For new investors looking to put smaller amounts of capital to work, the best stocks under $20 may be worth a look. Of course, a lower share price does not indicate undervaluation or even growth potential. Indeed, many companies with share prices well below the $20 level may be small — or mid-cap stocks, which tend to boast more intriguing growth profiles than their larger-cap counterparts.
That said, investors should ensure they evaluate the business itself, its growth prospects, any strategic long-term plans, the management team’s capability, and the actual valuation of a stock. Indeed, the price-to-earnings (P/E) ratio tells you far more about a stock’s value than the share price itself.
Either way, stocks under $20 are a great starting ground for smaller investors interested in companies with high growth ceilings, market expansion opportunities, or turnaround potential. Here are three of the best stocks under $20 worth checking out this July.
Nu Holdings (NU)
Nu Holdings (NYSE:NU) is a large-cap ($59 billion market cap) digital banking firm serving the Latin American market. Undoubtedly, NU stock stands out as one of the most attractive growth plays in the financial technology scene. Shares are trading at $12.36 per share at the time of writing.
Given the pace of recent gains, it may take less than two years for the stock to surpass $20 per share. For the first quarter, Nu Holdings saw net income soar to $379 million, up a whopping 160% year over year.
As the firm continues expanding into uncharted localities while offering more financial products and services, Nu Holdings’ explosive growth rate can stay higher for longer.
Additionally, tapping into AI personalization could further bolster growth rates. In any case, NU stands out as having the most compelling growth profile of stocks going for less than $20 per share.
Turtle Beach (HEAR)
Turtle Beach (NASDAQ:HEAR) is a computer peripherals company best known for its gaming headphones. The company has been on a relatively muted rally since bottoming in the back half of 2022 following a devastating 83% plunge from peak to trough. Indeed, the pandemic-era “pull forward” in PC peripheral demand helped HEAR stock spike, only to crash as the economy eventually reopened.
Though Turtle Beach’s share price leaves much to be desired at around $14 per share, I am intrigued by its product offering and some of its recent acquisitions, which could help kick its share price comeback into high gear.
Besides advancing its latest headphones, the company has expanded its reach into related product categories. Earlier this year, Turtle Beach paid around $118 million to acquire game controller firm PDP.
As an under-the-radar way to play long-term growth in video gaming, perhaps HEAR stock is worth careful consideration after a respectable first-half gain of around 37% in the books.
AT&T (T)
AT&T (NYSE:T) is a massive telecom behemoth with a stock that’s going for just shy of $19 per share. With a $136 billion market cap, T stock stands head and shoulders above most other stocks trading for under $20. It took a 55% implosion off five-year highs to get here. Still, AT&T has a turnaround plan, which seems to be showing signs of working, with shares now up close to 18% in the past year.
As the blue-chip laggard looks to take action to stay competitive in a fiercely competitive telecom scene, perhaps AT&T is the most intriguing deep-value option in this list. It’s a legacy turnaround play rather than a high-growth mid-cap.
Regardless, you’re getting paid a great deal (5.81% dividend yield) to wait for management to steer T stock toward one of its best years in a very long time. At 10.2 times trailing price-to-earnings, T stock also looks incredibly cheap for a firm with so much to gain if it can catch up to industry rivals.
On the date of publication, Joey Frenette did not hold (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.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.
