Although 2022 hasn’t gotten off to the start bullish investors were hoping for, the red ink does open the door for the best stocks under $20 to buy now. As many prominent financial advisors have mentioned, the silver lining in any bearish cycle is the chance to acquire high-potential companies at a discount, something that may not be available if the equities sector was in a frenzy.
Indeed, the positive to focus on is that the market needed to flush out the toxicities that got baked into the system. With all due respect to some of the frenetic meme trades that dominated the trailing year-and-a-half period, banking on fiscally decrepit companies may not be the recipe for sustained success. However, going after the best stocks under $20 could potentially yield long-term rewards.
For the purposes of this list, I’m going to focus on more of the lesser-known entities. Whether facing temporary setbacks or not being large enough to generate significant attention, these best stocks under $20 are trading in the background — but that might not last for long. Therefore, here are seven companies to pay attention to:
|Lucid Group, Inc.
|Kinder Morgan, Inc.
|Battalion Oil Corporation
|NuScale Power Corporation
|Patterson-UTI Energy, Inc.
|The Pennant Group, Inc.
Best Stocks Under $20: Lucid Group (LCID)
Despite exhortations from myriad transportation experts that electric vehicles (EVs) are the future, the harsh realty is that the future may be a long ways away. It all comes down to basic economics. According to Kelley Blue Book, the average transaction price for an EV this year is about $62,876. Given that the median household income in the U.S. is about $70,000, few families will pay 90% of their earnings on a car.
True, there are EV makers that specialize in ultra-compact cars or electric-powered trikes, but Americans have never embraced such dimensionally challenged rides. This is why I like Lucid Group (NASDAQ:LCID). Say what you want about the struggles that EV makers face when attempting to knock Tesla (NASDAQ:TSLA) off its perch. At least with Lucid, it’s not making any pretense about selling to middle-income consumers.
Instead, Lucid is 100% focused — at least for now — on affluent drivers. Frankly, with average EV costs through the roof, it’s the only consumer demographic to focus on. Therefore, if you have the patience, LCID is one of the best stocks under $20 to buy now.
Kinder Morgan (KMI)
Among North America’s largest energy infrastructure companies, Kinder Morgan (NYSE:KMI) represents a vital cog in the broader U.S. national security profile. Kinder Morgan owns an interest in or operates approximately 83,000 miles of pipelines and 141 terminals. Further, per its website, the company’s pipelines transport natural gas, gasoline, crude oil, carbon dioxide and other critical resources.
In addition, Kinder Morgan’s terminals store and handle renewable fuels, petroleum products, chemicals, vegetable oils and other products. Unlike energy firms that are tethered exclusively to exploration projects that are subject to extreme volatility, KMI is tied to everyday energy needs, facilitating relative stability.
What is especially appealing about KMI is that the equity unit suffered some red ink because of recent pressures to the crude oil market. For instance, President Joe Biden’s administration authorized the release of crude oil from the Strategic Petroleum Reserve.
However, this and other dynamics made KMI one of the best stocks under $20 to buy now. You may want to consider the opportunity before it potentially fades away should demand return.
Best Stocks Under $20: Battalion Oil (BATL)
An independent energy exploration and development firm, Battalion Oil (NYSEAMERICAN:BATL) is downright risky. Health, safety and environmental hazards cloud exploration projects. Additionally, you have the basic risk factor that drilling efforts may end up being unsuccessful. Therefore, conservative investors may be better served with midstream players as opposed to upstream businesses like Battalion.
That said, every investor is different. If you have the personality for risk tolerance, then BATL could very well be one of the best stocks under $20 to buy now. While Battalion swung higher for much of this year due to Russia’s shocking invasion of Ukraine sending energy markets into a panicked frenzy, pressures have started to weigh on the hydrocarbon sector.
Along with the increased supply associated with the strategic petroleum reserve release mentioned earlier, soaring inflation appears to have modified consumer behavior; namely, Americans are driving less (not including under special circumstances, like Memorial Day weekend).
However, all you need for the energy market to bounce back is another catalyst — say the return to the office. Thus, speculators should keep close tabs on BATL stock.
NuScale Power (SMR)
I’ve been talking about NuScale Power (NYSE:SMR) for quite some time and for good reason. An innovative take on the nuclear energy argument, NuScale specializes in small modular reactors, which are nuclear-powered facilities that feature the benefit of a much smaller footprint than their traditional counterparts. Theoretically, then, you can deploy small modular reactors (SMRs) in areas previously inaccessible to large nuclear powerplants.
Among the many intriguing applications of SMRs is empowering reverse osmosis desalination processes. While the technology to convert ocean water into drinking water has always existed, the process is very energy intensive. Possibly, NuScale’s SMR technology can help fill the opportunity gap, thus solving multiple future crises with one solution.
To be fair, there are many about nuclear energy and the risks of circumstances going awry. In addition, NuScale entered the public market via a reverse merger with a special purpose acquisition company (or SPAC). While SMR stock may not be for the faint of heart, it is certainly one of the best stocks under $20 for those willing to ride through some choppy weather.
Best Stocks Under $20: Patterson-UTI Energy (PTEN)
Providing land drilling and pressure pumping services along with rental equipment, Patterson-UTI Energy (NASDAQ:PTEN) is one of the background players in the energy sector. However, I don’t mean that in the pejorative sense. As hydrocarbons suddenly enjoyed a surge of relevance because of the geopolitical crisis in eastern Europe, more attention is now focused on domestic energy production.
True, Democrats historically have eschewed support for hydrocarbons in favor of green energy infrastructure development. Here’s the reality: green energy will take a while to catch on. In the meantime, there are Americans paying multi-decade highs in gasoline prices. Plus, they’re hurt and angry right before a critical midterm election cycle.
As if to further confirm that PTEN is one of the best stocks under $20 to buy now, Patterson-UTI recently delivered a strong earnings performance for its second quarter, beating consensus targets on the top and bottom lines. Moving forward, economic realities will likely force greater investments in energy development projects, boding cynically well for PTEN stock.
Among the signature pain points of the coronavirus pandemic and its broader impact on global commerce is the supply chain disruption. Suddenly, everyday people became aware of not only headline problems, but the minutia of disruptive events, such as container shortages and the clashing of economic incentivization; as in, being paid by miles driven versus compensated by the hour.
While I’m not presenting Symbotic (NASDAQ:SYM) as a panacea to our woes, it may lend a much-needed helping hand. Specializing in cutting-edge robotics and automation technology, Symbotic seeks to improve supply chain efficiencies. As an end-to-end solutions provider, the company has the potential to help enterprise-level clients identify their frictions and address them immediately, thus enhancing the bottom line.
To be clear, Symbotic also entered the public arena via a reverse merger with a SPAC. Given that SPAC-based business combinations have underperformed the benchmark equities index, SYM stock may not be appropriate for everyone. However, if you have some funds lying around for speculation, SYM stock could be one of the best stocks under $20 to buy now.
Best Stocks Under $20: Pennant Group (PNTG)
Getting old is simply a reality of life that eventually everyone must accept in gracious silence or kicking and screaming. In many cases, professional care may be required, which brings us to Pennant Group (NASDAQ:PNTG). Offering home health and hospice care, PNTG makes for a strong case as one of the best stocks under $20 to buy now based on demographic trends.
As the Pew Research Center stated, the baby boomer generation has always had an outsized presence compared to other age cohorts. Their numbers peaked at 78.8 million in 1999, though millennials finally replaced them as the largest living adult generation in the U.S. in 2019.
However, the reality is that as boomers retire and enter their golden years, they need to live somewhere. In addition, advances in healthcare and medicine means that people are generally living longer (setting aside the deaths of despair crisis). Therefore, PNTG stock is likely to be relevant for a very long time.
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.