Although the dramatic rise of inflation last year ruined the definition of what we might term cheap, investors can still find great deals among the best stocks under $20 to buy now. Indeed, while inflation hurt the consumer, in some ways, it represented a godsend for contrarians. That’s because higher prices led to belt tightening, which in turn hurt corporate valuations.
Obviously, that’s a cynical way to approach the best stocks under $20 to buy. However, another angle exists. Basically, some of the high-flying names of last year could be due for a correction this year, especially if the Federal Reserve continues to tighten the money supply. Fundamentally, this dynamic may set up the case for under-the-radar market ideas.
Of course, you want to be careful as we enter uncharted territory. Still, it’s undeniable the troubles of 2022 offered up some compellingly cheap market ideas. Below are seven best stocks under $20 to buy now.
Best Stocks Under $20: Compx International (CIX)
Founded in 1993, Compx International (NYSEMKT:CIX) operates out of Dallas, Texas. Compx specializes in security products, providing lock components utilized in cabinet locks, ignition switches, office furniture, postal boxes, healthcare, vending and gas stations and exhaust systems.
Presently, Compx commands a market cap of $225 million. At the end of 2022, CIX closed out at $18.48 per share. For last year, CIX gave up almost 20% of equity value. However, sentiment stabilized in the final week of 2022, gaining half a percent.
Fundamentally, an attractive component undergirding Compx is that it has no debt. In fairness, it’s not always the greatest metric to own during a bullish (and inflationary) cycle. However, money essentially becomes more “expensive” with the Fed tightening the supply. Therefore, leveraging a zero-debt balance sheet affords incredible flexibility and resilience.
Also, Compx enjoys solid profitability metrics. For instance, the company’s net margin stands at 12%, beating out 79% of the competition. Although a relatively unknown name, CIX is well worth consideration if you’re looking for the best stocks under $20 to buy.
Headquartered in Tacoma, Washington, TrueBlue (NYSE:TBI) represents a workforce solutions firm. Presently, TrueBlue features a market cap of $644 million. At the end of last year, TBI closed out at $19.58 per share. Thus, it barely made it for consideration as one of the best stocks under $20 to buy. For the entirety of 2022, TBI ended up losing almost 31% of equity value.
While volatile, TrueBlue managed to post an 8% return for stakeholders in the back half of 2022. Further, Gurufocus labels TrueBlue a “modestly undervalued” business based on its proprietary calculations for fair market value. Objectively speaking, the market prices TBI at 10.1-times forward earnings. In contrast, the underlying business services industry features a forward price-earnings ratio of 13.3 times.
Another factor to consider is the company’s balance sheet. Right now, TrueBlue has an Altman Z-Score of 4.4, reflecting low bankruptcy risk over the next two years. In addition, its debt-to-equity ratio is 0.13 times. This metric sits favorably below the underlying sector’s median ratio of 0.4 times. Thus, if you’re seeking an underappreciated idea among the best stocks under $20 to buy, give some consideration to TrueBlue.
Best Stocks Under $20: AudioCodes (AUDC)
Based in Israel, AudioCodes (NASDAQ:AUDC) is a provider of advanced communications software, products and productivity solutions. Presently, AudioCodes carries a market cap of $546 million. Also, AUDC finished 2022 at $17.89. However, it’s one of the riskiest propositions, with AUDC dropping almost 50% of equity value in 2022. In contrast, the benchmark S&P 500 index gave up 20% of value during the same period.
Primarily, AudioCodes may attract contrarian bargain hunters because of its strong growth potential. In the third quarter of 2022, AudioCodes delivered revenue of $69.7 million, a lift of 10% against the year-ago quarter. Further, on an annual basis, AUDC has been consistently profitable since 2015. On a trailing-12-month basis, the company is looking at net income of $28.2 million.
To be fair, analysts feature a lackluster impression of AUDC, rating it a consensus “hold” with one “buy” and one “sell.” However, hedge funds have been steadily building their position in the firm since Q4 2021. If you can handle some risk, AUDC may represent one of the best stocks under $20 to buy.
Based in China, Vipshop (NYSE:VIPS) operates the e-commerce website VIP.com, which specializes in online discount sales. Per its public profile, Vipshop represents the third-largest e-commerce site in its home nation. Currently, Vipshop commands a market cap of $8.32 billion. For the full year 2022, VIPS gained a remarkable 63%. And in the trailing month, shares boomed more than 14%.
To be fair, not everyone wants to chase strong companies into potentially further strength. With 2022 being so volatile, it’s possible that VIPS could see some declines in the new year. Plus, with issues such as rare public protests against the government’s zero-coronavirus policy, China doesn’t exactly inspire confidence.
Then again, late in 2022, the government there signaled intentions to open the country for tourism and relax its policies. This should help boost Vipshop, making it an intriguing (albeit risky) name among the best stocks under $20 to buy.
Financially as well, VIPS stock presents an attractive profile. In a nutshell, Vipshop enjoys solid growth and profitability metrics. As well, it features a stable balance sheet with a healthy cash position. Finally, the market prices VIPS at only 8.8-times forward earnings. In contrast, the sector median is 13.9 times.
Best Stocks Under $20: Noah (NOAH)
Another China-based enterprise that doesn’t quite inspire confidence, Noah (NYSE:NOAH) requires patience. And that’s because it represents a wealth management service provider. Specifically, the company offers three business segments: wealth management, asset management and internet finance. It focuses on high-net-worth individuals along with enterprises in its home market.
Currently, Noah commands a market cap of $1.03 billion. For 2022, shares dropped almost 48% of equity value. Nevertheless, in the trailing month, shares actually gained more than 6%. Therefore, this could signal the early innings of a market recovery, drawing interest as one of the best stocks under $20 to buy.
Of course, fundamentally, it’s a risk. With investor sentiment down globally, wealth management lost much relevance. At the same time, downturns offer a chance for the truly competent experts to guide their clients to success.
Now, Noah benefits handsomely because of its fiscal stability. Mainly, the company features a debt-to-equity ratio of 0.01 times. In contrast, the industry’s median ratio is 0.24 times. As well, Noah appears undervalued. Currently, the market prices shares at 0.76-times book value, favorably below 79% of the competition.
G. Willi-Food (WILC)
Primarily operating out of Israel, G. Willi-Food (NASDAQ:WILC) is engaged directly and through subsidiaries in the development, import, export, marketing and distribution of a range of over 600 food products around the world. At the moment, G. Willi-Food commands a market cap of $187 million. WILC closed out 2022 at $13.16. For 2022, shares lost 32% of equity value.
Fundamentally, what’s arguably the most attractive attribute of G. Willi-Food centers on its cash balance. According to data from Gurufocus, the company features a cash-to-debt ratio of 75.4 times. In contrast, the median ratio for the broader defensive industry is only 0.43 times. As well, the firm features an Altman Z-Score of 13.5, reflecting extremely low bankruptcy risk.
Moreover, the enterprise benefits from strong profit margins. For instance, its net margin stands at 6.5%, beating out 88% of the competition. Finally, the company features 10 years of consecutive profitability over the trailing decade. Therefore, WILC could be one of the best stocks under $20 to buy in terms of proven track records.
Best Stocks Under $20: Electromed (ELMD)
Founded in 1992, Electromed (NYSEMKT:ELMD) operates out of New Prague, Minnesota. Electromed represents a medical device company dedicated to designing, manufacturing and marketing airway clearance technologies that help people around the world breathe better, stay healthier and lead active and fulfilling lives.
Presently, Electromed features a market cap of $88 million, one of the smallest enterprises among the best stocks under $20 to buy. The market priced the security at $10.49 a pop for 2022’s final trading session. For the year, ELMD dropped nearly 19% of equity value. However, it’s been picking up recently, gaining nearly 3% in the trailing month.
Fundamentally, Electromed enjoys a zero-debt balance sheet. Also, its Altman Z-Score stands at 11.5, reflecting very low bankruptcy risk over the next two years.
Out of the one analyst covering ELMD, it features a “consensus” view of “moderate buy.” Keep in mind, though, the analyst’s price target is $20, almost double from where it stands now. As well, insiders bought a significant number of shares in November. Thus, ELMD could be one of the best stocks under $20 to buy (before it gets to $20.)
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.