Investors understand the importance of buying low and selling high. And finding undervalued stocks that are trading below $20 gives investors the ability to get a substantial return with an investment of $2,000 or less.
However, these stocks also present investors with a substantial risk. Many of these companies are small-cap stocks which can be more volatile than more stable large-cap stocks. Not surprisingly, certain sectors like biotechnology and mining are heavily represented in this group of stocks.
Investing in these sectors does expose investors to more risk than in sectors like consumer staples or utilities. That's a risk that many investors are willing to take if they have speculative cash to put at risk.
However, investors need to keep in mind that sometimes stocks trade for under $20 because of underlying fundamental problems. Some of these companies generate little revenue and many are not yet profitable. Nevertheless, if you have an appetite for some risk, here are seven stocks under $20 for you to consider.
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- Mind Medicine
- AbCellera Biologics
- CureVac
- CarParts.com
- Vermillion Energy
- Uranium Energy
- Pearson
#1 - Mind Medicine (NASDAQ:MNMD)
Mental health continues to be one of the growing sectors in biotechnology. However, even as more attention is being paid to mental health, there are still few approved treatments That’s where Mind Medicine, Inc. (NASDAQ: MNMD) comes in.
Mind Medicine or MindMed is a clinical-stage biotechnology company that is developing therapies and treatments to treat brain health disorders related to psychiatry (ADHD, anxiety, etc.), addiction, pain, and neurology.
The lead candidate (MM-120) for the Canadian-based company is in Stage 2 clinical trials. In its investor presentation in June 2023, the company announced it was expecting results for MM-120 in two therapeutic areas later this year. That being said, MindMed is still probably a year or more away from having the therapeutic eligible for FDA approval.
But if investors are willing to speculate on MNMD stock while it’s still trading below $5, there may be some upside. The MInd Medicine analyst ratings on MarketBeat give the stock a Buy rating with a 473% price target increase.
About Mind Medicine (MindMed)
Mind Medicine (MindMed) Inc, a clinical stage biopharmaceutical company, develops novel products to treat brain health disorders. The company's lead product candidates include MM-120, which is in phase 2 for the treatment of generalized anxiety disorder and attention deficit hyperactivity disorder; and MM-402, a R-enantiomer of 3,4-methylenedioxymethamphetamine, which is in phase I clinical trials for the treatment of core symptoms of autism spectrum disorder.
Read More - Current Price
- $7.52
- Consensus Rating
- Buy
- Ratings Breakdown
- 12 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $25.38 (237.4% Upside)
#2 - AbCellera Biologics (NASDAQ:ABCL)
Artificial intelligence boosts the underlying thesis for AbCellera Biologics, Inc. (NASDAQ: ABCL). The company has an AI-powered engine that it uses for antibody drug discovery and development. The company is looking for antibodies from natural immune responses, which are pre-enriched for antibodies.
Cash is always a concern for clinical-stage biotech companies, but it appears to be less of a concern for AbCellera. The company has five years of funding for its operations at its current run rate. And it is partnering with larger companies to get its pipeline candidates through the clinical trial stage.
Despite the fact that the company will not be profitable for several years, the AbCellera analyst ratings on MarketBeat give ABCL stock a Buy rating with a 225.75% upside, making it one of the largest potential gainers for stocks under $20.
About AbCellera Biologics
AbCellera Biologics Inc builds an engine for antibody drug discovery and development. Its engine discovers antibodies from natural immune responses, which are pre-enriched for antibodies. The company's preclinical products are ABCL635 for metabolic and endocrine conditions; and ABCL575 for atopic dermatitis.
Read More - Current Price
- $2.67
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 2 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $8.67 (224.6% Upside)
#3 - CureVac (NASDAQ:CVAC)
CureVac N.V. (NASDAQ: CVAC) is the third and last of the biotech companies on this list of stocks under $20 that have a chance of doubling in the next 18 months. Although the mRNA technology used to develop two of the Covid-19 vaccines remains controversial, there’s no question that it is changing the way some vaccines will be developed in the future.
CuraVac was not successful in developing a Covid-19 vaccine, but it is still a leader in mRNA technology and will continue to use that in its development process. For example, the company recently tested its first patient in a Phase 1 study for an mRNA-based cancer vaccine targeting brain tumor glioblastoma. As anyone who has had a loved one with this type of cancer knows, there is no cure and the prognosis, while expanding, is poor.
The company’s expertise in mRNA puts the risk and reward in plain sight for investors. And with a company that’s not yet profitable, there is always risk involved. But analysts suggest the stock may gain 102% in the next 12 months, which makes it a speculative buy for the right investor.
About CureVac
CureVac N.V., a biopharmaceutical company, focuses on developing various transformative medicines based on messenger ribonucleic acid (mRNA). It is developing prophylactic vaccines, such as mRNA-based vaccine candidates CV2CoV, which is in Phase 1 clinical trial against SARS-CoV-2; CV7202 which is in Phase 1 clinical trial for the treatment of rabies; and CVSQIV to treat multivalent seasonal influenza; Flu SV mRNA fot treating nucleotides, single antigen seasonal influenza.
Read More - Current Price
- $2.49
- Consensus Rating
- Hold
- Ratings Breakdown
- 1 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $10.00 (301.6% Upside)
#4 - CarParts.com (NASDAQ:PRTS)
If you believe that inflation and interest rates are likely to remain higher for longer, you’ll understand the thesis for CarParts.com, Inc. (NASDAQ: PRTS). Inflation is down from its 40-year highs of 2022. However, consumers continue to deal with sticky inflation in key areas.
One of those areas is new and used car pricing which are also being affected by rising interest rates that put them out of range for low- and middle-income consumers. That means that consumers are trying to keep their older cars in working order.
This is more than speculation. A report by S&P Global Mobility, cites the average age of light vehicles in the U.S. is at a record high of 12.5 years. This is bullish for a company that has been growing sales at a compound annual growth rate (CAGR) of 10%.
The risk to this bullish thesis is that the online auto parts market does not give the company a wide moat. Already competitors like AutoZone, Inc. (NYSE: AZO) and O’Reilly Automotive, Inc. (NASDAQ; ORLY) are taking steps to increase their digital presence. And that’s to say nothing about Amazon.com, Inc. (NASDAQ:AMZN) and Walmart, Inc. (NYSE: WMT). However, in the short term, PRTS stock looks like a speculative buy.
About CarParts.com
CarParts.com, Inc, together with its subsidiaries, operates as an online provider of aftermarket auto parts and accessories in the United States and the Philippines. It offers replacement parts, such as parts for the exterior of an automobile; mirror products; engine and chassis components, as well as other mechanical and electrical parts; and performance parts and accessories.
Read More - Current Price
- $1.01
- Consensus Rating
- Hold
- Ratings Breakdown
- 1 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $1.60 (58.4% Upside)
#5 - Vermillion Energy (NYSE:VET)
Another interesting place to look for stocks under $20 with the potential to double is the energy sector. I have two energy stocks on this list. The first is Vermillion Energy, Inc. (NYSE: VET), a traditional oil and gas company.
The bullish case for Vermillion Energy centers around natural gas, which accounted for 32% of the world’s energy consumption in 2021. Europe was a heavy consumer of natural gas as it looks to reduce carbon emissions. That demand is increasing as countries look for alternatives to Russian oil in lieu of the ongoing Russia-Ukraine war. Demand for natural gas is also expected to rise in some Asian countries.
If that demand plays out, then Vermillion Energy is attractively undervalued at just over 2x earnings. And with earnings expected to grow by 15%, there appears to be plenty of support for VET stock. Vermillion Energy analyst ratings on MarketBeat give the stock a 142% upside from its current price.
About Vermilion Energy
Vermilion Energy Inc, together with its subsidiaries, engages in the acquisition, exploration, development, and production of petroleum and natural gas. The company has properties in West Central Alberta, southeast Saskatchewan, Manitoba, and West Pembina in Canada; Wyoming in the United States; southwest Bordeaux and Paris Basin in France; the Netherlands; Germany; Ireland; Croatia; Slovakia; and Australia.
Read More - Current Price
- $10.27
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 1 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
#6 - Uranium Energy (NYSEAMERICAN:UEC)
For investors looking for low-priced alternatives in renewable energy, Uranium Energy Corp. (NYSEAMERICAN: UEC) is an attractive possibility. As the world looks for clean energy sources, nuclear energy is generating renewed interest. That means demand for uranium will be on the rise, and that’s the case for Uranium Energy.
In June and June, and July of 2023, the company announced it completed a restart program at its Christensen Ranch ISR Project in Wyoming. It also advanced the development of two projects in South Texas. The company says it will begin producing uranium if the commodity price hits $60. As of this writing, the spot price of uranium is around $56.
UEC stock is not cheap by conventional metrics. And with the company’s revenue and earnings so heavily tied to the price of uranium, the risk is clear. But so is the reward. And according to the Uranium Energy analyst ratings on MarketBeat, UEC stock has a Buy rating with a 125% upside from its current price of $3.21.
About Uranium Energy
Uranium Energy Corp., together with its subsidiaries, engages in exploration, pre-extraction, extraction, and processing uranium and titanium concentrates in the United States, Canada, and Paraguay. It owns interests in the Palangana mine, Goliad, Burke Hollow, Longhorn, and Salvo projects located in Texas; Anderson, Workman Creek, and Los Cuatros projects situated in Arizona; Dalton Pass and C de Baca project located in New Mexico; Roughrider, Shea Creek, Christie Lake, Horseshoe-Raven, Hidden Bay, Diabase, West Bear, JCU, and other project located in Canada; and Yuty, Oviedo, and Alto Paraná titanium projects in Paraguay.
Read More - Current Price
- $8.16
- Consensus Rating
- Buy
- Ratings Breakdown
- 4 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $10.50 (28.8% Upside)
#7 - Pearson (NYSE:PSO)
As a company that specializes in creating educational content, Pearson (NYSE: PSO) is a company that is in the crosshairs of artificial Intelligence (AI). The emergence of generative AI is changing the way students “engage” with online learning.
However, AI also presents Pearson with an opportunity if it can find a way to apply AI into its online content. As of July 2023, the company hasn’t come out with a comprehensive AI strategy. However, in May the company announced it would introduce “AI based open response assessments” and “proprietary predictive algorithms...” into its English Language Learning and Workforce Skills offerings.
How the company continues to respond to the growth of AI will go a long way to determining the fate of PSO stock between and the end of 2024. However, the Pearson analyst ratings on MarketBeat, give the stock a Moderate Buy rating and a price target that suggests PSO stock could deliver multi-bagger returns for investors.
About Pearson
Pearson plc offers educational courseware, assessments, and services in the United Kingdom, the United States, Canada, the Asia Pacific, other European countries, and internationally. The company operates through five segments: Assessment & Qualifications, Virtual Learning, English Language Learning, Workforce Skills, and Higher Education.
Read More - Current Price
- $15.04
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 1 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
As you can see, there are several attractive stocks you can buy for under $20. And this is not an exhaustive list by any means.
To help you find stocks that fit your investment style, MarketBeat has tools such as the MarketBeat stock screener. This user-friendly tool lets you filter stocks for certain attributes including by sector and current price. This can help you quickly find stocks under $20 that fit with criteria that you use with other investments.
And if you want to invest in inexpensive stocks but with less risk, you can consider buying shares of an exchange-traded fund (ETF). While you won't find an ETF that specifically invests in stocks under $20, you can find sector ETFs like biotech or mining stocks. You can also invest in funds that focus on small-cap stocks or mid-cap stocks.
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