Best Stocks Under $20

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Stocks under $20 offer investors and traders a lower-cost alternative to more expensive stocks. Despite the misperception that lower-priced stocks carry more risk, the risk profile of many stocks under $20 compares favorably with stocks trading at much higher prices, as does the opportunity for profiting from investing in them. At the same time, you may need to be patient because $20 per stock can constitute quite a lot of money before the asset finally begins to rise, meaning that you may feel locked into these positions.

In addition, well-established stocks under $20 often pay dividends, which can be ideal for income-minded investors. Some stocks under $20 even have listed options, which can give you additional avenues of income if you wish to sell covered call options. You may also choose to buy and hold because, even though the price is just under $20, you see quite a lot of growth potential in these assets (or the growth of your portfolio at-large.)

Whatever your investing or trading goals might be, stocks under $20 cover a wide range of companies and can offer great opportunities for profit. At the same time, you must exit positions that are no longer profitable, allowing you to enter new positions that may be more profitable. You can repeat this process as often as you need, allowing you to optimize your portfolio over and over again, meaning that it can be much easier to rebalance your portfolio. Assessing your assets routinely is always an important move for the savvy investor.

Looking at the Best Stocks Under $20

Our picks for best stocks under $20 include companies like precious metals and mining funds, manufacturers, retail firms, family entertainment companies, international e-commerce and internet businesses and much more. Each of these stocks represents a company with a unique product or service or one that already holds a prominent position in its field. At the same time, some of these stocks have only begun to rise. When you invest in stocks under $20, you need to know if you will hold the stock and watch it rise, swing trade when it rises or buy at the dip because you feel it has peaked for the time being.

Choosing stocks of this value can be complicated because there’s so much to consider. The stocks are officially “pricey”, but you need to decide if they are too pricey for you. At times, it’s worth the investment, but some people may prefer to invest in stocks that are a little lighter on their budget. For example, you could look into penny stocks, energy stocks and more as you aim to diversify your portfolio.

At the same time, remember that you need to spend money to make money in many cases. You should not be afraid of stocks that rise near the $20 mark, but you may need to budget for yourself so that you can spend with wisdom. As your portfolio grows, you may have more freedom to invest in more expensive growth stocks.

Compare Online Brokers for Stocks Under $20

If you’d like to start trading or investing in stocks under $20, as well as stocks under $10 and stocks under $5, you can through any reputable broker with access to U.S. stock markets. Many online brokers, such as Charles Schwab, Magnifi, Vanguard, TD Ameritrade, E*TRADE, Robinhood and Firstrade, offer commission-free trading. More experienced, active and well-funded traders can use Interactive Brokers. A broker comparison table to help you choose among them appears below, and you are free to change your allegiances at any time. Plus, you can return to Benzinga whenever you want to learn more about choosing a brokerage.

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Best For

Active and Global Traders

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Best For

Active and Global Traders

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1 Minute Review

Interactive Brokers is a comprehensive trading platform that gives you access to a massive range of securities at affordable prices. You can buy assets from all around the world from the comfort of your home or office with access to over 150 global markets. Options, futures, forex and fund trading are also available, and most traders won’t pay a commission on any purchase or sale.  

IBKR is geared primarily toward experienced traders and investors but now with the availability of free trades with IBKR Lite, casual traders can also acclimate to IBKR’s offerings.

Best For

• Access to international markets
• Active traders
• Detailed mobile app that makes trading simple
• Wide range of available account types and tradeable assets

Pros

• IB SmartRouting provides significant price improvement vs. industry
• Fractional trading allows investing regardless of share price
• Industry’s lowest margin rates
• Earn more by lending your fuly-paid shares

Cons

• Beginner investors might prefer a broker that offers a bit more hand-holding and educational resources

Best For

Leveraged Trading

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get started securely through Plus500’s website

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Disclosure: 82% of retail accounts lose money

Best For

Leveraged Trading

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1 Minute Review

82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

Plus500 is an online CFD broker focusing on contracts for difference (CFDs). CFDs are similar to binary options in the U.S. where traders take all-or-nothing speculation on the prices of certain securities like indices, commodities or currencies. While not legal to trade in the U.S., CFDs are legal in many jurisdictions across the globe and Plus500 offers a wide array of tradable markets using these instruments. 

Plus500 doesn’t charge commission and only profits off the spread, which is the difference between the buy and sell price of a specific security. But Plus500 is not a broker for beginners — the education materials are sparse and CFDs are risky derivatives capable of sapping out all of an investor’s capital. Only trade these instruments if you understand how they operate and the risks involved with buying them.

Best For

• Traders looking for a smooth mobile experience

Pros

• Great mobile app
• Low spreads and commissions
• Unlimited demo account

Cons

• Only derivatives are available
• Not open to U.S. residents

Best For

Trading Ideas

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get started securely through public.com’s website

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Trading Ideas

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Public is the only investing platform that lets you trade stocks, ETFs, crypto, bonds, options and alternative assets—like fine art and collectibles—all in one place. Public also provides access to custom company metrics, live shows about the markets, and insights from a community of millions of investors, creators, and analysts.

Today, Public provides more ways to create a diversified portfolio than nearly any other online broker. Members can engage in sophisticated investing strategies and access a wealth of investing insights—from company-specific analysis to live audio shows and town hall-style Q&As. In addition, Public offers a premium membership tier with unique company KPIs, detailed performance metrics, and institutional-grade research. 

 

Best For

• Stock and ETF investors
• Crypto investors
• Investors looking to diversify with alternative assets or bonds and options

Pros

• Commission-free stock and ETF trading
• Fractional share investing
• Advanced data, tools, and insights with Public Premium

Cons

• You can’t transfer crypto to another wallet
• No mutual funds or precious metals
• At this time, only offers individual brokerage accounts and not IRAs

Best For

Commission-Free Mobile Trading

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get started securely through Robinhood’s website

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Commission-Free Mobile Trading

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Robinhood is a popular trading platform known for its commission-free trades and user-friendly mobile app. Ideal for novice investors, Robinhood makes it easy to buy and sell stocks, ETFs and cryptocurrencies. The platform offers a straightforward, no-frills experience, making it accessible for users new to investing. With features like fractional shares and a sleek interface, Robinhood lowers the barriers to entry for investing, allowing users to start with just a few dollars. It lacks the advanced tools and research options that more experienced investors might seek. Overall, Robinhood is a great choice for beginners seeking a simple way to invest.

Best For

• Beginners looking for simplicity
• Mobile-first investors
• Commission-free trades

Pros

• User-friendly mobile app
• Instant double
• Cash management
• Access to cryptocurrencies

Cons

• Limited research tools
• No mutual funds available
• Basic customer support options

Best For

Active Short Sellers

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get started securely through TradeZero’s website

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Active Short Sellers

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TradeZero is an online broker and free stock trading platform that provides everything you need to successfully share and trade, including round-the-clock customer support. TradeZero provides four different trading state-of-the-art software programs with its services, a locator for sourcing shares for shorting, commission-free trades, and real-time streaming, to name a few of the features promoted on their website. The software is a unique and (potentially) affordable option for anyone interested in stock trading.

Best For

• Traders seeking high transparency and mobility in a stock trading program
• Those attracted to commission-free trades
• Those seeking a free version of a high-quality trading program

Pros

• 24/7 live customer support
• Uses ZeroWeb technology, a powerful level 2 online platform with direct market access
• Mobile app allows users to access stocks and trade in real-time while on the go

Cons

• Enforces Pattern Day Trading restrictions (accounts need to maintain a daily equity balance of at least $25k)
• Mobile app could offer more features

Features to Look for in Stocks Under $20

• Desirable product or service: To achieve success with stock investments, one of your first and foremost considerations should be whether the company has a viable product or service with significant current or anticipated demand for future earnings growth. However, companies that seem to go stale may no longer express the same growth potential that they once had.
• Good financials: Reviewing the financial profile of the companies whose stocks you’re considering buying will give you a sense of the firm’s assets and liabilities. Pick companies with a solid and improving financial situation and avoid those facing serious business challenges. You can also look for companies whose earnings per share (EPS) do not yet reflect the future business scenarios you expect for them.
• Analyst ratings: Because liquidity tends to be higher with stocks under but close to $20, many market analysts take the time to review and rate them. Their professional analysis can give you a good idea of whether a stock shows promise as an investment. Also, when a company’s stock receives a good review from a reputable analyst, it tends to attract buying interest in the stock. This then causes the stock’s market price to rise, meaning that you can see some value in the asset, which might allow you to draw value from these assets.
• Quality management: You need to invest in companies that you believe are managed properly. If they’re not managed properly, they may not have the capacity to maintain their stock value. If that’s the case, you could spend more time worrying about these assets than managing your portfolio.
• Growth potential: When you invest in stocks that have risen near $20, you may wonder if they can continue to soar. This is when you decide whether you want to hold the stock or cash out because you feel it cannot continue to grow as anticipated. At the same time, you may choose to invest for value, meaning you need to be far more patient.

Are Stocks Under $20 Worth Buying?

While some stocks under $20 are definitely worth buying and holding in your portfolio, you do need to do your research on a company before pulling the trigger. You also need to choose carefully because some stocks are on their way to 0 as their companies head toward insolvency, while others could be the next rising star. 

Consider looking for inexpensive companies to invest in with a popular product or necessary service and a respectable financial position. These companies will grow on you, but they need to seem healthy in the present so that they can, at the very least, maintain their value.

Also, if you plan on taking a large position or engaging in short-term trading in stocks under $20 per share, then choose those with decent market liquidity. If you’re not sure, using the appropriate broker can help you gather this information.

Read more about Benzinga’s best stocks:

• Best Stocks Under $5
• Best Stocks Under $10
• Best Penny Stocks
• Best Tech Stocks
• Best Biotech Stocks
• Best Gold Stocks
• Best Oil Stocks

The post Best Stocks Under $20 by Wayne Duggan appeared first on Benzinga. Visit Benzinga to get more great content like this.