When it comes to the best stocks under $20, let’s be real with each other — generally speaking, you get what you pay for. In other words, you don’t want to be the person that downgrades a two-star hotel for not having the accommodations of The Ritz-Carlton New York.
Many of these companies in this segment will feature challenges. That’s why they can be bought for under a Jackson. Still, it’s not utterly impossible to find truly compelling deals among the best stocks under $20.
Presently, thousands of publicly traded securities exist. That means not all investors can be everywhere at once. Further, certain market ideas will inherently command more attention than others. That’s life. In that context, it’s possible to find diamonds in the rough.
Nevertheless, the best stocks under $20 will require patience. The goal here is to find promising players in the minor leagues and bring them to the big show. If you’re up to the challenge, here are some low-cost names to consider.
Best Stocks Under $20: Infosys (INFY)
Based in India, Infosys (NYSE:INFY) represents a multinational information technology, or IT, company that provides business consulting, IT and outsourcing services. As of the conclusion of the Oct. 7 session, INFY stock finished at $17.06. Currently, it features a market capitalization of $75.5 billion.
The main reason why INFY qualifies as one of the best stocks under $20 is high quality. According to Gurufocus, Infosys’ business is “modestly undervalued.” Nevertheless, the company features strong financial metrics across the board, meaning that over time, the market might catch on. The balance sheet features robust stability. Most notably, its debt-to-EBITDA ratio is 0.17 times, whereas the industry median is 1.2 times.
Moreover, the company’s three-year revenue growth rate stands at 16.1%. This compares favorably to the industry median’s stat of 7.1%. On the profitability angle, Infosys features a net margin of 17.4%, which rates significantly higher than the industry median of 1.9%. Yet INFY stock slipped more than 30% on a year-to-date basis, which seems a bit excessive given the above attributes.
Wipro (WIT)
Another India-based technology firm, Wipro (NYSE:WIT) represents a rival to Infosys, competing in the same fields of IT and consulting. As well, Wipro specializes in business processing services. One of the cheaper names among the best stocks under $20, WIT ended up closing at $4.73 following the Oct. 7 session. Presently, the underlying firm features a market cap of nearly $26 billion.
As with its compatriot, Wipro makes this list of best stocks under $20 for its high relative quality. Financially, the company enjoys a very solid balance sheet. Arguably its most prominent metric is an Altman Z-Score of 5.47, which reflects low bankruptcy risk.
On the income statement, Wipro enjoys a three-year revenue growth rate of 14%. Again, the industry median sits at 7.1%. Further, Wipro ranks better than 67% of the competition for this metric. Regarding profitability, the tech firm features an operating margin of 16.2%, rating higher than 84.5% of its peers. It also has a net margin of 14%, better than more than 84% of public software companies.
Best Stocks Under $20: Amcor (AMCR)
An American-Australian company, Amcor (NYSE:AMCR) represents a packaging business. Per its website, the company develops and produces high-quality, responsible packaging solutions. The industries it covers include the food, beverage and pharmaceutical sectors. At time of writing, AMCR trades hands at $10.88 and features a market cap of just more than $16 billion.
Fundamentally, the inclusion of AMCR on this list of the best stocks under $20 centers on indispensable relevance. While the packaging industry may be mundane, it’s also crucial for the shipment of goods. Therefore, even with recessionary headwinds appearing on the horizon, Amcor offers pertinence to stakeholders.
Another factor aiding AMCR is its value proposition. According to Gurufocus, Amcor’s business rates as “modestly undervalued” based on proprietary calculations. While traditional indicators suggest it’s a bit overpriced, AMCR undeniably benefits from very solid revenue and profitability metrics.
Also, don’t forget Amcor represents a dividend aristocrat, featuring 39 consecutive years of dividend increases. It’s also generous with a forward yield of 4.4%.
DigitalBridge (DBRG)
A global digital infrastructure firm, DigitalBridge (NYSE:DBRG) owns, invests in and operates businesses such as cell towers and data centers. Admittedly, DigitalBridge represents a high-risk, high-reward opportunity. Earlier this year, shares commanded a price tag of more than $32. Today, it’s down to $12.72.
To be fair, DigitalBridge features an aspirational business profile. Frankly, if you take a look at its financial summary at Gurufocus, the company could use significant improvements. One positive to hold onto is its second-quarter 2022 earnings report. DigitalBridge generated revenue of $289 million, representing a lift of 22% against the year-ago quarter.
Currently, the company features a price-to-sales ratio of 1.6 times. For the industry, this metric’s median value is 7 times. Therefore, DBRG is cheap in this regard.
But what really makes DigitalBridge one of the best stocks under $20 to consider is insider buying. The top executives believe in the company, which could be encouraging for retail investors.
Best Stocks Under $20: Spok Holdings (SPOK)
Based in Alexandria, Virginia, Spok Holdings (NASDAQ:SPOK) specializes in clinical information delivery solutions for care teams. Per its website, Spok seeks to eliminate communication gaps across underlying healthcare systems. As of this writing, SPOK trades hands at $7.78, representing one of the riskier names among the best stocks under $20. Currently, Spok features a market cap of $153 million.
While SPOK on paper may not immediately generate confidence, its performance hasn’t been too bad this year. Since the January opener, SPOK has slipped 18%. For context, the benchmark S&P 500 index dropped nearly 25% during the same period.
On the fundamental side of the business, Spok plays a significant role in the normalization of society. Specifically, by improving administrative flow in healthcare systems, it helps improve patient outcomes and drives stakeholder value.
Aside from being “modestly undervalued,” prospective investors will appreciate the company’s insider transactions. Some of the top players in the company have been buying up shares, which is encouraging during this crimson wave.
Humacyte (HUMA)
Headquartered in North Carolina, Humacyte (NASDAQ:HUMA) is a biotech firm. Specifically, the company pioneers the development and manufacture of off-the-shelf, universally implantable bioengineered human tissues. Per its website, the “Humacyte Human Acellular Vessel (HAV) is a regenerative vascular conduit currently in various stages of clinical trials targeting multiple vascular applications.”
As of the closing bell of Oct. 7, HUMA finished the session at $3.14. Because of its very low price point, HUMA automatically represents one of the riskiest names among the best stocks under $20. As well, the company features a market cap of $316 million, on the smaller end of the scale.
However, it would be a mistake to dismiss the company outright. Fundamentally, the underlying HAV market represents one of the most exciting developments in biotech. Experts project it will grow at a rapid rate, possibly imbuing Humacyte with a large addressable market.
Also, HUMA enjoys confidence among its insiders. It’s a mixed profile, to be sure, but several high-level employees have bought shares, reflecting belief in the underlying science.
Best Stocks Under $20: Northern Star Resources (NESRF)
In a concerted effort not to keep repeating the same names for the best stocks under $20, I’m going to go with an under-the-radar idea with Northern Star Resources (OTCMKTS:NESRF). Based in Australia, NESRF stock represents a “gold producer with world class projects located in highly prospective and low sovereign risk regions of Australia and North America,” per its website.
At the end of the Oct. 7 session, NESRF closed at $5.38. The underlying company features a market cap of 9.59 billion AUD (approximately $6.13 billion.) Since the start of this year, NESRF declined 22%.
Fundamentally, gold miners present risks because precious metals tend to rise during inflationary cycles. That said, the Federal Reserve seeks to raise interest rates to get inflation under control. However, its efforts have so far lagged, with the latest hotter-than-expected jobs report providing proof. Therefore, the inflation argument could still apply for NESRF.
Ultimately, though, speculators might want to consider NESRF because it’s “significantly undervalued.” Northern Star doesn’t get much visibility because it’s traded over the counter. Yet it features a robust balance sheet and excellent growth and profitability metrics.
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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.