The Nasdaq has had a challenging start to 2025, with the index dropping nearly 12% YTD, as of March 13. March 10 marked its worst single-day decline in almost two years, plunging 4% as investor concerns over escalating trade tensions fuelled fears of a potential U.S. recession. Given that technology companies make up approximately 60% of the Nasdaq, the sector’s heightened volatility has played a significant role in the index’s decline. Consumer discretionary stocks, the second-largest sector in the Nasdaq, account for roughly 20% of its total weight. This heavy concentration in growth-driven industries makes the Nasdaq a key indicator of the performance of both the technology sector and high-growth stocks.
A closer look at sector exposure provides further insight into recent market movements. On March 7, Reuters cited a Goldman Sachs report highlighting that hedge funds specializing in stock picking and multi-strategy investing saw nearly half of their annual gains erased in a single day following a tech-driven selloff on March 6. The most significant declines were concentrated in sectors where hedge funds had high exposure, including technology, media, and telecommunications. Year-to-date, the technology sector has been the second-worst performer in the S&P 500, falling 8%, while consumer discretionary stocks have led declines with a drop of over 9%.
Market volatility is likely to persist as economic indicators continue to send mixed signals. Treasury Secretary Scott Bessent recently stated that the U.S. economy may undergo a “detox period” as the new administration implements government spending cuts. However, he later clarified that a recession is not an inevitable outcome. With policy changes creating uncertainty, market turbulence could remain a recurring theme.
John Belton, a portfolio manager for growth equities at Gabelli Funds, shared his perspective on Nasdaq’s recent volatility during an appearance on CNBC’s ‘The Exchange’. He described the current market sentiment as a “buyers’ strike,” driven by uncertainty over policy direction from the White House. According to Belton, Wall Street is hesitant to take on additional risk in such an unpredictable environment. Despite the recent downturn, he emphasized that the fundamentals of major mega-cap technology companies remain strong. He also noted that Nasdaq’s exceptional performance in the past two years—gaining over 40% in 2023 and more than 30% in 2024—set high expectations among investors. The current correction, he suggests, is a natural reaction to those lofty expectations, coupled with the transition in political leadership.
While Nasdaq has delivered impressive returns in recent years and remains home to some of the world’s leading technology giants, it also presents compelling opportunities beyond large-cap tech. Investors looking for promising yet lower-priced stocks, particularly those trading under $20, may find attractive options within the index. These stocks often belong to companies with significant growth potential, making them appealing to both institutional and retail investors seeking high-upside investments at a relatively affordable price point.
To help navigate these opportunities, we have compiled a list of 12 Nasdaq stocks that could be worth considering in the current market environment. Let’s take a closer look at the 12 best Nasdaq stocks under $20 to buy now.
Photo by Pascal Bernardon on Unsplash
Our methodology
To determine the 12 best Nasdaq stocks under $20 to buy, we conducted a screening for Nasdaq-listed companies with a share price below $20 and a market capitalization exceeding $2 billion. We applied an additional criterion, considering only those stocks with an expected upside of at least 10%. Finally, we ranked the top 12 stocks that were the most widely held by hedge funds in ascending order of hedge fund holders, based on data from Insider Monkey’s Q4 2024 database of hedge funds.
Note: All pricing data is as of market close on March 13.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
12 Best NASDAQ Stocks Under $20 to Buy Now
12. Rivian Automotive Inc. (NASDAQ:RIVN)
Current market price: $10.61
Upside Potential: 32%
Number of Hedge Fund Holders: 40
Rivian Automotive Inc. (NASDAQ:RIVN) is an electric vehicle (EV) manufacturer specializing in adventure-oriented trucks and SUVs, as well as software and services that address the entire lifecycle of the vehicle. The company also partners with Amazon to produce electric delivery vans, reinforcing its role in the commercial EV segment.
In a report released in late-February, Canaccord Genuity analyst George Gianarikas remained optimistic about Rivian Automotive Inc. (NASDAQ:RIVN)’s future, highlighting key financial improvements. The company reported its first-ever gross margin positive quarter in Q4 2024, with management expecting this trend to continue into 2025. Profitability targets remain on track, with EBITDA turning positive by 2027, supported by the highly anticipated R2 launch in early 2026 and increasing production volumes. The analyst sees Rivian as the strongest contender to emerge as the West’s second major EV player alongside Tesla.
He also views Rivian Automotive Inc. (NASDAQ:RIVN)’s partnership with Volkswagen as a significant catalyst, providing crucial capital, scaling opportunities, and a competitive edge in next-generation vehicle platforms. However, uncertainties remain, particularly regarding potential changes to Department of Energy (DOE) loan commitments under a new administration. According to him, investors will need clarity on Rivian’s plans to fund its Georgia facility. Despite these challenges, the analyst maintains a bullish stance and reiterated a Buy rating on Rivian Automotive Inc. (NASDAQ:RIVN) with a $23 price target, significantly above the consensus 1-year median price target of $14.
11. ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD)
Current market price: $16.78
Upside Potential: 52%
Number of Hedge Fund Holders: 40
ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) is a biopharmaceutical company dedicated to developing and commercializing innovative therapies for neurological and central nervous system disorders.
For 2024, company sales surged 32% year-over-year to $958 million. Around 64% of total sales came from NUPLAZID ($609.4 million) and 36% came from DAYBUE. For FY 2025, the company guided for total revenue of $1.03 to $1.095 billion, which included DAYBUE net sales guidance of $380 to $405 million and NUPLAZID net sales guidance of $650 to $690 million.
In a February 27 report, Needham analyst Ami Fadia reaffirmed a Buy rating on ACADIA Pharmaceuticals with a $28 price target, citing strong growth indicators. The company’s earnings aligned with market expectations, reflecting financial stability. Management’s focus on brand development and international expansion signals a strategic growth approach. Key positives include improved commercial metrics for Daybue, with lower discontinuation rates and higher average dose usage. Additionally, upcoming 2026 pipeline data readouts add long-term growth potential, reinforcing ACADIA’s investment appeal.
