In this article, we will discuss the 12 Most Undervalued Stocks to Invest in for Under $20.
As we know, nearly all sectors in the S&P 500 index saw gains in 2024, a year dominated by AI enthusiasm and a strong US economy. According to FactSet, the S&P 500 is anticipated to report earnings growth of 11.7% for Q4 2024, marking the highest YoY growth rate reported by the index since Q4 2021. According to an update (as of January 17), the Q4 2024 earnings season for the S&P 500 has seen a strong start. FactSet added that both, the percentage of S&P 500 companies publishing positive earnings surprises and the magnitude of earnings surprises, appear to be above recent averages.
As per Morningstar, the growth drivers identified last year that supported the broader market in 2024 are now receding. The rate of monetary policy easing has been slowing, inflation has been sticky, long-term rates are increasing and the broader US economy continues to slow. Amidst these uncertainties, what lies ahead?
S&P 500 to End at 6,200-6,300 in 2025, Says Goldman
Goldman Sachs’ investment strategy group anticipates the S&P 500 to end between 6,200-6,300 by year-end, demonstrating a total return of ~7% – 8%. The companies’ earnings growth is expected to be the critical driver of the S&P 500’s 2025 return, and Goldman forecasts that the index’s EPS will increase by ~10% to $265 this year. When this earnings growth gets combined with a 1.3% dividend yield and some sort of compression in the P/E ratio, the firm’s base case this year demonstrates high-single-digit total returns and the S&P 500 target range of 6,200 – 6,300.
What to Expect in 2025?
As per Goldman Sachs, the US stocks have faced pressures as of now in January, due to factors including higher Treasury bond yields, after strong performance in 2024 pushed S&P 500 index at elevated valuations. As per the group, the yield on the 10-Y treasury note is expected to conclude the year lower compared to the current level. The firm recommends to remain invested in the US stock market, even though the broader market is historically expensive.
As per Goldman, the US stock market often delivers gains when there are economic expansions. The investment strategy group of the bank has placed 80% odds on the fact that the US economy will continue to expand in the current year. While the elevated valuation can expose the market to downside risks, the investment firm believes that the US equities will outperform intermediate-duration U.S. bonds and cash considering its economic growth forecast of 2.3%.
With this in mind, we will now have a look at the 12 Most Undervalued Stocks to Invest in for Under $20
An executive of the company viewing a portfolio of investment grade municipal obligations.
Our Methodology
To list the 12 Most Undervalued Stocks to Invest in for Under $20, we used a screener to find stocks that are under $20 and have a forward P/E of less than 15x, as of January 17. We also mentioned hedge fund sentiment around each stock, as of Q3 2024. The stocks were ranked in ascending order of their hedge fund sentiment.
At Insider Monkey we are obsessed with 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
12 Most Undervalued Stocks to Invest in for Under $20
12) Barclays PLC (NYSE:BCS)
Forward P/E as of January 17: 7.04x
Share Price as of January 17: $14.26
Number of Hedge Fund Holders: 21
Barclays PLC (NYSE:BCS) offers various financial services in the UK, Europe, the Americas, Africa, the Middle East, and Asia. The company can allocate additional resources to areas demonstrating strong potential, like investment banking, wealth management, or fintech partnerships. By capitalizing on the strong performance in Q3 2024, it can focus on talent acquisition, technology upgrades, and market expansion in these lucrative segments. Furthermore, Barclays PLC (NYSE:BCS)’s strong performance is expected to provide financial flexibility to pursue strategic acquisitions or partnerships.
The company informed that Barclays Bank UK PLC has completed the acquisition of the retail banking business of Tesco Personal Finance plc. This acquisition forms an important step in increasing Barclays PLC (NYSE:BCS)’s investment in the UK. Through the acquisition of Tesco Bank’s credit cards, unsecured personal loans, and deposits, Barclays PLC (NYSE:BCS) will have access to Tesco’s extensive customer network, which can enhance its market presence in the UK.
Integration of Tesco Bank’s offerings will diversify Barclays PLC (NYSE:BCS)’s product range, resulting in cross-selling opportunities and meeting the broader spectrum of customer needs. In conjunction with the completion of the acquisition, Barclays UK has entered into a long-term, exclusive strategic partnership with Tesco Stores Limited for an initial period of 10 years. This will allow the former to market and distribute financial products under the Tesco brand, leveraging Tesco’s strong retail reputation.
11) UWM Holdings Corporation (NYSE:UWMC)
Forward P/E as of January 17: 14.1x
Share Price as of January 17: $6.14
Number of Hedge Fund Holders: 26
UWM Holdings Corporation (NYSE:UWMC) is engaged in the residential mortgage lending business in the US. The company’s market strategy focuses on maintaining its leading position in the broker channel via continuous innovation and significant investments. These initiatives are expected to aid UWM Holdings Corporation (NYSE:UWMC)’s market share and potentially fuel future growth. The company’s chief continues to prepare for a strong 2025, as he anticipates that home buying and mortgage refinances will pick up due to lower interest rates.
Home buyers will continue to enter the market as a result of a higher number of homes for sale and lower mortgage rates. UWM Holdings Corporation (NYSE:UWMC) is on pace to see record purchase volume in 2024, with the broker channel continuing to dominate the purchase market. UWM Holdings Corporation (NYSE:UWMC) and the channel remain well-positioned to capitalize on the inevitable increase in refinance volume when it comes.
There is optimism around refinancing opportunities, which can boost revenues over the coming quarters. This favorable outlook on refinancing activities demonstrates that the company continues to position itself to capitalize on potential market shifts. As interest rates fluctuate, periods of lower rates can result in increased refinancing activity. If refinancing activity increases, UWM Holdings Corporation (NYSE:UWMC) is expected to see a boost in loan originations and revenue. This can help mitigate any weakness in the purchase mortgage market and result in a more diversified income stream.
10) Coty Inc. (NYSE:COTY)
Forward P/E as of January 17: 13.2x
Share Price as of January 17: $7.14
Number of Hedge Fund Holders: 26
Coty Inc. (NYSE:COTY) manufactures, markets, distributes, and sells beauty products. In December 2024, Goldman Sachs initiated coverage on the company’s shares, setting a price target of $9. The firm has a positive long-term view on the beauty category and expects strong organic growth potential, courtesy of innovation and the category’s convergence with health and wellness. Despite the headwinds, Coty Inc. (NYSE:COTY) focuses on streamlining its operations, accelerating of innovation cycle, and enhancing social media marketing strategies.
The company outlined a distinction between mature markets and growth engine markets, which is expected to aid long-term growth. This segmentation strategy enables Coty Inc. (NYSE:COTY) to tailor its efforts more effectively and earmark resources to areas having strong potential returns. In mature markets, the company targets steady growth, while in growth engine markets, it continues to pursue more aggressive expansion strategies.
While Coty Inc. (NYSE:COTY) operates in a highly competitive beauty industry, its strong brand recognition, innovative product offerings, and effective marketing strategies are expected to help it navigate competitive pressures. Therefore, its growth prospects stem from several factors, such as strategic focus on high-growth segments, geographical expansion, and innovation. Canaccord Genuity Group reaffirmed a “Buy” rating, setting a $14.00 price objective on 15th October.
9) Levi Strauss & Co. (NYSE:LEVI)
Forward P/E as of January 17: 11.2x
Share Price as of January 17: $17.37
Number of Hedge Fund Holders: 27
Levi Strauss & Co. (NYSE:LEVI) is engaged in designing, marketing, and selling apparel and related accessories for men, women, and children worldwide. Barclays initiated coverage on the company’s shares, assigning an “Overweight” rating and setting a price target of $24.00. The firm’s analyst highlighted numerous factors that could fuel Levi Strauss & Co. (NYSE:LEVI)’s growth in 2025. These drivers include elevated wholesale demand and the current shift in denim styles.
Levi Strauss & Co. (NYSE:LEVI) is expected to benefit from organic sales acceleration because of broader market dynamics. Furthermore, the analyst also highlighted the long-term productivity gains from Project Fuel, which is an initiative focused on streamlining operations and emphasizing the core Levi’s brand. Despite acknowledging headwinds including unfavorable margin conditions, tariff impacts, and a strong U.S. dollar, Barclays expects that Levi Strauss & Co. (NYSE:LEVI)’s sales growth will be the most critical factor moving forward.
As per the analyst, opportunities are available for the company to meet the market share losses in men’s bottoms, improve operational capabilities, optimize its assortment, and make investments in direct-to-consumer channels. Middle Coast Investing, an investment advisor firm, released its Q4 2024 investor letter. Here is what the fund said:
“I’ve owned Levi-Strauss (LEVI) briefly before, and am trying again after a year where its stock nearly doubled from where I bought it, before dropping 30%. This is a small position based on the company’s improving cash flow and balance sheet and the ubiquity of the brand. But it’s also to some degree just a better alternative to cash for one account.”
8) Invesco Ltd. (NYSE:IVZ)
Forward P/E as of January 17: 9.01x
Share Price as of January 17: $17.20
Number of Hedge Fund Holders: 32
Invesco Ltd. (NYSE:IVZ) is a publicly owned investment manager. Morgan Stanley increased the firm’s price target to $19 from $18, keeping an “Equal-Weight” rating. The firm upped Q4 EPS estimates by 0.7% on average for the asset manager group, courtesy of the higher asset under management (AUM) levels due to better markets and flows. Elsewhere, TD Cowen analysts maintained their “Buy” rating on the shares of Invesco Ltd. (NYSE:IVZ), demonstrating the stronger-than-expected AUM figures.
The company reported preliminary month-end AUM of $1,846.0 billion as of December 31, 2024. Invesco Ltd. (NYSE:IVZ) delivered net long-term inflows of $12.6 billion in the month, equating to an annualized organic growth rate (AOGR) of ~11%, crushing the estimates of 3.4%. Notably, non-management fee-earning net inflows came in at $1.3 billion and money market net inflows stood at $12.0 billion. TD Cowen believes that the strong AUM figures were due to healthy inflows in both Long-Term and Global Liquidity assets.
TD Cowen went on to add that the volume of these inflows could have a mixed impact on fee rates. That being said, the magnitude of the inflows can positively influence Invesco Ltd. (NYSE:IVZ)’s revenue and adjusted operating income outlooks. Furthermore, the company’s broad and diversified investment capabilities place it well for future growth opportunities.
7) Huntington Bancshares Incorporated (NASDAQ:HBAN)
Forward P/E as of January 17: 12.3x
Share Price as of January 17: $17.01
Number of Hedge Fund Holders: 34
Huntington Bancshares Incorporated (NASDAQ:HBAN) operates as the bank holding company for The Huntington National Bank that provides commercial, consumer, and mortgage banking services in the US. Truist Securities initiated coverage on the company’s shares with a positive outlook. The firm provided a “Buy” rating and established a price target of $19.00. Brian Foran, an analyst at Truist Securities, lauded Huntington Bancshares Incorporated (NASDAQ:HBAN) for its strong standing in its primary markets of Ohio and Michigan, and strategic expansion into new growth areas like North Carolina, South Carolina, and Texas.
The analyst believes that Huntington Bancshares Incorporated (NASDAQ:HBAN) has a strong potential for capital deployment over the coming years. Its accumulation of other comprehensive income (AOCI) can offer financial flexibility. Huntington Bancshares Incorporated (NASDAQ:HBAN)’s expansion into the Carolinas can offer access to new customer bases and business opportunities, fueling loan growth, deposit acquisition, and fee income.
Huntington Bancshares Incorporated (NASDAQ:HBAN)’s success in capital markets reflects that the bank can expand its product offerings and services. By leveraging this expertise in new markets, it can create additional revenue streams and enhance its competitive position. The company’s expansion into the Carolinas opens up new opportunities to acquire new retail customers and corporate clients, fueling growth in deposit bases and loan portfolios.
6) NOV Inc. (NYSE:NOV)
Forward P/E as of January 17: 8.7x
Share Price as of January 17: $15.62
Number of Hedge Fund Holders: 34
NOV Inc. (NYSE:NOV) is engaged in designing, constructing, manufacturing, and selling systems, components, and products for oil and gas drilling and production, and industrial and renewable energy sectors. Also, the company manufactures and supplies equipment utilized in the drilling of natural gas wells, including rigs, drill pipes, and other related technologies. There is a potential for NOV Inc. (NYSE:NOV) to benefit from secular themes like a resurgence in demand for natural gas. Furthermore, its strong position in international markets is expected to offer a buffer against regional downturns.
With countries focusing on transitioning to cleaner energy sources, natural gas is being preferred because of its lower carbon emissions as compared to coal and oil. This shift can fuel increased investment in natural gas exploration and production. NOV Inc. (NYSE:NOV)’s expertise in offering equipment for both onshore and offshore drilling places it well to capitalize on these promising trends. The company is expected to see elevated demand for its specialized natural gas extraction and processing equipment, resulting in increased order volumes and better pricing power.
Furthermore, a natural gas boom is expected to result in the development of new gas fields, mainly in regions with underdeveloped resources. This will create opportunities for NOV Inc. (NYSE:NOV) to expand its global footprint. Hotchkis & Wiley Funds, an investment management company, released its Q3 2024 investor letter. Here is what the fund said:
“NOV Inc. (NYSE:NOV) is a leading provider of oilfield capital equipment, consumables, and services. Like APA, the downturn in energy prices has reduced oilfield activity below sustainable levels, impacting NOV’s sales and profitability. As activity rebounds, most of NOV’s product lines should experience significant increases in volume and pricing. In the longer term, the earnings power of its Rig Aftermarket business should improve, given its large installed base.”
5) Ford Motor Company (NYSE:F)
Forward P/E as of January 17: 6.06x
Share Price as of January 17: $10.18
Number of Hedge Fund Holders: 36
Ford Motor Company (NYSE:F) develops, delivers, and services a range of Ford trucks, commercial cars and vans, sport utility vehicles, and Lincoln luxury vehicles. The company’s electric vehicle strategy remains a critical component of its future growth plans. It has been investing heavily in its Model e division, which emphasizes EV development and production. As of now, the Ford Motor Company (NYSE:F) remains focused on costs. It has reduced $1 billion in its EV costs this year and has remade its battery footprint. The company remains on track to achieve $2 billion in cost reductions this year, mainly in the first three quarters.
Ford Motor Company (NYSE:F)’s approach to electrification uses its iconic nameplates and robust presence in the commercial vehicle sector. This strategy focuses on capitalizing on brand loyalty while, at the same time, addressing elevated demand for electric options throughout its various vehicle segments. The company expects that ~150 new EV nameplates will hit North America by the end of 2026.
Ford Motor Company (NYSE:F)’s Gen-2 EV platforms demonstrate a significant opportunity for the company to improve its competitive position in the EV market. These new platforms can be more cost-effective and efficient as compared to their predecessors, enabling Ford Motor Company (NYSE:F) to offer EVs at more competitive price points while maintaining or improving its margins. Royal Bank of Canada reiterated a “Sector perform” rating on the company’s shares, setting a $10.00 price objective on 29th October.
4) KeyCorp (NYSE:KEY)
Forward P/E as of January 17: 11.6x
Share Price as of January 17: $18.30
Number of Hedge Fund Holders: 41
KeyCorp (NYSE:KEY) operates as the holding company for KeyBank National Association which provides retail and commercial banking products and services in the US. It has been pivoting towards a more balanced growth model in consumer banking, aided by the expansion of digital banking capabilities. KeyCorp (NYSE:KEY) received a strategic investment from Scotiabank, which demonstrates a significant opportunity for growth and financial stability. This capital influx offers the company improved financial flexibility to pursue its strategic initiatives, mainly the securities portfolio repositioning.
This investment is expected to be accretive to EPS and can strengthen KeyCorp (NYSE:KEY)’s balance sheet and capital position. Furthermore, this partnership with Scotiabank is expected to potentially result in new business opportunities and synergies. The investment further underpins confidence in KeyCorp (NYSE:KEY)’s business model and future prospects, which is expected to positively influence market perception and investor sentiment.
Furthermore, Scotiabank’s global presence, mainly in Latin America and international markets, offers KeyCorp (NYSE:KEY) opportunities to further expand its reach beyond the US by leveraging Scotiabank’s network. This is expected to result in facilitating cross-border business, including the expansion of KeyCorp (NYSE:KEY)’s commercial banking services to international markets, mainly where Scotiabank possesses strong ties. Wells Fargo & Company increased its target price from $20.00 to $22.00, giving an “Overweight” rating on 15th November.
3) American Airlines Group Inc. (NASDAQ:AAL)
Forward P/E as of January 17: 7.3x
Share Price as of January 17: $18.27
Number of Hedge Fund Holders: 41
American Airlines Group Inc. (NASDAQ:AAL) operates as a network air carrier. Jefferies upgraded the company’s stock to “Buy” from “Hold,” raising its price target to $20 from $12.1. Its analysts said American Airlines Group Inc. (NASDAQ:AAL) is expected to see a significant surprise to the upside in 2025 as a result of corporate share recapture, lower capacity, capex, and a credit card partnership with Citi. The company continues to focus on fleet simplification, which can result in improved unit costs and operational efficiency.
The exclusive co-branded credit card deal with Citi demonstrates a significant opportunity for American Airlines Group Inc. (NASDAQ:AAL) to improve financial performance and strengthen its competitive position. This strategic partnership is expected to drive substantial benefits for the airline. The enhanced cash flow from the credit card deal is expected to accelerate American Airlines Group Inc. (NASDAQ:AAL)’s deleveraging efforts, which can improve its balance sheet and credit profile over time.
Furthermore, it can result in more favorable financing terms and enhanced financial flexibility. The co-branded card program can translate into a tool for customer retention and acquisition, fueling increased loyalty and repeat business among American Airlines Group Inc. (NASDAQ:AAL)’s passenger base. The airline is expected to see working capital benefits, which can improve overall liquidity position and operational flexibility.
2) Elanco Animal Health Incorporated (NYSE:ELAN)
Forward P/E as of January 17: 12.6x
Share Price as of January 17: $12.02
Number of Hedge Fund Holders: 42
Elanco Animal Health Incorporated (NYSE:ELAN), an animal health company, is involved in innovating, developing, manufacturing, and marketing products for pets and farm animals. Stifel maintained its “Buy” rating on the company’s shares. The firm believes that, in 2026 and beyond, the company’s EBITDA growth is expected to outpace revenue growth. Furthermore, the firm opines that EPS is expected to grow faster than EBITDA, hinting that Elanco Animal Health Incorporated (NYSE:ELAN) provides the best risk/reward among Stifel’s other Animal Health names.
The new product launches, like Zenrelia and Credelio Quattro, are expected to fuel future growth. These developments highlight Elanco Animal Health Incorporated (NYSE:ELAN)’s strategic focus on innovation and market penetration. The company’s product pipeline demonstrates significant growth opportunities. The launch of Credelio Quattro, which is expected in Q1 2025, can help the company in the parasiticide segment, thanks to broad parasite coverage and competitive advantages. Furthermore, the strong performance of Experior, primarily in the heifer market, can contribute significantly to growth in 2025.
The potential success of such products, together with the ongoing expansion of Zenrelia’s clinic network, is expected to fuel revenue growth and further strengthen Elanco Animal Health Incorporated (NYSE:ELAN)’s market position over the next few years. Barclays upped its target price on the company’s shares from $19.00 to $20.00, giving an “Overweight” rating on 8th November.
1) PG&E Corporation (NYSE:PCG)
Forward P/E as of January 17: 11.4x
Share Price as of January 17: $17.01
Number of Hedge Fund Holders: 49
PG&E Corporation (NYSE:PCG) is mainly involved in the generation, transmission, and distribution of electricity and natural gas. BMO Capital Markets initiated coverage on the company’s shares, assigning an “Outperform” rating and a price target of $21.00. The firm sees the company’s stock as a core investment in the regulated utility sector, which offers a unique deep value opportunity together with healthy visible growth prospects.
The White House has finalized a $15 billion loan guarantee to PG&E Corporation (NYSE:PCG). This loan has been designed to help fund a portfolio of projects for the company to address the forecasted power demand growth and update its grid, as per Bloomberg. The company’s capex plans remain aligned with overall industry trends, consisting of the integration of renewable energy sources and the modernization of grid infrastructure. These initiatives are expected to support PG&E Corporation (NYSE:PCG)’s financial growth and will contribute to its environmental, social, and governance (ESG) profile.
The company’s growth strategy remains heavily inclined towards capital investments targeted at improving grid resiliency and accommodating load growth in transmission and distribution systems. Such investments can fuel PG&E Corporation (NYSE:PCG)’s rate base growth and aid its long-term earnings trajectory. Mizuho upped its price objective on the company’s shares from $24.00 to $26.00, giving an “Outperform” rating on 27th November.
While we acknowledge the potential of PCG as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than PCG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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