Given that buying a basket of securities listed on the S&P 500 index can get you about 17% returns so far this year, the concept of must-own stocks under $20 naturally piques investors’ interest. With so many names flying high, discounts appear few and far between. Still, look long enough and you’ll find ideas that the Street missed.
I’m not saying that as if it’s some remarkable revelation by the way. Because investors have thousands upon thousands of publicly available securities to choose from, it’s impossible to fully assess every enterprise. Therefore, bargain stocks to buy now as a theory is also an inevitability. Again, you just have to find the right ideas.
To be 100% clear, even legitimate cheap stock picks don’t carry guarantees that they’ll move higher. Sometimes (many times), a cheap idea will get even cheaper. It’s just part of the risk you take by going the contrarian route.
Still, if you’re okay with that, below are the bargain hunter’s stock picks to consider.
Titan (TWI)
An unassuming enterprise that probably isn’t on most investors’ radar if I had to guess, Titan (NYSE:TWI) specializes in off-the-road tires and wheels. At first glance, that doesn’t sound like a compelling business. Indeed, since the beginning of this year, TWI slipped nearly 22%. And in the trailing one-year period, TWI shed about 21%. Still, it warrants consideration for must-own stocks under $20.
Focusing on agricultural equipment, Titan plays a significant role in overall infrastructure, along with the global food supply chain. In addition, it offers products for the construction, forestry, and mining industries. Given the Biden Administration’s infrastructure push, TWI seems a solid bet. As well, Titan offers products for the military, which is a relevant (though controversial) segment.
Priced at less than $12 at the time of writing, TWI psychologically makes a case for bargain stocks to buy now. However, it’s also financially undervalued. In particular, TWI trades at forward earnings multiple of 6.65. In contrast, the sector median stat stands at a much loftier 12.22x.
Southwestern Energy (SWN)
A natural gas exploration and production company, Southwestern Energy (NYSE:SWN) makes an intriguing case for must-own stocks under $20. Fundamentally, Southwestern offers an enduring business. You can talk all you want about clean and renewable energy sources. However, hydrocarbons will likely remain relevant for years to come because of their high energy density.
Another reason to consider SWN as one of the cheap stock picks is its operational resilience. Over the past three years, Southwestern posts a revenue growth rate (per-share basis) of 33.8%, above 86% of its peers. As well, it enjoys strong profit margins. Its operating margin and net margin stood at 47% and almost 46%, respectively.
At the time of writing, SWN trades hands at $6.48. However, it’s also cheap against its impressive revenue performance. The market prices SWN at a sales multiple of 0.51, well below the sector median stat of 1X. Therefore, it’s one of the bargain hunter’s stock picks.
NerdWallet (NRDS)
A personal finance company, NerdWallet (NASDAQ:NRDS) offers a website and app that helps visitors get answers to their burning money-related questions. In turn, the company earns money through its promotions of financial products. Fundamentally, NRDS ranks among the must-own stocks under $20 because of its acute relevance.
During periods of economic challenges – particularly with stubbornly high inflation – households need proper guidance. As well, they can scour through NerdWallet to look for tips and lifehacks to save money. At the moment, NRDS isn’t the greatest performer in the charts. Since the January opener, shares gained just under 2%. However, a case could be made that it’s undervalued.
I’m not just referring to its low price of less than $10, though that’s psychologically enticing. Rather, NRDS trades at trailing-year sales multiple of 1.28. However, the sector median clocks in at 3.37x. This means NRDS ranks favorably lower than 75.61% of its peers, making it one of the bargain stocks to buy now.
inTest (INTT)
A terribly risky idea at the moment for must-own stocks under $20, inTest (NYSEAMERICAN:INTT) is a global supplier of innovative test and process technology solutions. Per its website, the company serves various industries, including automotive (and electric vehicles), defense and aerospace, industrial, life sciences, and security. In addition, it serves as both a front-end and back-end semiconductor manufacturing partner.
However, as I said earlier, it’s terribly risky. Yes, INTT gained 71% since the January opener. However, in the trailing month, shares slipped 26%. So, why bother mentioning inTest as one of the cheap stock picks?
Mainly, Wall Street analysts peg INTT as a unanimous strong buy. It’s only among three analysts but still, unanimous is unanimous. As well, the average price target lands at $27.67, implying nearly 49% upside potential. Financially, inTest benefits from solid revenue and EBITDA growth. It’s also consistently profitable with an impressive return on equity (ROE) of 17.37%. But is it worth the downside danger? I’ll leave it up to you but I thought I’d at least throw the idea out there.
NuScale Power (SMR)
If we’re going to speculate on must-own stocks under $20, I might as well bring up my favorite high-risk, high-reward investment, NuScale Power (NYSE:SMR). Specializing in a “fresh” take on nuclear energy, NuScale focuses on small modular reactor technology. To be sure, the innovation has been around. However, NuScale’s power module represents the first SMR design certified by the U.S. Nuclear Regulatory Commission.
For SMR stock and the underlying industry, it’s a groundbreaking achievement in my view. Essentially, the move normalizes the concept of SMRs, which feature significant advantages over traditional nuclear facilities. To summarize, because of this platform’s smaller footprint, it can be integrated with areas inaccessible to regular power plants. Stated differently, SMRs enable power sources to be located closer to the points of demand, theoretically promoting superior cost profiles. Specifically, efforts such as desalination – turning salt water into drinking water – can be made more feasible. If you want to gamble on cheap stock picks, SMR is ready to take your call.
Vertex Energy (VTNR)
Headquartered in Houston, Texas, Vertex Energy (NASDAQ:VTNR) largely specializes in downstream operations. Its main refining unit represents a leading supplier of renewable and conventional fuels. It’s also one of the largest processors of used motor oil in the U.S. Gulf Coast. In addition, it’s committed to environmental stewardship, focusing on collection, re-refining, recycling, and recovery operations.
Priced at a few cents above $5, VTNR easily qualifies nominally as one of the must-own stocks under $20. However, it’s admittedly a risky venture. Since the beginning of this year, VTNR gave up more than 15% of its equity value. In the trailing year, it’s down almost 64%, a staggering loss.
Still, market gamblers may appreciate that Wall Street analysts peg shares as a moderate buy. Better yet, the average price target clocks in at $10.75, implying nearly 114% upside potential. Financially, I must say Vertex makes for a shaky play. However, it trades at an enterprise-value-to-revenue multiple of 0.21, far lower than the sector median stat of 1.34x.
Sadot (SDOT)
An incredibly risky proposition for must-own stocks under $20, Sadot (NASDAQ:SDOT) is only appropriate for extreme speculators. With a price tag barely hovering over a buck, it’s uncomfortably close to penny stock territory. If that wasn’t enough, the company features a market capitalization of less than $38 million. That’s quite a framework considering that the nano-cap cutoff typically sits at $50 million.
Nevertheless, Sadot appeals because of the essential nature of its business. According to its website, the company specializes in bulk grain and staples, along with processed products used in confectionary, feed and oils. Offering a global farm-to-table solution, the need for life-sustaining commodities could accelerate exponentially, especially given the competition for such resources.
Still, I cannot emphasize enough that investors will be taking a huge risk here. Yes, SDOT’s EV-to-revenue multiple sits at a lowly 0.11x. However, it could be a value trap. Then again, Sadot also features a surprisingly solid balance sheet. If you want to speculate on bargain hunter’s stock picks, SDOT marks the spot.
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.