5 Incredible Top-Ranked Stocks Under $20 On Sale
Zacks Investment Research | Feb 19, 2018 10:30PM ET
The Wall Street has made an impressive comeback after two weeks of violent sell-off, which sent the major indices to correction territory. The positive trend is likely to continue in the months ahead, given the global economic growth, solid corporate earnings, and optimism around the new tax legislation. However, volatility and uncertainty will continue to show up, denting investors’ confidence from time to time.
In such a scenario, most investors want to remain invested in the equity world but may not be able to afford large stakes in valuable companies with higher priced stocks. For them, low-priced stocks could be attractive as these will enable them to buy more number of shares instead of just a handful of higher priced stocks for the same amount. For example, an investor willing to spend $10,000 can either purchase at least 500 shares of a stock trading under $20 or only 100 shares of a stock trading at $100.
Additionally, stocks under $20 reap huge profits as an increase of as less as a dollar in share price adds 5% to the portfolio. This is in contrast to stocks priced at $100 or above, which see 1% or lower gains if share prices move up by $1. Further, most of the low priced stocks have high levels of liquidity that give these stocks an added advantage. This means that cash can be converted quickly and investors could easily get their money out of the securities.
In fact, trading in higher average daily volumes keeps the bid/ask spread tight and does not lead to extra cost for the investor.
Moreover, given the chances of intermittent volatility, it is prudent to look for value and cheap plays along with low-priced stocks. We recommend stocks under $20 that have a Zacks Rank #1 (Strong Buy) or #2 (Buy) and average trading volume of at least 1 million shares as excellent picks. Adding some flavors of value and growth could make them highly appreciable. So, we have refined the search by using our Zacks Investment Research
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