7 Under-$20 Stock Picks to Beat the Market Slump

While you’ve all heard the phrase you get what you pay for, sometimes, you can “arbitrage” this aphorism in the market with stocks to buy under $20.

What does that mean? The lion’s share of financial advisors will direct you to quality blue-chips. These often carry hefty price tags and for good reason. They represent established businesses and industries.

However, plenty of solid names exist under the bracket of stocks to buy under $20. Admittedly, a majority of these underlying companies have seen better days. However, it’s also possible that Wall Street imposes an unjustified discount, which presents a potential upside opportunity for forward-looking investors. After all, investing is about what may happen, not what is happening.

To set market participants at ease, while these stocks to buy under $20 can be had for what it costs to buy lunch these days, none of them are what I would consider extremely speculative. Although they undoubtedly present risks, they align with potential fundamental catalysts.

So, without further ado, below are compelling stocks to buy under $20.

Warby Parker (WRBY)

Warby Parker (NYSE:WRBY) made its public market debut in September 2021. Unfortunately, it’s on the cusp of a very poor one-year anniversary. Since the beginning of January, WRBY has hemorrhaged 70% of market value. Some of the troubles may be due to bad timing.

“According to FactSet data, 1073 companies IPO’d in 2021, raising $317 billion; in the first half of 2022, the total was just 92 companies, raising just under $9 billion,” a new report suggests. Of course, not everything can be blamed on timing issues. With inflation taking a bite out of purchasing power, even medical-related companies like Warby Parker – which specializes in discount eyewear – took a beating.

Still, WRBY could easily be one of the best stocks to buy under $20 for the long haul. According to various scientific research papers, projections call for myopia cases to increase globally. By one estimate, nearly half of the world population could suffer from nearsightedness.

Therefore, it’s worth keeping an eye on WRBY, no pun intended.

Plains All American Pipeline (PAA)

Perhaps not the biggest household name, Plains All American Pipeline (NASDAQ:PAA) is an energy specialist. Specifically, the company focuses on the midstream aspect of the oil and natural gas industries. This deals with infrastructure needs such as storage and transportation. By logical deduction, companies like Plains represents the vital link between the upstream (exploration) and downstream (retail) components.

According to its website, Plains commands 18,300 miles of active crude oil and natural gas liquids (NGLs) pipelines and gather systems. It also features 140 million barrels of storage capacity. As well, the company oversees 6,000 crude oil and NGL railcars.

Moving forward, should social normalization trends stemming from Covid-19 accelerate, PAA is one to watch among stocks to buy under $20. Effectively, demand for midstream operators facilitates incredible resilience. For instance, if you need to go to work (via a combustion car), you can’t just avoid the gas station.

NuScale Power (SMR)

Over the years, various nations began shutting down their nuclear power facilities. In January of this year, Wired.com reported that Europe is in the middle of a messy nuclear slowdown. The publication was perhaps more prescient than it imagined. A little more than a month later, Russia invaded Ukraine, sending the energy market into chaos.

However, this chaos also presents a cynical argument for NuScale Power (NYSE:SMR). Essentially, NuScale specializes in small modular reactors. These are nuclear facilities that feature a physically smaller footprint, enabling integration across a wide canvas. As well, NuScale’s SMRs feature advanced safety technologies to substantially mitigate catastrophic risks.

While the political narrative concentrates on renewable energy, the scientific reality is that no other source features the energy density of nuclear fuel. Further, with the ability for SMRs to effectively “decentralize” nuclear power, they may undergird currently economically unviable initiatives such as desalination. Therefore, SMR is one of the best high-risk, high-reward stocks to buy under $20.

Sunlight Financial (SUNL)

As the name might suggest, Sunlight Financial (NYSE:SUNL) is an enterprise that finances residential solar systems. Specifically, the company partners with contractors nationwide to offer homeowners innovative, affordable loans for modern home upgrades, per its website. In so doing, Sunlight helps contractors build their portfolio while helping homeowners reduce their utility bills.

This area of the renewable energy segment has been incredibly relevant for individuals and families over the years. Recently, though, the impact of climate change has driven even more relevance to the sector, which should help make SUNL one of the best stocks to buy under $20.

One of the factors that should help boost demand for Sunlight are heat waves. To beat the heat, consumers must resort to air conditioners, which present massive utility bills. Solar panels over time can pay for themselves, making SUNL very intriguing.

Sibanye Stillwater (SBSW)

No one in their rational mind would present mining specialist Sibanye Stillwater (NYSE:SBSW) as a risk-free opportunity. It’s not. On a year-to-date basis, SBSW shed nearly 23% of market value.

To be clear, Sibanye’s gold production business faces fundamental risks. Recently, inflation data revealed that price pressures remain stubbornly high, per the New York Times. This circumstance implies that the Federal Reserve will act even more aggressively to combat inflation. Unfortunately, this translates to higher borrowing costs, which tends to be deflationary for commodities.

At the same time, Sibanye is one of the world’s top producers of platinum and palladium. Not only are these two metals rare and offer monetary value, they also deliver industrial uses. Since Russia dominates palladium production, Sibanye’s “friendly” sourcing of palladium – Sibanye being headquartered in South Africa – could be vital.

Everi (EVRI)

If you have a contrarian mindset, you may want to check out casino gaming specialist Everi (NYSE:EVRI). Focusing on the technologies that undergird modern games of chance, Everi looked like a solid bet before the Covid-19 pandemic disrupted everything. True, it received a boost following the global health crisis. But this year, shares slipped 22%, particularly as Covid-19 restrictions in China and inflation worldwide impacted consumer sentiment.

On surface level, Everi’s attempt to gain more market share in Asia couldn’t have come at a worse time. Again, with Covid-19 disrupting global affairs, an Asia-centric business strategy suffered serious vulnerabilities. At the same time, this exposure also makes EVRI one of the more compelling stocks to buy under $20.

Essentially, while Asia-tethered casinos look bad now, once Covid-19 restrictions fade, circumstances should improve dramatically.

Thus, EVRI is one of the stocks to buy under $20, even if it doesn’t look like it now.

Cushman & Wakefield (CWK)

If you really want to go contrarian, you should look into Cushman & Wakefield (NYSE:CWK). A global commercial real estate services firm, Cushman & Wakefield launched its IPO in 2018. That doesn’t give much of a history before the Covid-19 crisis rudely made its entry into international affairs.

Of course, with the post-pandemic new normal, the narrative for CWK stock took an ugly turn. With millions of people working from home, the underlying firm suffered a lack of relevancy. Even today, many employers allow their employees to operate remotely. However, that circumstance could change soon enough.

Frankly, the economic backdrop favored workers over employers in a tight labor market. However, as some publications are beginning to point out, the economic pendulum may be swinging to the other side.

The harsh reality is that the entity signing the checks usually wins. Therefore, with employers possibly gaining the upper hand, CWK could be one of the intriguing stocks to buy under $20.

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.