and experiencing growth. In Q2 it reported $1.82 billion in revenue, up 8% on a sequential basis, and 21% year-over-year.
And expectations are that the trend will not slow down. Analysts anticipate that United Microelectronics will report $7.56 billion in revenues in 2021. That number is expected to hit $10.72 billion in 2022.
Simply put, things aren’t slowing for the company. In September, it posted monthly sales growth of 29.01% YoY.
Stocks Under $20 to Buy: Ford Motor Co. (F)
F stock has the least upside of any equity on this list. That is true based on average target prices at least. That price sits at $16.19, barely above Ford’s $15.60 price at the start of Oct. 19.
But the true upside in F stock is really unknown at this point. The company is undergoing a massive change. That change, of course, relates to electric vehicles.
And whether you like EVs or not, the truth is that EV stocks outperform traditional auto stocks. Even the most bearish analysts readily admit that. Case in point: Barclays analyst Brian Johnson set his target price for Tesla (NASDAQ:TSLA) at $300. That’s deeply bearish, as Tesla trades above $800. But it also signals that at $300 he believes Tesla is more valuable than Toyota (NYSE:TM) on a market capitalization basis.
That’s why it makes sense to consider Ford. It is a company that is moving heavily into EVs. Legacy manufacturers had the benefit of watching Tesla and other EV upstarts prove their markets. It also has significant resources. So now that EVs have proven much more than a fad, it is moving in quickly.
Ford recently made headlines when it announced plans with SK Innovation to build an EV battery complex in Tennessee.
It all signifies that Ford shares could be getting a bump in coming years. The more it is associated with EVs, the greater its stock will benefit.
Cemex is a Mexico-based cement producer with roughly 41% upside based on target prices, and strong analyst sentiment. 19 of the 21 analysts covering it give it a buy rating — that alone says something.
At first blush it would seem that the most compelling catalyst behind Cemex would be infrastructure spending. After all, U.S. sales accounted for 29% of Cemex’s most recent reported sales. And cement remains critical in repairing and building new bridges and roads.
And while Cemex will benefit, JPMorgan’s Adam Huerta thinks that other Mexican cement firms like Grupo Cementos de Chihuahua stand to benefit more.
What Cemex has shown, even before infrastructure spend begins, is that it is growing. Q2 sales increased 40% on 24% greater volume on a year-over-year basis. And first half sales increased 22% on 16% greater volume.
The majority of that growth is coming from within the company’s home base, Mexico. That said, sales could jump in the U.S. moving forward which would give the company two bases of rapid growth.
Stocks Under $20 to Buy: AcuityAds Holdings (ATY)
AcuityAds Holdings is an adtech company. The company serves digital marketers in the omnichannel programmatic ad niche. That’s part of the reason ATY stock surged as high as it did in early 2021. Consumers were spending more time in front of screens, driving spending upward.
Further, AcuityAds had a relatively new self-serve platform which had launched in October. The timing was fortuitous.
And the company took advantage from a revenue and profit perspective. Through the first 6 months of 2021, revenue increased 31.9% YoY, hitting 57.739 million CAD ($46.72 million). And the company remains highly profitable, managing to take 30.173 million CAD ($24.41 million) in profit during the period.
In Q2, the numbers were even stronger. Revenues jumped 55%, and profits hit 15.809 million CAD ($12.79 million) on 30.285 million CAD ($24.5 million) in revenue.
Even so, ATY stock dropped anyway back in March and hasn’t rebounded since. There’s a ton of upside in it with a $16.45 target price.
The last two stocks on this list are both are oil companies. Thus, they both have significant catalysts in the form of rising oil prices. In fact, those prices recently hit $85 a barrel as analysts are warning that supply deficits will continue for the next few months.
That probably signals bad news for you and me at the pump, but good news for companies like Enerplus. So, putting the most positive spin on it, buy it as a hedge against rising gas prices.
Enerplus is a Canadian oil exploration and production firm which is quickly rising in price. In the trailing month, it’s up 42%, opening on Oct. 19 at $9.17. Analysts peg its price a couple dollars more at $11.67, but at least one analyst thinks it could go to $20. Those prices may be a stretch, but it does seem that everything is in place for ERF stock to rise substantially.
The company has suffered losses throughout 2021, but production increased by 32% in Q2 and now with prices in place things could change quickly, making it very interesting.
Stocks Under $20 to Buy: Energy Transfer LP (ET)
Energy Transfer, as you might have guessed by its name, engages in pipeline transportation and oil transmission. Basically, it’s a company that has been performing well in the energy rebound and should continue to.
In Q2, the company hit $15.1 billion in revenues, a jump of 106% over the same period a year earlier. With oil prices increasing quickly, there’s every reason to believe revenues will increase as company demand picks up.
The company is undertaking a debt reduction effort, which should increase its attractiveness. In Q2 the company paid down $1.5 billion in outstanding debt. In 2021 that took that number to $5.2 billion in aggregate.
Companies like Energy Transfer are interesting because they are relatively unknown outside of oil focused investment circles. They have upside and rise quickly when a catalyst hits. Recent price projections suggest an average upside of 42%, but that is very likely rising as oil supply deficits worsen.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.