Earlier in 2023, it seemed like Wall Street would overcome the recent pressures of inflation and rising rates. But with the S&P 500 down about 9% in the past 90 days and uncertainty on the rise, it’s starting to look like the year may end on a sour note after all.
The good news for bargain-conscious investors, however, is that pullbacks like this may present buying opportunities. Not all cheap stocks are attractive, as some companies get beaten down for very good reasons. However, patience can pay off for those who stake out long-term positions in companies that have a positive growth outlook, even if short-term trends are a bit rocky.
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Each of the following seven stocks are under $20 a share, but all are showing positive momentum lately despite the current cloud hanging over the stock market.
| Stock | Year-to-date return as of Oct. 25 |
| Alamos Gold Inc. (ticker: AGI) | 26.4% |
| American Eagle Outfitters Inc. (AEO) | 32.3% |
| Coty Inc. (COTY) | 13% |
| New York Community Bancorp Inc. (NYCB) | 23.2% |
| Paymentus Holdings Inc. (PAY) | 81.8% |
| Plains All American Pipeline L.P. (PAA) | 39.9% |
| Steelcase Inc. (SCS) | 52.6% |
Alamos Gold Inc. (AGI)
— Sector: Materials
— Market capitalization: $5 billion
Commodity stocks like Alamos Gold have been in favor in the inflationary environment of the past year or so. Furthermore, the safe haven appeal of gold has been drawing in more investors amid geopolitical risks and fears of prolonged dysfunction in Washington. AGI is sitting on roughly 10.5 million ounces of gold reserves, according to a report from earlier this year, so even a modest tailwind for the precious metal means big things for this cheap stock. Shares are up 26.4% year-to-date as a result to nearly triple the returns of the broader stock market since Jan. 1. There is a hard link between the performance of this firm and pricing trends for gold, however, so be aware of the risks before you dive in.
American Eagle Outfitters Inc. (AEO)
— Sector: Consumer discretionary
— Market capitalization: $3.5 billion
American Eagle is a retailer that has been on a roller coaster ride over the past five years, sparked by a pandemic-era crash, then a snap-back rally, then a rough 2022 with the rest of Wall Street. Most recently, the trend has been higher for shares, including a 32.3% gain year to date as the company has nearly doubled from its 52-week lows. Consumer tastes are always hard to pin down, but the generally better-than-expected economic environment has buoyed AEO as the stock charges into the all-important holiday season. With profitability set to surge about 30% this year even as revenue growth remains in the low single-digits, American Eagle has won over investors who think it has what it takes to capitalize on potentially brighter days ahead.
Coty Inc. (COTY)
— Sector: Consumer staples
— Market capitalization: $8.4 billion
Coty is technically defined as a consumer staples company, as it provides personal care products, but it is divided into two arms with its “consumer” brands that are workaday products and its “prestige” brands that are luxury goods. The company provides fragrances, color cosmetics and upscale cleansers that are sold under the Philosophy, Calvin Klein and Gucci brands, in addition to its more mainstream Cover Girl and Max Factor lines. During the pandemic, people seemed to care less about their cosmetics, but now COTY stock is on an upswing thanks to rising demand and strong margins. In August, the company reported its prestige segment revenues surged by 21% year over year, a great sign as we enter the holiday shopping season.
New York Community Bancorp Inc. (NYCB)
— Sector: Financials
— Market capitalization: $7 billion
A mid-sized bank, NYCB was caught up in the concerns about regional banks earlier this year in the wake of the First Republic and Silicon Valley Bank failures. But the stock has bounced back quickly, and is up about 60% from its spring lows. With a tremendous yield of about 6.7% and consistent 17-cent quarterly payouts that date back to 2016, this financial company has proven an income stock under $20 that is worth a look. There’s risk here, to be sure, but the worst seems to be over for the sector and that could hint that brighter days are ahead for NYCB stock in 2024.
[READ: 7 Best Regional Bank Stocks to Consider Now]
Paymentus Holdings Inc. (PAY)
— Sector: Technology
— Market capitalization: $1.8 billion
Though perhaps not as high profile as some other fintech firms, Paymentus offers cloud-based bill payment technology to both merchants and financial institutions through its software-as-a-service technology platform. Its clients include local utilities, smaller banks and insurance providers, government offices, telecommunications firms, and health care companies, to name a few. The stock has been on an absolute tear in the past year, with gains of about 82% year to date in 2023, thanks to projected revenue growth of 20% in both the current fiscal year and fiscal 2024. PAY stock is still comfortably under $20 even after this run, however, and could have continued upside.
Plains All American Pipeline L.P. (PAA)
— Sector: Energy
— Market capitalization: $10.7 billion
Plains All American Pipeline is a cheap stock that stands out as one of the most generous dividend payers out there. The energy company currently yields 6.9%, which is more than four times the typical S&P 500 stock on average. Plains is an energy infrastructure company that operates a series of oil and gas pipelines, as well as terminals and storage facilities. This isn’t quite as high-margin as being an oil exploration or production company, but it is much more reliable — leading to generous dividends that many shareholders have come to rely on.
Steelcase Inc. (SCS)
— Sector: Industrials
— Market capitalization: $1.2 billion
Office cubicle and furniture manufacturer Steelcase was hard-hit by the pandemic and the resulting shift to remote work. But after bottoming out in 2022, things are looking up. Wall Street has adjusted its expectations and many employers are re-investing in their physical offices as they get serious about forcing workers to attend in-person for much of the week. SCS stock is up about 53% year to date, with fiscal 2024 earnings set to soar about 50% as steady demand lifts profitability. The company is still far from its 2019 peak, but recent momentum may make this stock a bargain buy at under $20 a share.
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7 Best Cheap Stocks to Buy Under $20 originally appeared on usnews.com
Update 10/26/23: This story was previously published at an earlier date and has been updated with new information.
