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3 Stocks Under $20 Worth the Price

Friday, April 30, 2021 | MarketBeat Staff
3 Stocks Under $20 Worth the Price

With U.S. stocks trading near record highs, low-priced stocks have been hard to come by. Only 15 of the S&P 500 constituents have a share price below $20. The story is similar in the mid-cap space where only 25 S&P 400 stocks can be had for less than an Andrew Jackson bill.

This means that investors that prefer lower-priced shares have to work a bit harder these days to find quality names that fit the budget. Here we showcase three stocks under $20 that have good fundamentals, good technicals, or both.

What Does Viavi Solutions Do?

Viavi Solutions (NASDAQ:VIAV) is a communications company formerly known as JDS Uniphase. Since the former Nasdaq highflier spun-off its optical networking business Lumentum Holdings, it has performed well but not nearly as well as Lumentum. So, why buy Viavi instead of Lumentum?

For starters, Viavi is an undervalued play on the 5G networking buildout which is expected to gain steam in the post-pandemic economy. As more telecom carriers launch their 5G networks in the back half of the year, demand will be strong for the test equipment that is used in the field to enable and measure 5G service. This is Viavi's core business.

Another growth catalyst is the Optical Specialty Products (OSP) business which offers anti-counterfeiting solutions that assure the authenticity of currencies and certain high-value documents. It is seeing solid demand from government and corporate customers that want to protect their banknotes, documents, and products using Viavi's optically variable pigment (OVP) technology. The pigment creates a color-shifting effect on banknotes to combat the use of funny money in over 100 countries. 

This higher margin segment was a strong contributor to earnings in the most recent quarter and will likely remain so. And in combination with the large 5G testing opportunity, Viavi's below industry 21x forward earnings multiple has significant room for expansion.

Is it a Good Time to Buy International Game Technology Stock?

International Game Technology (NYSE:IGT) has climbed higher along with other casino-related reopening plays but at $17.80 has a ways to go to revisit its all-time high near $50.

The London-based maker of slots machines and lottery systems is expected to get a near-term boost from the recent sale of its Italian gaming business. In December 2020, IGT announced that it is selling its consumer gaming equipment, digital gaming, and sports betting divisions to Apollo Global Management for $1.1 billion. Shedding the business will not only provide relief from overbearing regulatory scrutiny but improve profit margins absent the burden of notoriously high Italian taxes.

In addition, a better bottom-line performance is expected to be generated by a renaissance in the core gaming business. And while the gaming business tends to be volatile, IGT's lottery business provides steady recurring revenue from its Aurora lottery management system and TouchPoints self-service terminals and wagering apps. This has been the company's main revenue source during the pandemic but is expected to play more of a supporting role as casinos re-open and electronic gaming equipment sales resume.

A pair of bullish chart patterns are also in IGT's favor. On April 23rd, when the stock closed at $16.57, a bottom triangle formed pointing to a possible run to the low $20's by June 2021. On the same day, a continuation wedge suggested the same. IGT has since moved decidedly higher but a sizeable jackpot remains for traders that pull the lever here.

What is a Good Lithium Stock?

Speaking of bullish chart patterns, Livent (NYSE:LTHM) has a double bottom formation developing on the daily chart. The stock has twice found support around the $16 level and looks poised to reverse to a new uptrend. If the classic pattern plays out as expected, Livent could rally to the $22.90 to $23.70 range over the next several weeks.

Aside from the favorable technicals, the Philadelphia-based lithium technology company has the makings of a winner based on its fundamental merits. Although the rise of the electric vehicle industry has only recently put lithium battery companies in the spotlight, Livent has been finding a use for lithium for decades. It worked with the U.S. government in the 1940's to develop lithium applications before it began supplying the element to Sony in the 1990's for lithium-ion batteries used in camcorders.

Today, Livent's most promising growth opportunity is battery-powered electric vehicles which will be the transportation mode of the future for passenger and commercial customers alike. The company's seven manufacturing sites around the world are expected to be a major source of battery-grade lithium hydroxide as global auto manufacturers seek the input to fulfill their EV ambitions. And with Livent generating more than 80% of its revenue outside North America, it will truly be a beneficiary of global demand. At the same time its low-cost profile compared to competitors should make for some healthy, multiyear profit growth as the EV story plays out.

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7 Lithium Stocks That Will Power the Electric Vehicle Boom

Demand for lithium is set to increase exponentially in the next few years. In fact, according to Statista, demand for lithium may very well double to 820,000 tons in that time. Some of that demand will come from companies that are manufacturing the batteries that we use every day. For example, lithium is an essential component of the batteries that power our mobile devices.

But the real growth will come as the United States goes all-in on electric vehicles (EVs). The Biden administration recently announced plans to have the U.S. government’s fleet of over 600,000 vehicles converted to EVs.

And as you’re aware, EV stocks are in a bubble of some sort at the moment. Some of that is due to the increasing number of companies that went public last year. However, as investors are beginning to realize, not all of these companies will be the next Tesla. In fact, some of these companies may never be successful at bringing an EV to market, at least not at the scale that will be required.

The ones that do make it will need lithium and lots of it. To help you sift through the best lithium stocks to buy, we’ve put together this special presentation.

View the "7 Lithium Stocks That Will Power the Electric Vehicle Boom".

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Livent (LTHM)1.3$17.73+6.2%N/A-197.00Hold$17.91
International Game Technology (IGT)0.9$22.00-0.5%N/A-5.47Buy$19.15
Viavi Solutions (VIAV)1.7$16.47+1.1%N/A102.94Buy$18.71
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