While you don’t need to look far to find some scorching-hot ideas (hint: artificial intelligence) in the market right now, investors seeking to go off the beaten path may find solace in undervalued stocks under $20. True, you don’t want to buy securities just based on their price tag. However, these less-appreciated names may eventually deliver the goods.
From relevant businesses to attractive multiples, these undervalued stocks under $20 might not seem particularly exciting at the moment. However, with a little bit of patience, you may be glad to have taken a shot before the big wave moves in. Even better, all the below ideas enjoy bullish consensus among Wall Street analysts.
If you’re ready to roll the dice, below are compelling ideas for undervalued stocks under $20.
Liberty Energy (LBRT)
Billed as a leading North American oilfield services firm, Liberty Energy (NYSE:LBRT) offers an innovative suite of completion services and technologies to onshore oil and natural gas exploration and production (upstream) companies. Presently priced at just a bit over $16, Liberty carries a market capitalization of $2.74 billion. Since the start of the year, LBRT gained almost 10% of its equity value.
Fundamentally, one of the factors that bolster the case for Liberty being one of the undervalued stocks under $20 is the resurgence of the hydrocarbon energy market. With demand moving in the right direction (up), business could return to the oilfield services specialist.
For now, LBRT trades at a forward earnings multiple of 5.04x. In contrast, the sector median clocks in at a much loftier 8.95x. Finally, Wall Street analysts peg LBRT as a consensus moderate buy. Further, their average price target comes in at $19.78, implying over 23% upside potential.
Healthcare Services (HCSG)
A risky but intriguing idea among undervalued stocks under $20, Healthcare Services (NASDAQ:HCSG) is an experienced leader in managing housekeeping, laundry, dining, and nutritional services within the healthcare industry. In other words, the company does the dirty job that few want to do but is so critical to the underlying infrastructure. Still, HCSG isn’t really appreciated, slipping about 3% since the Jan. opener.
For full disclosure, shares tumbled almost 17% in the trailing one-month period. Also, investment data aggregator Gurufocus warns that HCSG could be a possible value trap. One of the concerns is that its long-term revenue growth rate has gone negative. However, it’s gradually building momentum following the Covid-19 boom-bust effect.
For now, bullish investors can focus on its forward multiple of 19.79x, which ranks favorably lower than 68.81% of the competition. Lastly, analysts peg HCSG as a consensus moderate buy. Their average price target lands at $15.50, implying nearly 28% upside potential.
Jerash Holdings (JRSH)
A custom-branded apparel company for top global brands, Jerash Holdings (NASDAQ:JRSH) itself might not be a household name. However, you have almost certainly heard of the enterprises it serves, including Timberland, New Balance, and Calvin Klein, among many others. Per its website, Jerash owns six factories and four warehouses and employs approximately 5,700 people. Since the Jan. opener, JRSH slipped nearly 14%.
Granted, the red ink in JRSH makes it one of the riskiest undervalued stocks under $20. With inflation remaining stubbornly high, Americans are starting to feel the pressure. On the other hand, retail sales came in better than expected in July. This framework implies that, at least for relatively low-cost products such as branded apparel, people are willing to open their wallets.
Is that worth taking a shot with JRSH? Enticingly, JRSH trades at only 7.45x free cash flow. In contrast, the sector median stands at a loftier 11.52X. To close, analysts peg JRSH as a moderate buy. Their average price target clocks in at $6, implying over 76% upside potential.
NerdWallet (NRDS)
A personal finance company, NerdWallet (NASDAQ:NRDS) has gained popularity over the years for providing money-related guidance. Such advice commands extraordinary relevance right now. As you’ve probably heard, Americans’ credit card debt hit over $1 trillion, a dubious record. To be fair, much of this framework (perhaps most of it) stems from the lingering challenges of Covid-19.
On the other hand, at least a good chunk of the plastic leverage comes from profligate behaviors. It’s here where NerdWallet may possibly impart positive change. Still, investors aren’t exactly coming to the light right now. Shares trade at just under $9, having lost 9% since the beginning of this year. Presently, the company features a market cap of $679.2 million.
Nevertheless, NRDS makes a solid case for undervalued stocks under $20. Even though its three-year revenue growth rate (per-share basis) impresses at 23.8%, shares trade at only 1.14x. In contrast, the sector median is 3.28x. Also, analysts peg NRDS as a strong buy with a $16.80 price target, implying nearly 92% upside potential.
Vizio (VZIO)
Based in Irvine, California, Vizio (NYSE:VZIO) primarily operates as a television manufacturer. It designs and sells sound bars, viewer data, and advertising, per its public profile. As a commoditized play – Vizio specializes in low-cost TVs relative to the competition – VZIO suffers from volatility. Since the beginning of this year, shares fell almost 16%. Therefore, it’s a risky idea among undervalued stocks under $20.
Still, it’s possible that shares have started to calm down a bit. In the trailing five sessions, VZIO “only” lost less than 2%. Plus, if trends in the consumer economy move in the right direction (though it’s a bit of a long shot), VZIO could swing higher. Financially, Vizio may be compelling for patient investors because of its zero-debt profile, affording it flexibility. Plus, it trades at an enterprise-value-to-revenue multiple of 0.52x. For context, the sector median value stands at 1.35x.
Turning to Wall Street, analysts peg VZIO as a strong buy. Their average price target comes in at $12, implying almost 95% upside potential.
PCTEL (PCTI)
Moving onto the really speculative portion of undervalued stocks under $20, PCTEL (NASDAQ:PCTI) is a communications technology firm that enables wireless connectivity. Its brands feature applications in antenna systems, Industrial Internet of Things (IoT) devices, and test/measurement solutions. Although a relevant component of our rapidly digitalizing infrastructure, PCTI has fallen almost 7% since the start of this year.
What’s more worrying is the near-term trajectory. In the past month, PCTI crumbled more than 20%. Of course, that’s not what you want to see in your investment. At the same time, risk-tolerant investors may consider PCTEL’s strong balance sheet. Specifically, it boasts an impressive cash-to-debt ratio of 9.22X.
It’s also one of the undervalued stocks under $20, featuring a trailing earnings multiple of 11.79x. In contrast, the sector median is 21.17x. As well, the market prices PCTI at 7.72x FCF, favorably lower than 74.79% of its peers. Lastly, Lake Street’s Jaeson Schmidt pegs PCTI a buy with a $9 price target, implying over 124% upside.
SurgePays (SURG)
Billed as a technology and telecom company, SurgePays (NASDAQ:SURG) focuses on the underbanked community. Leveraging its financial technology (fintech) platform, SurgePays addresses the fact that millions lack access to traditional money networks. Although increasingly relevant (especially during this post-pandemic period), the company presents a volatile profile. Since the start of the year, SURG has given up almost 28% of its equity value.
Nevertheless, circumstances may be stabilizing. For example, in the trailing one-year period, SURG only slipped about 0.4%. Further, the company prints decent financial metrics. In particular, SurgePays’ Altman Z-Score clocks in at 6.05, which indicates high stability and low bankruptcy risk.
However, the issue with SurgePays is that it has lacked a credible pathway to consistent profitability. It’s possible, though, that it could turn things around. In the second quarter of this year, the company posted operating income of $6.2 million and net income of $6 million, a far cry from the red ink printed during the year-ago quarter. Finally, analysts peg SURG as a moderate buy with a $12.75 price target, implying nearly 166% upside potential.
On the date of publication, Josh Enomoto 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.
