With skyrocketing inflation, it’s difficult to find a great deal these days, which is why investors should pay close attention to the best stocks under $20 to buy now. Not only can you pick up these great companies for less than a Jackson, but they also bring meaningful value to the table. In other words, we’re not talking about stocks that are merely priced below $20.
Using Gurufocus’s screener, I’ve extracted relatively low-risk market ideas with strong financials and/or dependable stability metrics. This way, when you take a shot at these best stocks under $20, you’re doing so based on the fundamentals rather than guesswork and assumptions.
Of course, with the wild circumstances in the market today, these ideas will require a modicum of patience. But if you’re willing to tolerate some choppiness, these may be the best stocks under $20 to buy now.
Best Stocks Under $20: Heartland Express (HTLD)
Headquartered in North Liberty, Iowa, Heartland Express (NASDAQ:HTLD) provides both long-haul and regional truckload transportation. Currently, Heartland commands a market capitalization of $1.15 billion. As of midday Nov. 9, the market prices HTLD at $14.49 per share. On a year-to-date (YTD) basis, HTLD declined nearly 14%, which isn’t terrible compared to the losses incurred by the major indices.
Fundamentally, Heartland enjoys a strong cash position. At the moment, the company’s cash-to-debt ratio stands at 2.31 times. In contrast, the underlying transportation industry features a cash-to-debt ratio of 0.42 times. This places Heartland nearly 81% above the competition. As well, the transportation specialist features an Altman Z-Score of 4.91, reflecting very low bankruptcy risk.
In addition, Heartland enjoys strong profitability margins. For instance, its net margin pings at 21.6%, ranking better than 82% of its peers. Therefore, if you’re looking for an out-of-the-box idea for the best stocks under $20 to buy, HTLD could be it.
Headquartered in Tacoma, Washington, TrueBlue (NYSE:TBI) represents a workforce solutions firm. Presently, it features a market cap of $657.3 million. As of Nov. 9, TBI trades hands for $19.78 per share, barely making it for consideration as one of the best stocks under $20 to buy. Since the start of this year, TBI gave up nearly 30% of equity value.
Although TrueBlue presents volatility risk based on its market performance, its fundamentals present many attractive qualities. Primarily, Gurufocus labels TrueBlue a “modestly undervalued” business. TBI is priced at 8.94-times trailing-12-month, or TTM, earnings. In contrast, the underlying business services industry features a price-earnings ratio of 15.9 times.
Another factor to consider is the company’s balance sheet. Right now, TrueBlue has an Altman Z-Score of 4.4, reflecting low bankruptcy risk over the next two years. In addition, its debt-to-equity ratio is 0.13 times. This metric sits favorably below the underlying sector’s median ratio of 0.4 times. Thus, if you’re seeking an underappreciated idea among the best stocks under $20 to buy, give some consideration to TrueBlue.
Best Stocks Under $20: AudioCodes (AUDC)
Based in Israel, AudioCodes (NASDAQ:AUDC) is a provider of advanced communications software, products and productivity solutions. Presently, AudioCodes carries a market cap of $615.8 million. Also, Wall Street prices AUDC at $19.33, also a barely-making-it idea among the best stocks under $20 to buy. It’s also one of the riskiest propositions, with AUDC down 46% YTD.
Primarily, AudioCodes may attract contrarian bargain hunters because of its strong income-statement metrics. For example, the company commands a three-year revenue growth rate of 8%, ranking above 65% of the competition. Also, during the same period, its free cash flow, or FCF, growth rate stands at 19.4%, beating out 66% of its rivals.
On the bottom line, AudioCodes has operating and net margins of 11.9% and 10.4%, respectively. Both figures exceed rival players by at least 77%. Also worth mentioning is that the company features a return on equity (ROE) of 14.7%, reflecting a high-quality business.
G. Willi-Food (WILC)
Also based in Israel, G. Willi-Food (NASDAQ:WILC) is engaged directly and through subsidiaries, in the development, import, export, marketing and distribution of a range of over 600 food products around the world. At the moment, G. Willi-Food commands a market cap of just more than $196 million and shares trade hands for $14.15. Since the beginning of the year, WILC dropped over 26% of equity value.
Fundamentally, what’s arguably the most attractive attribute of G. Willi-Food centers on its cash balance. According to data from Gurufocus, the company features a cash-to-debt ratio of 81.1 times. In contrast, the median ratio for the broader defensive industry is only 0.38 times. As well, the firm features an Altman Z-Score of 12.32, reflecting extremely low bankruptcy risk.
Moreover, the enterprise benefits from strong profit margins. For instance, its net margin stands at 6.2%, beating out more than 86% of the competition. As well, the company features 10 years of consecutive profitability over the trailing decade. Therefore, WILC could be one of the best stocks under $20 to buy in terms of proven track records.
Best Stocks Under $20: Capital Properties (CPTP)
Based in Rhode Island, Capital Properties (OTCMKTS:CPTP) is a real estate investment, development and management firm. At time of writing, Capital Properties carried a market cap of $73.9 million, representing one of the smallest ideas on this list of the best stocks under $20 to buy. At last count, shares traded hands for $11.20 a pop. In the year so far, CPTP dropped 15.5% of equity value.
While it might not be the most comfortable form of contrarianism, investors should note that Capital Properties has no debt. To be fair, being debt-free represents a personal goal. In many cases, when corporations are debt-free, it could imply they’re not using their capital efficiently. However, with deflationary forces entering the monetary ecosystem – as defined by an arresting of purchasing power erosion – having no debt represents its own premium.
Also, Capital Properties is a highly profitable enterprise. For example, its net margin stands at 35.2%, beating out 74% of its peers. Also, the company has an ROE of over 24%, making it elite (top 10%) in the industry. It also reflects a very high-quality business, making CPTP a worthy candidate among the best stocks under $20 to buy.
Compx International (CIX)
Founded in 1993, Compx International (NYSEAMERICAN:CIX) calls Dallas, Texas home. Compx specializes in security products. Specifically, it provides lock components utilized in cabinet locks, ignition switches, office furniture, postal boxes, healthcare, vending and gas stations and exhaust systems.
Presently, Compx commands a market cap of $227 million. At time of writing, CIX trades hands for $18.20 per share. Since the January opener, CIX gave up nearly 21% of equity value. However, the business may be stabilizing, with the trailing-month performance pinging at almost 2% up.
As with Capital Properties above, Compx features no debt. Again, it’s not always the greatest metric to own during a bullish (and inflationary) cycle. However, with the Federal Reserve tightening the supply, money essentially becomes more “expensive.” Therefore, leveraging a zero-debt balance sheet affords incredible flexibility and resilience.
Also, Compx enjoys better-than-sector-average metrics for revenue growth and profitability (operating and net margins). Although a relatively unknown name, it’s well worth considering if you’re looking for the best stocks under $20 to buy.
Best Stocks Under $20: Electromed (ELMD)
Founded in 1992, Electromed (NYSEAMERICAN:ELMD) operates out of New Prague, Minnesota. Electromed represents a medical device company dedicated to designing, manufacturing and marketing airway clearance technologies that help people around the world breathe better, stay healthier and lead active and fulfilling lives.
At the moment, Electromed features a market cap of $86.5 million, again one of the smaller enterprises among the best stocks under $20 to buy. The market prices shares at $10.18 a pop. Since the beginning of this year, ELMD dropped almost 19% of equity value. However, it’s starting to pick up slowly, gaining 2% in the trailing month.
Fundamentally, Electromed enjoys an extremely robust balance sheet. Not to repeat myself yet again, but the company benefits from a zero-debt balance sheet. Also, its Altman Z-Score stands at 10, reflecting very low bankruptcy risk over the next two years.
Other than that, Electromed features modest stats for revenue growth and profitability: decent but not stellar. However, if you’re looking to take a shot on a relatively unknown market idea, Electromed’s stability may spark positive surprises.
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.