In this article, we discuss the 5 best stocks under $20. If you want to read our detailed analysis of these stocks, go directly to the 10 Best Stocks Under $20.
5. Magnachip Semiconductor Corporation (NYSE:MX)
Stock Price as of May 25: $18.76
Stock Price as of November 17: $9.44
Number of Hedge Fund Holders: 28
Magnachip Semiconductor Corporation (NYSE:MX) is a Korean designer and manufacturer of OLED displays and other analog and mixed-signal semiconductor products, mainly for electronics and power companies. The products manufactured by Magnachip Semiconductor Corporation (NYSE:MX) are used in a diversified range of devices like automobiles, desktop PCs, LED lighting, smartphones, and smartwatches.
Magnachip Semiconductor Corporation (NYSE:MX) stock is in the news as a Korean financial website has claimed that a company known as LX Semicon intends to acquire Magnachip Semiconductor for $25 per share. This provides a potential upside of over 30% from the previous closing price. There are other bidders in the market also, who may bid a higher price. The long-term revenue outlook of Magnachip Semiconductor Corporation (NYSE:MX) seems strong as the OLED market is expected to rise at around 13% annually to reach $72.8 billion by 2026. Magnachip Semiconductor Corporation (NYSE:MX) is at an attractive valuation against its competitors as it is trading at a trailing twelve months (TTM) P/S ratio of 1.58x.
Magnachip Semiconductor Corporation (NYSE:MX) was discussed in the Q4 2021 investor letter of Altron Capital Management. Here’s what the firm said:
“MagnaChip Semiconductor Corp. (NYSE:MX). While the previous buyout offer from Wise Road Capital did not go through as many expected, the company is still in talks with other potential buyers. Furthermore, the company announced a USD 75 million share buyback, which represents a significant percentage of the company’s shares. While we do not generally enter positions with the anticipation of a buyout, it is the case that a MagnaChip acquisition will be the most likely outcome.”
4. Flex Ltd. (NASDAQ:FLEX)
Stock Price as of May 25: $15.63
Stock Price as of November 17: $19.79
Number of Hedge Fund Holders: 48
Flex Ltd. (NASDAQ:FLEX) is the third biggest electronics manufacturing services (EMS) company globally in terms of revenue. The Singaporean company has a very low-cost structure due to its significant presence in developing countries. Flex Ltd. (NASDAQ:FLEX) is pinning its hopes on numerous high-growth and next-generation industries like automotive, cloud data centers, and digital healthcare. Together, these industries contribute only 15% of the top line, but the revenue from these high-growth industries is expected to compound by 20% annually until 2025.
On May 18, James Kelleher at Argus upgraded Flex Ltd. (NASDAQ:FLEX) stock from a Neutral to a Buy rating. The analyst has given a target price of $22 and anticipates the top line of Flex Ltd. (NASDAQ:FLEX) to drive the improvement in margin. Kelleher highlighted that Flex Ltd. (NASDAQ:FLEX) has a “strong” backlog, and the company’s “focused execution” is offsetting any supply-chain disruptions.
Of the 912 elite funds tracked by Insider Monkey at the end of Q1 2022, Flex Ltd. (NASDAQ:FLEX) was held by 48 hedge funds.
3. Magnite, Inc. (NASDAQ:MGNI)
Stock Price as of May 25: $9.25
Stock Price as of November 17: $11.11
Number of Hedge Fund Holders: 28
Magnite, Inc. (NASDAQ:MGNI) is the world’s biggest independent sell-side advertisement platform (SSP). In the last 12 months, Magnite, Inc. (NASDAQ:MGNI) stock has fallen from $60 to $10 as investors are concerned about the future of growth companies.
The significant dip in Magnite, Inc. (NASDAQ:MGNI) stock price reflects that the impact of a potential recession has already been factored into the stock and in case of any positive catalyst, the stock price will shoot up. The company has made its position stronger as the main SSP through various acquisitions. Leading streaming giants like Netflix, Disney+, and Apple TV Plus are looking to launch an affordable advertisement-supported service for their customers and this will increase the total addressable market (TAM) for Magnite, Inc. (NASDAQ:MGNI). Furthermore, ad spending is expected to jump in the second half of 2022 due to the mid-term elections in the US.
Here’s what Alger said about Magnite, Inc. (NASDAQ:MGNI) in its Q2 2021 investor letter:
“Magnite provides an advertising supply side platform for publishers. The technology helps publishers such as network television stations or cable news providers automate the sale of digital advertising inventory across different formats and channels, like desktop, mobile, video, audio, connected TV and over-the-top TV. Publishers monetize their digital advertising inventory by using Magnite’s platform to access a global market of ad buyers, including advertising agencies that use supply side platforms. Magnite also helps sellers decrease costs and protect their brands and user experience. Magnite receives ad inventory from sellers and optimizes publishers’ revenue yields by processing the highest buyer bids. Currently, Magnite keeps approximately 10% of ad spend as revenue (i.e. take rate) and passes on the remainder of the ad spend to publishers. Magnite’s clients include many of the world’s leading publishers of websites and mobile applications and the company believes that its platform reaches approximately 1billion individuals globally.
Shares of Magnite underperformed in the second quarter due to the growth market selloff and slower-than-expected growth in connected TV during the first three months of this year. We believe the 32% growth in connected TV was below expectations and due to a one-time issue with one of the company’s publishing partners that ran out of advertising inventory. Management noted the issue has been fixed and the company saw strong reaccelerating growth in April. Additionally, we believe Magnite’s recent acquisition of video advertising company SpotX will significantly bolster the company’s positioning within connected TV, a high-growth area of the digital advertising market that is taking share from linear TV ad budgets.”
2. Latch, Inc. (NASDAQ:LTCH)
Stock Price as of May 25: $2.14
Stock Price as of November 17: $1.14
Number of Hedge Fund Holders: 21
Latch, Inc. (NASDAQ:LTCH) is a New York-based corporation that provides a complete platform of products, software, and services like connectivity, sensors, guests, and delivery management, along with personalization for a complete building.
Although the construction of new buildings may come under pressure due to the rising interest rate, Latch, Inc. (NASDAQ:LTCH) has already prepared for this contingency by reducing its workforce by 28%. Stephen Sheldon at William Blair sees this development as a net positive and highlighted that the Latch, Inc.’s (NASDAQ:LTCH) market capitalization is now just slightly above its net cash position. The announcement related to the decline in the workforce would help the company sustain its operations and lower its cash burn. On May 23, Sheldon gave Latch, Inc. (NASDAQ:LTCH) stock an Outperform rating.
Latch, Inc. (NASDAQ:LTCH) also generates revenue by selling hardware and charging a monthly subscription fee for its software and services. This reflects a sustainable revenue model as the customer would be bound by the significant outlay made for the hardware.
1. Energy Transfer LP (NYSE:ET)
Stock Price as of May 25: $11.17
Stock Price as of November 17: $12.11
Number of Hedge Fund Holders: 31
Energy Transfer LP (NYSE:ET) is the biggest and the most diversified midstream company in North America with a network of 120,000 miles of pipeline.
In the Q1 2022 results, Energy Transfer LP (NYSE:ET) reported an EBTIDA of $3.34 billion, which was significantly higher than the consensus estimates of $3 billion. The company is recovering strongly from the COVID-19 pandemic, and its distribution matches the pre-COVID levels. Energy Transfer LP (NYSE:ET) reported Q1 2022 revenue and EPS of $20.491 billion and 37 cents, respectively, outperforming consensus estimates of $18.76 billion and 32 cents.
In a note issued to investors on April 26, Robert Kad at Morgan Stanley gave Energy Transfer LP (NYSE:ET) stock a target price of $15 along with an Overweight rating. The analyst is bullish on the outlook of the midstream industry for the remainder of this year.
In its Q2 2021 investor letter, Miller Value Partners shared its stance on Energy Transfer LP (NYSE:ET). Here’s what the firm said:
“Energy Transfer LP (ET)rose over the period along with the price of oil climbing 40.59% over the period. The company received positive news that the Dakota Access Pipeline project would not be shut down while the Environmental Impact Statement by the US Army Core of Engineers is drawn up. Energy Transfer reported strong 1Q results with revenue of $17B surpassing expectations for $11.8B with adjusted earnings before income, taxes, depreciation and amortization (EBITDA) hitting $5.04B ahead of consensus of $2.77B. The company raised full year adjusted EBITDA guidance to $12.9-13.3B from $10.6-11.0B previously, with the increase largely related to the benefits realized from Winter Storm Uri. The company paid down $3.7B in debt during the quarter, using strong cash f low to reduce leverage. The company also announced the issuance of $900M in 6.5% Series H perpetual preferreds with the company using the proceeds to repay debt and for general purposes.”
“We have no new position this quarter and have made below changes to our portfolio. We also sold Palantir (PLTR) as I identified it subject to high retail bubble risk (using above method) and are not part of our core “Mindful Compounder” holdings.”
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