Many stocks under $20 have been beaten down in recent years, due to the struggles that their issuing companies have undergone, the Street’s overdone fears about interest rates and economic growth, or some combination of all of those factors. But with the economy staying strong and the Street becoming much less concerned about rates, many of these names are going to make big comebacks in the months and years ahead. Moreover, a high percentage of these companies have extraordinarily low valuations at this point, making them very cheap stocks to buy. For medium-term and long-term investors, here are three top-notch stocks under $20.
Stem (STEM)
On Dec. 7, investment bank TD Cowen identified Stem (NYSE:STEM) as a top pick for next year. The bank believes that Stem will get a lift from the proliferation of energy storage products, while its AI-powered Athena software is putting it ahead of its competitors.
TD Cowen expects Stem to start generating positive EBITDA, excluding certain items, next year. “We see Stem as the leader in the energy storage space relative to its more nascent peers,” the bank stated.
In the third quarter, Stem’s top line jumped a very impressive 34% versus the same period a year earlier to $134 million. STEM shares are changing hands at an extremely low forward price-sales ratio of 0.7, making it one of the best cheap stocks to buy.
Pan American Silver (PAAS)
From Nov. 13 to Dec. 8, Pan American Silver (NYSE:PAAS) climbed 13%, as silver and gold prices advanced meaningfully. With interest rates widely expected to fall next year, the U.S. dollar should drop significantly further going forward , providing a big lift to both silver and gold prices.
Moreover, silver prices should also be lifted by the inclusion of silver in both electric vehicles and solar panels. Of course, the worldwide utilization of both solar energy and EVs is continuing to rapidly increase. Also importantly, silver also has some momentum, as the price of the metal has risen about 10% since Oct. 5.
Analysts, on average, expect the company’s earnings per share to jump to 73 cents in 2024 from just 9 cents in 2022.
Paymentus Holdings (PAY)
Paymentus Holdings (NASDAQ:PAY) provides cloud-based bill payment technology to both merchants and financial institutions in the form of software-as-a-service.
It has customers in many different vertical markets, including the lucrative sectors of banking and insurance, and it has been growing quite rapidly, as its top line advanced 19% last quarter versus the same period a year earlier. Much more impressively, the firm’s EBITDA, excluding certain items, soared 94% versus the same period a year earlier to $15.5 million.
The company reported that the demand for its products and its “competitive differentiation” were strong. Moreover, the mean top-line estimate calls for $730 million of revenue next year, up from just $497 million in 2022.
Analysts, on average, expect its earnings per share to come in at 31 cents next year, up from 7 cents in 2022. Given the company’s very strong growth, its forward price-sales ratio of 2.9 is quite attractive.
On the date of publication, Larry Ramer held a long position in STEM. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
