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5 Little-Known Stocks Under $20 Analysts Recommend Buying

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Stock markets started 2020 on an upbeat mood continuing the momentum witnessed in 2019. Then came coronavirus and played spoilsport. The pandemic triggered massive sell-offs across stock markets globally on concerns over its impacts on the world economy. The contagion brought global economic activities to a grinding halt for three months due to the lockdowns and restrictions by governments across the world. Notably, March witnessed one of the most dramatic stock market crashes on record with the Dow Jones Industrial Average nosediving roughly 25%.

However, all three major market indexes roared back and staged an impressive recovery from the stock market crash that started in February and continued till mid-March, and racked up handsome returns for 2020. Economic activities started to pick up in the United States in late spring with the loosening of lockdown restrictions.

U.S. stock markets had a bumper month of gains in November with the Dow Jones crossing the 30,000 level for the first time later that month. The momentum that was witnessed in November continued in December on hopes of a stimulus deal and upbeat prospects on the coronavirus vaccine front.

The Dow Jones and the S&P 500 scaled record highs on multiple occasions and ended 2020 at all-time highs. The Dow Jones, which touched an intraday all-time high of 30,637.47 on Dec 31, gained around 7% in 2020. The S&P 500 also scaled an intraday record high of 3,760.20 on Dec 31. The benchmark gained around 15% last year. Meanwhile, the tech-heavy Nasdaq Composite Index was up an impressive 43% for the year. The index also touched an intraday all-time high of 12,973.33 last Tuesday. The momentum in the stock markets reflects the passage of the long-awaited U.S. stimulus bill, roll-out of coronavirus vaccines and signing of the post-Brexit trade deal. All three benchmarks ended 2020 with gains for a second straight year.

After months of deadlock, President Trump finally signed the $900 billion stimulus package on Dec 27 aimed at bolstering the U.S. economy. The bill includes $600 direct payments to most American adults, an extension of the Paycheck Protection Program and $300 weekly enhanced unemployment benefits. The new relief package provides a much-needed boost to millions of Americans and businesses clobbered by the pandemic.

A lackluster report on new job creation in the United States spurred the urgent need for another round of stimulus measure to alleviate the economic toll of the pandemic as most of the roughly $3-trillion government pandemic relief aid dried up. The relief measures also helped assuage investors’ concerns over an economic fallout from the resurgence of virus cases and the potential for more containment measures as well as the distress in the labor market.

The United States has also started to roll out vaccines with the first shots of the Pfizer-BioNTech vaccine being administered on Dec 14 following approval for emergency use from the FDA. Moderna, Inc.’s MRNA vaccine also received emergency use authorization from the FDA on Dec 19.

The availability of vaccine will allow the U.S. economy to fully open up, which would boost consumer spending and provide a boost to the coronavirus-stricken economy. However, it will take months to vaccinate a sufficient number of people in order to restore normalcy.

Nonetheless, the eventual reopening of the economy, at least most part of it, would pave the way for a swift economic rebound in 2021 as business activities return to near-normal levels. Moreover, as widely expected by investors, the U.S. Federal Reserve, in its December policy meeting, decided to keep benchmark interest rates near zero to prop up the economy. The Fed also remained committed to continue buying bonds until the economy gets back to full employment. The ultra-low interest rate environment augurs well for consumer confidence and expansion of economic activities in 2021.

5 Lesser-Known Stocks for 2021

Positive development on vaccines and the signing of the stimulus bill helped major indexes finish 2020 on a strong note. A strong showing for stock markets has also set the stage for continued upside in 2021. Moreover, the American economy has clawed its way back from pandemic-induced stupor and appears to be well set for 2021. The stimulus package would buttress the U.S. economy before a full economic reopening. However, the second strain of coronavirus may spoil the market mood. As such, volatility in the market is expected to continue over a few earnings cycles.

Against this backdrop, we recommend a few lesser-known stocks backed by analysts’ recommendation that hold promise for high returns this year. For this, we have taken the help of the Zacks Stock Screener to choose stocks that have a market cap of more than $500 million but less than $1500 million and currently carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). Our research shows that stocks with a Zacks Rank #1 or 2 offer the best investment options. You can see the complete list of today’s Zacks #1 Rank stocks here.

Moreover, these stocks are currently trading below $20 and have average broker rating less than or equal to 2. Their price as a % of 52-week high-low (H-L) range remains greater than or equal to 75%. A value of 100 indicates that the stock is trading at its 52-week high.

Here are the five stocks that meet the criteria:

Our Picks

ADTRAN, Inc. ADTN: This Alabama-based company designs, manufactures, markets and services network access solutions for communication networks and carries a Zacks Rank #2. With a wide portfolio of software-defined access and 10G solutions, ADTRAN is well poised to optimize its customer and geographic diversity momentum. The company’s global leadership in software-defined access is likely to ensure a steady revenue stream as it helps clients to reduce costs and accelerate service delivery and deployment.

The Zacks Consensus Estimate for earnings for 2021 has been revised 133.3% upward over the last 60 days. The company has also surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 132.3%. The stock has also gained 49% in 2020.

Donnelley Financial Solutions, Inc. DFIN: This Illinois-based company, carrying a Zacks Rank #2, is a leader in risk and compliance solutions, offering insightful technology, industry expertise and data insights to clients globally. The company should gain from growth in software solutions and strength in the IPO market. Its aggressive approach toward managing cost structure is also anticipated to lend support to its bottom line.

The consensus estimate for earnings for 2021 has also been revised 32% upward over the last 60 days. The company has also surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 119.5%. Its shares have also popped 62% in 2020.

Alphatec Holdings, Inc. ATEC: The California-based medical technology company is focused on the design, development, manufacturing and marketing of products for the surgical treatment of spine disorders. The company, carrying a Zacks Rank #2, should benefit from rising adoption of new products by surgeons and growth of its strategic distribution channel. New products are likely to drive its U.S. revenues.

The Zacks Consensus Estimate for 2021 earnings has been revised 1.9% upward over the last 60 days. The company has also surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average being 24.2%. The stock also surged around 105% last year.

Digi International Inc. DGII: Minnesota-based Digi International is a leading global provider of Internet of Things (IoT) connectivity products, services and solutions. The company, carrying a Zacks Rank #2, should gain from a strong uptick in its advanced IoT connectivity products. It should benefit from the rebound in its SmartSense IoT Solutions and synergies of the Opengear buyout.

The company has expected earnings growth of 53.6% for the current fiscal year. The consensus estimate for earnings for the current fiscal has also been revised 13.2% upward over the last 60 days. The company has also surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average being 546.9%. It also has an estimated long-term earnings growth rate of 14.5%.

Apollo Medical Holdings, Inc. AMEH: California-based Apollo Medical is a physician-centric, technology-enabled healthcare management company carrying a Zacks Rank #2. The company remains focused on increasing its clinical expertise and delivery by investing in a proprietary technology platform, which is driving operational efficiency. Acquisitions including Accountable Health Care IPA should also drive its top line.

The Zacks Consensus Estimate for earnings for 2021 has been revised 17.9% upward over the last 60 days. The company has also surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average being 150.3%. It also has an estimated long-term earnings growth rate of 5%.

Zacks Top 10 Stocks for 2021

In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?

These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold.

Start Your Access to the New Zacks Top 10 Stocks >>


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ADTRAN, Inc. (ADTN) : Free Stock Analysis Report
 
Moderna, Inc. (MRNA) : Free Stock Analysis Report
 
Digi International Inc. (DGII) : Free Stock Analysis Report
 
Alphatec Holdings, Inc. (ATEC) : Free Stock Analysis Report
 
Donnelley Financial Solutions Inc. (DFIN) : Free Stock Analysis Report
 
Apollo Medical Holdings, Inc. (AMEH) : Free Stock Analysis Report
 
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