Since 1957, the average growth in the S&P 500 has been between 8% and 11% depending on the source that you use. However, if you're an investor under the age of 50, you've cut your investing teeth during one of the longest bull runs in market history.
Fueled by record low interest rates, the S&P 500 delivered an average return of between 12% and 15% between 2012 and 2021. And as volatile as 2023 has been, the S&P 500 is up about 9% for the year.
The takeaway for investors is that if you're in the right stocks, it pays to buy and hold. However, if you missed out on stocks like Apple, Inc. (NASDAQ: AAPL), Amazon.com, Inc. (NASDAQ: AMZN) or more recently Nvidia Corporation (NASDAQ: NVDA) those shares may be too expensive for you to buy more than a single share.
A different option is to find “cheap" stocks that are potentially being undervalued by the market. This can allow you to turn a small investment of $1,000 or $2,000 into significant gains.
Here are seven stocks that are trading under $20 but have strong growth potential over the next 12 months.
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- Manulife Financial
- Palantir
- Vodafone
- Exelixis
- Lakeland Industries
- Amplify Energy
- LSI Industries
#1 - Manulife Financial (NYSE:MFC)
A key selling point of financial stocks is their revenue and earnings stability. So it might be a surprise that we start this list of long-term stocks to buy with Manulife Financial Corporation (NYSE: MFC). Shareholders of MFC stock have seen share price growth of around 2.9% in the past five years.
The Toronto-based company continues to post revenue that is lower on a year-over-year basis. This is largely due to continued weakness in the commercial real estate market. However, the company's earnings have remained stable. And in the next 12 months, analysts are forecasting earnings growth of 9.4%.
The opportunity for investors is that Manulife looks to be undervalued compared to Sun Life Financial, Inc. (NYSE: SLF). This is notable because the earnings outlook for both companies looks the same.
And investors shouldn’t be so quick to overlook the company’s dividend that currently has a 5.99% yield. That certainly helps to offset any lack of growth in the past five years. And on August 9, 2023, the company increased the dividend to 28 cents.
About Manulife Financial
Manulife Financial Corporation, together with its subsidiaries, provides financial products and services in the United States, Canada, Asia, and internationally. The company operates through Wealth and Asset Management Businesses; Insurance and Annuity Products; and Corporate and Other segments. The Wealth and Asset Management Businesses segment offers investment advice and solutions to retirement, retail, and institutional clients through multiple distribution channels, including agents and brokers affiliated with the company, independent securities brokerage firms and financial advisors pension plan consultants, and banks.
Read More - Current Price
- $30.33
- Consensus Rating
- Buy
- Ratings Breakdown
- 6 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $37.50 (23.6% Upside)
#2 - Palantir (NASDAQ:PLTR)
Palantir Technologies, Inc. (NYSE: PLTR) continues to be one of the most volatile and polarizing stocks of 2023. Of course, it’s also been one of the stock market’s biggest winners in 2023 posting a 140% gain in 2023.
One problem that faces investors is that it’s not easy to classify Palantir into a single category. That means it’s tough to forecast revenue and, more importantly, earnings.
Although PLTR stock is down 6% in the month ending August 14, 2023, interest in the stock is still high. One reason is due to bullish analyst sentiment including by Wedbush analyst Dan Ives who initiated coverage on the stock with a Buy rating and a $25 price target.
The question for Palantir comes down to valuation. The company is expected to see increased earnings in the last year. But analysts believe that only merits a stock price of around $13, which is about 16% lower than the PLTR stock price on August 14, 2023.
However, if you have the patience and the risk tolerance, Palantir looks like a stock that could easily double from its price of around $15.
About Palantir Technologies
Palantir Technologies, Inc engages in the business of building and deploying software platforms that serve as the central operating systems for its customers. It operates under the Commercial and Government segments. The Commercial segment focuses on customers working in non-government industries. The Government segment is involved in providing services to customers that are the United States government and non-United States government agencies.
Read More - Current Price
- $80.55
- Consensus Rating
- Reduce
- Ratings Breakdown
- 2 Buy Ratings, 11 Hold Ratings, 6 Sell Ratings.
- Consensus Price Target
- $41.00 (49.1% Downside)
#3 - Vodafone (NASDAQ:VOD)
Vodafone Group Public Limited Company (NASDAQ: VOD) checks off two boxes for investors to consider in a volatile market. First, Vodafone is part of the 5G sector. According to some analysts, the global 5G market is expected to reach $180 billion in North America alone by 2030.
Second, the company offers a compelling dividend that has a dividend yield of 10.36% as of August 14, 2023. On the other hand, the regulatory environment in Europe is a concern for investors worried that the dividend is not sustainable.
Another aspect of Vodafone for investors to consider is that the company is domiciled in the United Kingdom. When U.S. equities are volatile, it can be helpful to look at foreign stocks. So far, the performance of the MSCI EAFE index has approximated that of the S&P 500 index. That index covers large and mid-cap stocks across 21 developed markets excluding the United States and Canada.
According to the Vodafone analyst ratings on MarketBeat, the stock gets a Hold rating. However, since its last earnings report, VOD stock has received an upgrade from BNP Paribas from Underperform to Neutral.
About Vodafone Group Public
Vodafone Group Public Limited Company provides telecommunication services in Europe and internationally. It offers mobile connectivity services comprising end-to-end services for mobile voice and data, messaging, device management, BYOx, and telecoms management, as well as professional and consulting services; and fixed line connectivity, such as fixed voice and data, broadband, software-defined networks, managed WAN, LAN, ethernet, and satellite; and financial services, as well as business and merchant services.
Read More - Current Price
- $8.39
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 2 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
#4 - Exelixis (NASDAQ:EXEL)
Cancer research remains one of the key areas of emphasis for investors in the biotech sector. But the Biden administration’s call for a moonshot to find a cure is creating renewed interest. To that end, Exelixis, Inc. (NASDAQ: EXEL) recently saw its stock price move above the $20 range. But the stock looks like it has further to run.
The company's primary product, Cabometyx, is FDA approved as a treatment for several types of cancer, including renal and liver. And as biotech investors understand, you shouldn’t invest in this sector without looking at a company’s pipeline.
Exelixis doesn’t disappoint in that regard. The company has four candidates in Phase 3 clinical trials. It may still be over a year before any of these drugs are approved, if they ever do. But for companies investing in the company’s growth, this is encouraging.
Analysts give EXEL stock a Moderate Buy rating with a consensus forecast for 12% share price growth. However, earnings are projected to grow by 49%. If the company successfully meets that target, you should expect analysts to review their price targets.
About Exelixis
Exelixis, Inc, an oncology company, focuses on the discovery, development, and commercialization of new medicines for difficult-to-treat cancers in the United States. The company offers CABOMETYX tablets for the treatment of patients with advanced renal cell carcinoma who received prior anti-angiogenic therapy; and COMETRIQ capsules for the treatment of progressive and metastatic medullary thyroid cancer.
Read More - Current Price
- $33.29
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 10 Buy Ratings, 7 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $32.44 (2.6% Downside)
#5 - Lakeland Industries (NASDAQ:LAKE)
Lakeland Industries, Inc. (NASDAQ: LAKE) manufactures and sells protective clothing for various industrial and public sector markets. LAKE stock more than tripled between February 2020 and February 2021. Not surprisingly, revenue and earnings are down since their customers stocked up in 2020. And the stock has given up nearly all of those gains.
The bullish case for Lakeland comes from the industries they serve. While healthcare and pharmaceuticla manufacturing were revenue drivers in 2020, there are several industries such as mining, oil and gas, electric utilities, and construction that present scenarios for demand to rise in 2023 and beyond. In its March 2023 earnings presentation, the company forecast single-digit revenue growth in the company’s core markets.
LAKE stock has a forward price-to-earnings ratio of 15x earnings. And while the stock is down over 5% in 2023, analysts give the stock a Buy rating with a consensus price target of $25.
About Lakeland Industries
Lakeland Industries, Inc manufactures and sells industrial protective clothing and accessories for the industrial and public protective clothing market worldwide. It offers firefighting and heat protective apparel to protect against fire; high-end chemical protective suits to provide protection from highly concentrated, toxic and/or lethal chemicals, and biological toxins; and limited use/disposable protective clothing, such as coveralls, laboratory coats, shirts, pants, hoods, aprons, sleeves, arm guards, caps, and smocks.
Read More - Current Price
- $22.88
- Consensus Rating
- Buy
- Ratings Breakdown
- 2 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $27.50 (20.2% Upside)
#6 - Amplify Energy (NYSE:AMPY)
Investors are watching the oil and gas sector closely in the second half of 2023. The Intenational Energy Administration is forecasting the average price for a barrel of crude to be around $86 for the rest of the year.
That’s the bullish case for Amplify Energy Corp. (NYSE: AMPY) that is engaged in the acquisition, development, exploitation and production of oil and natural gas properties in the United States.
Year-over-year revenue is down sharply since 2023. And in its last quarter, earnings turned negative. However, analysts are forecasting strong revenue growth of 265% in the next 12 months. That growth is not likely priced into AMPY stock at this time. Investors should note that the company is the subject of takeover rumors.
The Amplify analyst ratings on MarketBeat give the stock a $12 price target that marks a 69% increase from the stock’s current price.
About Amplify Energy
Amplify Energy Corp., together with its subsidiaries, engages in the acquisition, development, exploitation, and production of oil and natural gas properties in the United States. The company's properties consist of operated and non-operated working interests in producing and undeveloped leasehold acreage, as well as working interests in identified producing wells located in Oklahoma, the Rockies, federal waters offshore Southern California, East Texas/North Louisiana, and Eagle Ford.
Read More - Current Price
- $5.71
- Consensus Rating
- Buy
- Ratings Breakdown
- 3 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $10.00 (75.1% Upside)
#7 - LSI Industries (NASDAQ:LYTS)
LSI Industries Inc. (NASDAQ: LYTS) is one of the best-performing technology stocks in 2023. As of August 14, 2023, LYTS stock is up over 102% in the last 12 months.
That would lead many investors to speculate that the company has an artificial intelligence story. But it doesn’t. The company produces and sells non-residential lighting and retail display solutions. It’s about as far from AI as you can imagine.
In 2022, the company launched its REDiMount system that the company claims will be the new standard for canopy lighting solutions. And one of the applications that this system is used for is refueling/recharging stations.
And the company has strong financials. The company’s three-year revenue growth rate per share is 8.9% which is better than over 64% of its competition.
Analysts are forecasting that LSI Industries will post 22% earnings growth and give LSI stock a 39% upside from its current price.
About LSI Industries
LSI Industries Inc produces and sells non-residential lighting and retail display solutions in the United States, Canada, Mexico, and Latin America. It operates through two segments, Lighting and Display Solutions. The Lighting segment manufactures, markets, and sells non-residential outdoor and indoor lighting fixture and control solutions in the commercial and industrial markets.
Read More - Current Price
- $18.77
- Consensus Rating
- Buy
- Ratings Breakdown
- 2 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $19.00 (1.2% Upside)
As is the case with any stock, past performance is not a guarantee of future returns. And stocks under $20 can be as volatile, if not more volatile, than stocks that trade for hundreds of dollars. That's why it's important to do your own research.
MarketBeat provides many free resources that can help investors find cheap stocks that are ready to produce outsized returns. One way is to look at the list of Best Stocks Under $20. This page provides a list of stocks with a share price of $20 or less that currently have “buy" and “strong buy" ratings from top-rated analysts. Another source is the MarketBeat stock screener which allows you to access customizable filters to fine tune your results based on your specific criteria.
And if one or more of these stocks makes it to your watchlist, MarketBeat gives you real-time updates for the news that impacts that stock. You'll never miss news that impacts the stock such as analyst upgrades/downgrades, SEC filings, and earnings reports.
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