In this article, we will look at the 8 Stocks Under $20 To Invest In Now.
Will We Have a Soft Landing?
There has been a lot of discussion happening lately regarding the economy and the markets. While the economy was doing great with the Federal Reserve cutting interest rates and analysts expecting the markets to continue the bullish outlook, the recent geopolitical circumstances have again created doubt among investors.
We recently covered an article about 10 Stocks Under $10 With High Potential, where we talked about how the market is expected to perform if the geopolitical situation escalates. Tom Lee, managing partner and head of research at Fundstrat Global Advisors, mentioned that he would be buying the dip if the market goes there and also presented his bullish thesis regarding how the market tends to perform well after such tensions. Here’s an excerpt from the article:
“Tom Lee, managing partner and head of research at Fundstrat Global Advisors, appeared on CNBC to discuss what the stock market looks like in the current geopolitically tense environment. Lee has been bullish on small caps for a long time however, he has also remained cautious regarding some bumps in the start before the market for small caps starts to rise. He maintained a bullish stance, projecting a year-end target of 6,000 for the S&P 500, despite acknowledging potential short-term volatility due to upcoming events like the election and geopolitical tensions in the Middle East.
He emphasized that current market conditions are tricky, with headline risks stemming from a potential port strike that could impact the economy. Lee suggested that if a significant dip occurs, it would be a good opportunity to buy, as he believes the long-term outlook remains positive despite temporary setbacks.
Talking about how the market has performed during wars in the past. Lee noted that historically, market reactions to geopolitical conflicts have often been more positive than anticipated. He cited past conflicts where buying during initial downturns proved beneficial, except for the recent Russia-Ukraine war which went otherwise due to concurrent Federal Reserve tightening.”
Building upon how the market is progressing, Larry Adam, chief investment officer at Raymond James, says that the current market is exactly what a soft landing looks like. Adam recently appeared in an interview on CNBC to talk about how the lower interest rates will benefit the small caps in particular the Russell 2000. He believes that the bull market will continue while the economy inches towards a soft landing.
When it comes to small-cap stocks they get around 56% of their financing from the short end of the curve. The short end of the curve refers to the short-term interest rate on the yield curve, which typically represents the yields on bonds with shorter maturities, such as 2-year or 5-year Treasury notes. Whereas the large-cap companies get only 26% financing from these short ends of the curve. Therefore, Adam believes that as the Fed continue to lower interest rates it will help small caps meet financing needs.
He further pointed out that it is expected that the Fed will cut twice this year and another four times the next year. Another reason why he likes small caps is because the economy going towards a soft landing. Adam emphasized that we have already seen that the rate cuts helped small caps outperform the large caps. Historically speaking whenever the economy has a soft landing it typically helps the small caps greater than the rest of the market.
Moreover, while mentioning his favorite sectors, Adam likes technology, healthcare, and industrials in both the small caps and large caps categories. While reasoning his interests in these sectors, he mentioned earnings in these sectors to be one of the prominent likable factors. Technology has been the only sector in the large caps category that has seen upward revisions. Moreover, the cash flow that these sectors are generating is being utilized in buybacks, paying dividends, and future growth expansions.
Let’s now talk about the 8 stocks under $20 to invest in now.
Source: pexels
Our Methodology
To curate the list of 8 stocks under $20 to invest in now, we used the Finviz stock screener and Insider Monkey’s database for Institutional Investors. Using the screener we shortlisted stocks trading under the price tag of $20 (recorded on October 4th). Once we had the list of stocks under $20, we ranked them according to the number of hedge fund holders as of Q2 2024. The list is ranked in ascending order based on the number of hedge funds.
Why do we care about what hedge funds do? 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).
8 Stocks Under $20 To Invest In Now
8. Viatris Inc. (NASDAQ:VTRS)
Share Price: $11.43
Number of Hedge Fund Holders: 45
Viatris Inc. (NASDAQ:VTRS) is an international healthcare company that was formed through the merger of Mylan and Upjohn, a former division of Pfizer. The company specializes in producing and selling generic and branded medicines. It is known for popular branded medicines such as Viagra and Lipitor. The company also produces cost-effective alternatives to branded drugs and deals in over-the-counter (OTC) medicines that are available without prescriptions.
A lot was going on with Viatris Inc. (NASDAQ:VTRS) during the second quarter of 2024, which clearly showed in its financial results for the quarter. The company was engaged in several divestitures as a part of its broader strategy to focus on core and high-growth therapeutics business. During the quarter, it completed the sale of its OTC business, its Active Pharmaceutical Ingredients business, and the Women’s Healthcare business.
As a result of this divestiture, there were prominent shifts in its financial results. The revenue of $3.8 billion was down 3% year-over-year and the net income of $264 million in Q2 2023 turned to a net loss of $326 million during the current quarter.
However, there is a bright side to the company’s future. While the revenue and net income took a hit during the quarter largely owing to the strategic measures, the new product revenue reached $210 million. The new product revenue was driven by the successful launches of Breyna and Lisdexamfetamine. The growth in new product revenue gave management the confidence to improve its new product revenue guidance for the year.
Moreover, if we look at the company’s remaining business after its divestiture, we see that the operational revenue increased by 2%, indicating that the core business is progressing even in tough quarters.
Viatris Inc. (NASDAQ:VTRS) is one of the best stocks to buy under $20. It was held by 45 institutional holders during the second quarter of 2024.
Greenlight Capital stated the following regarding Viatris Inc. (NASDAQ:VTRS) in its fourth quarter 2023 investor letter:
We established medium-sized positions in Alight (ALIT) and Viatris Inc. (NASDAQ:VTRS), and a small position in Syensqo (Belgium: SYENS). VTRS is a manufacturer of generic and off-patent branded drugs. The company was created in 2020 after a merger between Mylan and a division of Pfizer. We previously invested in Mylan, but sold five years ago due to concerns around management’s ability to deliver on promises, as well as deterioration in the generic industry. Those concerns were well-founded, as the shares proceeded to decline by more than 60% after we exited. After a recent management change, we decided to take another look and found that after years of sharp declines, generic drug pricing has stabilized and competition has been diminished. The company’s revenue and cash flow are now growing, and we expect this improvement to accelerate. VTRS’ new management team has simplified its drug portfolio via various divestitures and has committed to returning 50% of free cash flow to shareholders through “aggressive” share buybacks, implying a double-digit capital return based on our estimates. We acquired our shares at an average price of $10.63, or just 4.0x 2024 consensus earnings. VTRS shares ended the quarter at $10.83.”
7. PG&E Corporation (NYSE:PCG)
Share Price: $19.49
Number of Hedge Fund Holders: 46
PG&E Corporation (NYSE:PCG) is a holding company primarily known for its subsidiary, Pacific Gas and Electric Company (PG&E), which operates in northern and central California. It provides electricity and natural gas to approximately 15 million people across a vast area of around 70,000 square miles. The customer base of the company includes household users, commercial and industrial users, and agricultural customers.
One of the differentiating factors that sets the company apart is its focus on renewable energy. The solar business is one of the largest segments of PG&E Corporation (NYSE:PCG) and it can generate over 6,000 MW of electricity. This high production capacity from renewable energy sources positions the company well to benefit from the growing energy demand for data center and AI industries in the region.
Another point of attraction for PG&E Corporation (NYSE:PCG) is its strategic placement in Silicon Valley which will be the hub of AI and Data centers. The company has renewable power grids in the location and also has a vast network of fiber cables that can be used to supply electricity to Silicon Valley.
Management has reaffirmed its guidance range for 2024 with earnings per share at $1.33 to $1.37, indicating a 10% increase from 2023. PCG is one of the best stocks under $20 to invest in now. It was held by 46 hedge funds in Q2 2024.
Third Point Management made the following comment about PG&E Corporation (NYSE:PCG) in its Q1 2023 investor letter:
“Our strategy is to preserve liquidity and buying power to take advantage of markets when they “break”. While overall indices remain elevated, we are finding more chances to provide liquidity across all three asset classes in which we invest – credit, structured credit, and equity – opportunities which have been key drivers of performance for the fund. Our portfolio is balanced across industries with a focus on event-driven names including companies involved in spin-offs, significant cost-cutting, or other types of under-appreciated business transformation. PG&E Corporation (NYSE:PCG), which is still our largest position, continues to deliver strong performance, down 50bps in the first quarter but up 6.2% for the year to date after the Fire Victims Trust sold another 60 million shares in a block trade.”
6. The AES Corporation (NYSE:AES)
Share Price: $19.13
Number of Hedge Fund Holders: 46
Data Centers and artificial intelligence require a huge amount of energy to function, if these industries rely on traditional energy sources the risk for adverse climate effects increases. The solution to this problem is energy generation through renewable energy sources.
If you are looking to invest in a company that is making this happen and has the potential to grow with the high growth of AI and Data Centers, you might want to consider looking into The AES Corporation (NYSE:AES).
It is an energy company that focuses on generating electricity mainly from renewable sources of energy. As per the company’s second quarter 2024 factsheet, it generated 35,632 Gross MW in operation, out of which around 56% of the electricity came from renewable technologies. The company also operates Utilities that provide electricity to customers in strategically critical areas including Indiana, Ohio, and El Salvador.
There have been significant developments during the second quarter for The AES Corporation (NYSE:AES). The company expanded its partnership with Google, signing a 727 MW of hybrid wind and solar Power Purchase Agreements (PPAs). This will allow the company to expand into Texas as well as meet the electricity demand for Google’s data centers. Moreover, it also signed a 310 MW retail supply agreement with Google again for its data centers in Ohio.
While these nascent contracts with Google are impressive however, what’s more interesting is its overall growing backlog of long-term contracts which now stands at 12.6 gigawatts.
This topped with the fact that the stock was held by 46 institutional holders in the second quarter makes it one of the best stocks under $20 to invest in now.
Massif Capital made the following comment about The AES Corporation (NYSE:AES) in its Q3 2023 investor letter:
“Given interest rates’ elevated state, it is perhaps unsurprising that our utility exposure has fared poorly for us this year. We should have hedged the exposure sooner with a Utility ETF short, but we did not do that until the third quarter, after much of the damage was already done. As noted above, our Utility exposure is second only to our materials exposure in terms of negative impact on the portfolio across both the third quarter and the YTD periods. This is primarily driven by our investment in The AES Corporation (NYSE:AES), which was down roughly 26% in the third quarter and 47% YTD. Our other utility exposure is up for the year, including our short position, which, as noted, was put on in the third quarter, and it is probably something we should have had on the books for the entire year.
We attribute, for right or wrong, the entirety of the sell-off in AES to the interest rate environment. Chart overlays are always tricky, so one should not read too much into them, but as a quick sense check of the claim, if one inverts the move-in rates for a generic 10-year US government bond and overlay it with AES stock price YTD, you get the following:..” (Click here to read the full text)
5. Ford Motor Company (NYSE:F)
Share Price: $10.45
Number of Hedge Fund Holders: 47
Ford Motor Company (NYSE:F) is a leading automaker based in the United States. It is one of the world’s largest automakers and is known for its brands including but not limited to Ford, Mustang, and Lincoln. It manufactures and sells trucks, SUVs, cars, luxury vehicles, and EVs throughout 125 countries.
There are many points that investors can argue about while talking about the company, including its massive losses in the electric vehicle department or the challenges it is facing in China. However, one of the things that the investors might be missing about Ford Motor Company (NYSE:F) is its Ford Pro segment, which deals with commercial customers including businesses and government agencies providing vehicles and services tailored to their needs.
If we look at the first half of 2024, Ford Pro generated $5.6 billion in EBIT which was ahead of the regular company business. Moreover, while the overall revenue of the company grew 6% year-over-year, the Ford Pro grew 21% in the first half. The business in this segment also led to an increase of 35% in its software business.
Gaining confidence from the growing business segment, management has raised its full-year EBIT mark of $9 billion to $10 billion from $8 billion to $9 billion for its Ford Pro business. The stock was held by 47 hedge funds in Q2 2024, making it one of the best stocks under $20 to invest in now.
4. Warner Bros. Discovery, Inc. (NASDAQ:WBD)
Share Price: $7.74
Number of Hedge Fund Holders: 48
Warner Bros. Discovery, Inc. (NASDAQ:WBD) was formed in 2022 by the merger between WarnerMedia and Discovery Networks. As a result, the company has developed a wide portfolio ranging from TNT, TBS, CNN, and Discovery. Not only this, but the company is also one of the top content distributors that comprises film, television, streaming, gaming, and music.
It is one of the best stocks under $20 to invest in now. The stock was held by 48 hedge funds in Q2 2024.
The company faced some serious challenges arising from the gap between the market cap and the book value of the company. Moreover, there was also some softness in the advertising business which led to a 5% decrease in revenue year-over-year.
However, regardless its D2C business saw significant growth. The number of new subscribers added during the second quarter reached 3.6 million on top of the 2 million that were added during the previous quarter. Moreover, the upcoming and ongoing sports league resulted in double-digit growth for Warner Bros. Discovery, Inc. (NASDAQ:WBD) sports coverage.
This topped with the recent premier series on HBO including The House of the Dragon and The Penguin is expected to keep the company on track to achieve $1 billion in EBITDA by the next year.
Bonhoeffer Capital Management stated the following regarding Warner Bros. Discovery, Inc. (NASDAQ:WBD) in its first quarter 2024 investor letter:
In remembrance of Charlie Munger, I listened to and read his investment speeches in Poor Charlie’s Almanac. His speech to the University of Southern California business school specifically dealt with the application of worldly wisdom to investment management and business. There were five ideas presented by Munger in that speech which are particularly relevant in the Bonhoeffer portfolio. First, over the long term, it’s hard for a stock to earn more than the underlying business earns. As an illustration of this principle, we examined two firms, Old Dominion Freight Line (ODFL) and Warner Bros. Discovery, Inc. (NASDAQ:WBD).
WBD is an example of a value stock whose value has been impaired by a declining intrinsic value over time. Historically, WBD has been consolidating media content and distribution firms. However, the media content and distribution industry has been fragmenting over the past 20 years, with many new competitors and lower barriers to entry. Based upon Morningstar’s estimates, WBD is almost always undervalued, but stock price declined by 13.4% per year less than intrinsic value which declined by 5% per year, which is still a disaster compared to the index which increased by 12.7% per year. The average RoE was 7.2% and was declining through the period and ended negative. The chart below shows both the stock and Morningstar’s estimate of its intrinsic value over time.
These trends of growth and their effects on returns are reflected in the new investments we have invested in and those firms we have sold recently. We have sold most of our telecom and media firms (which have had flat to declining intrinsic values over time). These firms have been replaced by consolidating capital light distribution firms and specialized financial services firms (which have had increased intrinsic value over time) one of which is described below.
3. Permian Resources Corporation (NYSE:PR)
Share Price: $14.34
Number of Hedge Fund Holders: 51
Permian Resources Corporation (NYSE:PR) is an independent oil and natural gas production company. It operates through acquiring property with reserves of natural gas or oil. Next, the company utilizes its efficiency and productivity to extract resources at cheaper rates. The company has primary operations in the Delaware Basin.
As of the second quarter of 2024, the company had around 450,000 net acres, with 85,000 net royalty acres of land, and produced around 325 thousand barrels of oil per day. Recently, Permian Resources Corporation (NYSE:PR) announced acquiring core Delaware Basin assets which will benefit the company in several ways. The new property not only adds 29,500 net acres of land with 9,900 royalty acres to its portfolio but will also result in the addition of 15,000 barrels of oil per day to its production capacity by the fourth quarter of 2024.
This robust portfolio of property and its effective extraction methods that result in cheap natural gas and oil production enabled the company to post a successful second quarter of 2024. The revenue of Permian Resources Corporation (NYSE:PR) was up 100% year-over-year to reach $1.25 billion, with net income growing around 220% to reach $235.1 million.
As we mentioned, one of the main focuses of the company is to improve its cost structure. During the quarter it was able to bring its cost per foot to $830 which was well below the guidance of $860 for the current year.
The stock was held by 51 hedge funds in Q2 2024 as per Insider Monkey’s database, making it one of the best stocks under $20 to invest in now.
2. Carnival Corporation & plc (NYSE:CCL)
Share Price: $17.34
Number of Hedge Fund Holders: 53
Carnival Corporation & plc (NYSE:CCL) is the world’s largest leisure travel company, primarily focused on providing cruise vacations. It operates a diverse portfolio of cruise brands, including Carnival Cruise Line, Princess Cruises, Holland America Line, Seabourn, Costa Cruises, AIDA Cruises, and Cunard. The company serves major cruise destinations worldwide, with a fleet of 102 ships visiting over 700 ports. They cater to millions of guests annually, accounting for nearly half of the global cruise market.
The pandemic was tough waters for Carnival Corporation & plc (NYSE:CCL) as the company went from being a profit-making company to a loss-enduring operation. Challenges resulted in debt accumulation, however, management has been recovering well due to its cost-saving efforts, It has limited its new ship orders, and chosen fuel-saving routes for its cruise.
With the easing of the pandemic, the company is now back on track to generating record profits. The fiscal third quarter of 2024 was a depiction of its strong performance. The company generated a net income of $1.7 billion, which was up 60% year-over-year. The quarterly revenue was record high to $7.9 billion, up $1 billion from the previous year.
This is not it, Carnival Corporation & plc (NYSE:CCL) has already exceeded the current year with the cumulative advance booked positions for 2025, indicating that this record quarter was not an anomaly, but rather a pattern that we will see throughout the next year.
Aristotle Global Equity Strategy made the following comment about Carnival Corporation & plc (NYSE:CCL) in its Q4 2022 investor letter:
“We first purchased shares of Carnival Corporation & plc (NYSE:CCL), the world’s largest cruise line, during the second quarter of 2019. At the time, we believed the company was improving in quality, as the industry (and shipyards) had consolidated to a point where returns on capital could increase systematically over time. In addition, cruising is underpenetrated when compared to land-based alternatives. Despite the difficulties faced by the cruise industry during the pandemic, in our opinion, consumer appetite for cruising remains high, with cumulative advanced bookings at the upper end of historical ranges. As discussed below, we believe Carnival’s peer Norwegian Cruise Line is more optimally positioned for the coming years.”
1. Albertsons Companies, Inc. (NYSE:ACI)
Share Price: $18.50
Number of Hedge Fund Holders: 59
Albertsons Companies, Inc. (NYSE:ACI) is one of the largest food and drug retailers in the United States. The company operates more than 2,269 stores across 34 states under the brand names of Albertsons, Safeway, and Vons. This strong presence makes the company a leading player in the grocery store market. Moreover, the company also runs 1,725 pharmacies, more than 400 fuel centers, and around 1,330 in-store coffee shops.
Albertsons Companies, Inc. (NYSE:ACI) also has a robust online presence managed through its website and mobile app that allows customers to shop online and opt for delivery services. The stock is trading under $20 and was held by 59 hedge funds as per Insider Monkey’s database, thereby making it one of the best stocks under $20 to invest in now.
During the most recent quarter which is the fiscal Q1 2024, management indicated that it continues to focus on customer for life strategy. Under this strategy, it focuses on increasing its loyalty members. The strategy has been working fine for the company. Albertsons Companies, Inc. (NYSE:ACI) was able to grow its loyalty members by 15% year-over-year to 41.4 million.
Moreover, the company continued to perform well in the digital segment, with sales improving 23% year-over-year. Its same-store sales were also up by 1.4% thereby indicating an overall positive performance across all indicators. As a result of which, the net income of the company reached $241 million.
The continued focus on increasing loyalty members is expected to keep the company on the growth track for the fiscal year 2024, thereby making it an attractive investment opportunity for those looking for stocks trading below $20.
While we acknowledge the potential of Albertsons Companies, Inc. (NYSE:ACI) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for a promising AI stock that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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