Before we really start to jump in to our discussion on five great stocks that you can buy for less than $20 per share, it is important to point out that you simply can not judge the value of a stock simply by looking at its share price.
It is tempting to look at a stock that trades at $15, and reach the conclusion that the stock is less valuable than another stock that is trading in excess of $100 per share. It may very well be true, but you can not reach that decision simply by looking at a stock’s trading price.
You have to take into consideration where the stocks trade in relation to their earnings power, and just as importantly in relation to where analysts see earnings rising, or falling, in the not-too-distant future.
It is not all that uncommon to find a stock that trades at a lower price is actually more expensive than a stock that trades at much higher share price. It all comes down to valuation, and that is where you have to really make your opinion on a stock and its current value to your overall portfolio.
Another reason why you sh$ould not pay too much attention to a stock’s price, is that you are rarely buying just a fixed number of shares in a security. You go into a trade with X amount of dollars to invest, and you buy however many shares you are able to purchase with that money. If you have $10,000 to invest, you can either purchase 100 shares of a $100 stock, or 1,000 shares of a $10 stock. Either way you are left with a $10,000 investment in the security in question.
Where stock price does come into play, is if your intention is to set up covered call trades on the stocks you like. In this situation, you typically (but not always) have to purchase 100 shares in the underlying security in order to sell a call against the position. In this case, the lower the stock price, the easier it is to enter into the trade.
It really all comes down to your investment goals and strategies, but if you are looking for stocks you can buy that trade with a low share price, here are five stocks you can pick up today for under $20/share.
Advanced Micro Devices
Advanced Micro Devices (AMD) makes semiconductors, and while the sector has been a little volatile in recent years in reaction to slowing PC sales, but AMD has found its footing, and the stock has trended steadily higher over the last 18 months, and is currently trading at $12.71. The company has been losing money, but has a good record of topping estimates, and the market expects significant earnings growth over the next two years, with profits forecast to rise 150% in the current year, and 328.6% next year. Analysts have an average price target of $13.23, suggesting 4.1% potential upside, but if the company is able to live up to its bullish future estimates analysts will start raising their price targets and all shares to trend higher.
CalAmp Corp. (CAMP) is a micro-cap wireless communication technology company that provides services that allows machines to talk to each other. The stock has been a top performer over the last year, and shares have appreciated by 33.4% in 2017 alone to $19.35. Even with the stock’s recent gains, analysts see more upside, with an average price target of $20.00 on the stock. The stock has a forward P/E ratio of 16.5, with earnings forecast to rise 13.2% in the current year, and an additional 15.0% in 2018.
HP Inc. (HPQ) has been working to turn itself around after years of earnings declines, but it appears as if the company has started to turn the corner, and analysts see brighter days ahead for the company that struggled to keep pace as consumers shifted away from PCs in the modern mobile era. The stock has trended higher over the last year, fueled in part by multiple better than expected quarterly reports. The company’s most recent quarterly report in late May showed better than expected results on the top and bottom line, the second straight quarter HP Inc. was able to post better than expected numbers. The stock has a P/E of 13.0, with analysts expecting modest earnings growth of 1.9% during the current year, and an additional 6.1% in 2018. HPQ trades at $18.33, and analysts have an average price target of $19.11 on the stock.
Regional bank Regions Financial (RF) is currently trading at $13.61, and the stock has been stuck in a sideways pattern for the better part of the last six months. Analysts have an average price target of $15.10 on the stock, which suggests 11.0% upside potential for the stock. After years of near-zero interest rates, the Federal Reserve has begun to allow interest rates to rise, which is a major positive for the entire financial sector, as banks will be able to widen the gap on money its borrows from the Fed and loans out to their customers. RF trades with a P/E of just 14.9, and analysts expect earnings growth of 12.6% during the current year, and by an additional 13.3% in 2018
Cemex (CX) is a Mexican-based company that makes cement. CX has been stuck in a sideways pattern over the last six years, in part because of the stock’s high valuation, as CX currently has a P/E of 131. Analysts see earnings growth of 14.9% during the current year, and by an additional 18.5% in 2018. The stock’ P/E should not keep shares from moving higher as long as the company is able to hit its future growth estimates, and there is a strong likelihood that the entire sector could enjoy much stronger earnigns growth than is currently expected. It remains unclear how many campaign promises President Trump is going to be able to follow through on, but two big promises have the potential to provide a huge boost to Cemex moving forward. The one problem is that Cemex is not a U.S. company, but it does have significant operations in the U.S., and employees thousands of Americans in its U.S. plants. Trump can easily use Cemex cement and still claim to be creating jobs for Americans, and as Cemex has very little competition in the North America, it is a likely choice to provide cement for the ambitious wall Trump wants to build on the Mexican border. Trump also plans to significantly boost spending on the nation’s infrastructure, which would also increase demand for the company’s materials. The stock trades at $8.77, and analysts have an average price target of $10.04 on the stock.