Further, stocks under $20 reap huge profits as an increase of as less as a dollar in share price adds to 5% in the portfolio. This is in contrast to the stocks at $100 or above which would see 1% or less gains if share prices move up by $1. Moreover, 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 (read: 6 Incredible ETFs & Stocks on Sale).
In fact, trading in higher average daily volumes keeps the bid/ask spread tight and does not lead to extra cost for an investor.
And guess what, the massive decline in the stock market has provided investor’s great opportunity to tap some of these from a long list. The preference is not only limited to the stock world but can be felt in the ETF space as well. So, let us dig into some solid and cheap picks from both of these worlds that could lead to huge gains when the market stabilizes or move higher.
Top 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 stock screener to locate stocks with below-industry P/E and P/B ratios, and double-digit earnings growth for the current year. Here are our three picks:
Horizon Pharma (HZNP)
This Dublin-based company is a specialty biopharmaceutical company that engages in identifying, developing, acquiring or in-licensing, and commercializing medicines for the treatment of arthritis, pain, inflammatory, and/or orphan diseases in the United States and internationally.
Last Closing Price: $18.40
Zacks Rank: #1
Average Volume (in shares): 3.02 million
P/E: 8.31 vs industry average of 25.81
P/B: 2.34 vs industry average of 3.21
Fiscal 2016 Earnings Growth Rate: 47.19%
Axiall Corporation (AXLL)
This Atlanta-based company is the manufacturer and marketer of chemicals and building products in the United States and internationally.
Last Closing Price: $9.53
Zacks Rank: #2
Average Volume (in shares): 1.42 million
P/E: 12.19 vs industry average of 12.66
P/B: 0.44 vs industry average of 2.22
Fiscal 2016 Earnings Growth Rate: 10.42%
Trina Solar Limited (TSL)
This Changzhou-based company is an integrated solar-power products manufacturer and solar system developer in the People’s Republic of China, Europe, the United States, and other Asia Pacific regions (read: Inside the Recent Surge in Clean Energy ETFs).
Last Closing Price: $9.07
Zacks Rank: #2
Average Volume (in shares): 1.90 million
P/E: 7.07 vs industry average of 11.40
P/B: 0.74 vs industry average of 1.31
Fiscal 2016 Earnings Growth Rate: 22.70%
Top ETFs
For ETFs, we have looked into the funds having a Zacks Rank #1 or 2 (Buy) and average trading volume of more than 50,000 shares. While there are only a handful of ETFs trading under $20, we have highlighted three of those that investors would like to buy on hopes of reaping higher returns:
Deep Value ETF (DVP)
The fund tracks the TWM Deep Value Index, which provides the opportunity to invest in undervalued dividend-paying stocks within the S&P 500 Index with solid balance sheets, and strong earnings and free cash flow.
Last Closing Price: $19.11
Zacks Rank: #2
Average Volume (in shares): 72,200
Global X Social Media Index ETF (SOCL)
This fund provides exposure to the companies involved in the social media industry, including social networking, file sharing, and other Web-based media applications by tracking the Solactive Social Media Index (read: Internet ETFs to Buy After the Latest Sell-Off).
Last Closing Price: $17.16
Zacks Rank: #2
Average Volume (in shares): 71,500
PowerShares High Yield Equity Dividend Achievers Portfolio (PEY)
This fund offers exposure to the dividend yielding companies that consistently increase the payout and tracks the NASDAQ US Dividend Achievers 50 Index.
Last Closing Price: $12.30
Zacks Rank: #2
Average Volume (in shares): 257,000
Bottom Line
The above-mentioned stocks and ETFs should draw the attention of investors seeking to accumulate a larger number of inexpensive shares that are primed to outperform. Even small investors could add a decent holding of some of the best cheap stock and ETF names with a modestly sized investment. These products could bring higher returns to their portfolio.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report HORIZON PHARMA (HZNP): Free Stock Analysis Report AXIALL CORP (AXLL): Free Stock Analysis Report TRINA SOLAR LTD (TSL): Free Stock Analysis Report DEEP-VALUE ETF (DVP): ETF Research Reports GLBL-X SOCL MDA (SOCL): ETF Research Reports PWRSH-HY EQ DV (PEY): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
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