Oftentimes, high-ball stocks tend to steal more headlines than picks with single-digit prices. When a stock is nearing the $100 or $1,000 mark, it gets investors excited — just as the $1 trillion mark does for market cap. But the share price of a stock arguably only matters relative to, well, its own past or future.
The main exceptions are penny stocks or stocks that are low-priced and also extremely low-volume. In those cases, the share price is reflective of a broader situation that does add risk to the investment.
But plenty of well-established and growing companies are cheap stocks, with share prices under $20. Here are there to consider adding your portfolio.
Cheap Stocks Under $20: Sirius XM (SIRI)
Source: Vinod Sankar via Flickr
When it comes to cheap stocks, Sirius XM (NASDAQ:SIRI) simply cannot be ignored. And it’s not just because shares have been moving steadily higher since the Great Recession, including gains of over 30% in 2018 alone. My bull case is a bit more theoretical — though there are plenty of metrics to serve as the cherry on top.
While the music industry is generally thought of as intensely competitive, that’s really the case for on-demand options—Spotify (NYSE:SPOT), Apple (NASDAQ:AAPL) Music, Tidal and so on. But on-demand everything can wear consumers out. Thus, I believe more and more consumers are going to opt for an option like Sirius XM, where you get the curation of a radio station without the commercials.
Plus, Sirius XM has a built-in pipeline for new customers through the auto industry and a monopoly on satellite radio. In the most recent quarter, SIRI netted 483,000 self-pay customers with a lowest-ever churn rate of 1.6%, according to its earnings release. Looking forward, earnings are expected to expand by more than 20% annually.
And shares are trading for just $7 a pop.
Cheap Stocks Under $20: Arbor Realty Trust (ABR)
Arbor Realty Trust (NYSE:ABR) is a REIT and, in turn, boasts a mouth-watering yield. Right now, the forward yield is over 8% — and that’s after a year-to-date climb of more than 40% that brought shares to $12 each.
The real estate lender is based on New York and focuses on multifamily and commercial real estate. In fact, it’s one of the top multifamily vendors by volume. Multifamily assets make up 73% of its portfolio. The company has revenue growth of over 30% on-tap and comes with a reasonable PEG just above 1.
If you’re looking for a cheap stock under $20, it’s hard to beat one that comes with such guaranteed income. While this year’s gains aren’t the norm for the company, it more or less moved sideways before that. That’s not a bad baseline for an 8% annual payout.
Cheap Stocks Under $20: Cision (CISN)
You may not have ever heard of Cision (NYSE:CISN), but anyone who works in public relations or marketing has — and may even refer to it as their best friend. Cision’s software helps companies monitor media coverage and journalists, among other things. So far this year, CISN stock has gained almost 50%, putting shares just below our “cheap stocks” benchmark of $20.
But investors can expect growth to continue. Annual earnings growth for the next five years is expected to be an impressive 43%, which is especially appealing compared to the stock’s forward P/E of 18. Of course, it’s important to the note that company only posts profits in its adjusted numbers. But in the most recent quarter, the net loss still decreased by 66%.
Communications is a growing industry, and public relations are ever important as we have more screens and information and at our fingertips. This is true beyond America, as evidenced by Cision’s strong growth in emerging markets. For $17 a share, I think CISN is a great buy.
As of this writing, Robert Martin did not hold a position in any of the aforementioned securities.