The Dow, S&P 500, and Nasdaq all reached new highs once again Wednesday as they continue their hot November on the back of increased U.S.-China trade war progress and better-than-feared quarterly earnings results. In the last several days, both President Trump and President Xi Jinping have appeared more optimistic that the so-called phase one trade deal can get done.
Meanwhile, the Russell 2000 also hit a new 52-week high this week, which is a big deal for the small-cap index. With this in mind, now seems like a solid time to add a few “cheap” stocks to your portfolio.
Here at Zacks, we try to avoid labeling stocks as “expensive” or “cheap.” Instead, we look far beyond face value, and our system puts an emphasis on earnings estimate revisions to find stocks that will hopefully be winners for investors.
With that said, lower-priced stocks can be more volatile than stocks trading at higher prices. Nonetheless, stocks that trade for $20 or less can still be highly attractive to investors for many reasons, one of which is they present the chance to take a larger position in a company.
Today we found 5 strong stocks currently trading for under $20 per share with our Zacks Stock Screener that investors might want to buy heading into December…
The AES Corporation AES
Prior Close: $18.75 USD
AES is a global power company that operates a diverse energy portfolio from diesel, gas, and oil to renewables. The firm topped our quarterly earnings estimates in early November by 20%, and it is part of our Utility - Electric Power space, which currently rests in the top 33% of our more than 250 Zacks industries. AES’ positive earnings estimate revision activity helps it earn a Zacks Rank #2 (Buy) right now.
AES also boasts an “A” grade for Value and a “B” for Growth in our Style Scores system, and holds a 2.91% dividend yield, which comes in well above the 10-year U.S. Treasury’s 1.76%. Shares of AES have surged nearly 30% in the past three months and 80% in the last two years to crush its industry’s 5% average climb. Looking ahead, the firm’s adjusted full-year fiscal 2019 earnings are projected to jump 8.1%, with 2020’s figure projected to pop another 7.7% higher, based on our current Zacks Consensus Estimates.
FireEye, Inc. FEYE
Prior Close: $16.54 USD
FireEye is a cybersecurity company with offerings tailored to enterprises and governments that works with more than 8,500 customers across more than 100 countries. FEYE, like AES, is coming off a strong third quarter where it topped our earnings and revenue estimates, after it posted record Q3 billing for cloud subscription, managed services, and professional services. FEYE stock has been volatile over the last two years, but it is up nearly 30% in the past three months. Plus, FEYE still has plenty of room to run before it hits its 52-week highs of over $20 per share.
FireEye is a Zacks Ranks #2 (Buy) at the moment that also holds “A” grades for Growth and Momentum. The firm’s full-year sales are expected to climb 6% and 7.5%, respectively in 2019 and 2020. Meanwhile, its earnings are projected to slip this year to $0.02, but then soar to $0.16 in fiscal 2020. Digital threats will continue to grow as businesses big and small continue their digital transformations and FireEye’s Security industry currently rests in the top 5% of our 253 Zacks industries.
Newell Brands Inc. NWL
Prior Close: $18.83 USD
Newell Brands owns a diverse portfolio of consumer goods brands that includes everything from Mr. Coffee and Rubbermaid to Coleman and Calphalon. The company easily topped our Q3 earnings estimates on November 1 and raised its outlook. NWL stock had tumbled since the summer of 2017, when it was trading for over $50 per share. But Newell Brands shares have surged over 40% in the last six months. This climb started after the firm announced it hired Ravi Saligram as its new CEO at the end of July and crushed our Q2 bottom-line estimates.
The company’s full-year fiscal 2019 earnings are projected to surge over 29% from the year-ago period to reach $1.67 per share. Overall, Newell’s comeback narrative might just be starting and its positive earnings revision activity helps it earn a Zacks Rank #2 (Buy). NWL also holds “A” grades for Value, Growth, and Momentum. Plus, the firm’s current annualized dividend yields 4.89% right now, which comes in well above peers such as Kimberly-Clark’s KMB 3.06%.
NeoPhotonics Corporation NPTN
Prior Close: $8.15 USD
NeoPhotonics designs and makes optoelectronic solutions utilized in high-speed communications networks across telecom and datacenters. The San Jose, California-based company crushed our quarterly estimates on Halloween, with its shares up 36% since then. NPTN stock has also surged 130% over the past six months from under $4 per share to its current price point. And the firm’s core business should continue to expand as datacenters become more important in the cloud computing age.
NPTN’s consensus fiscal 2019 earnings estimate jumped from -$0.15 to break-even after it reported, while 2020’s estimate jumped 33%. This strong movement helps NeoPhotonics earn a Zacks Rank #1 (Strong Buy). NPTN also rocks “A” grades for Growth and Momentum and is part of our Semiconductor – Communications industry, which rests in the top 25% right now. Looking ahead, NeoPhotonics’ full-year fiscal 2019 sales are expected to jump 9%, with 2020 expected to come in 7% higher.
Pure Storage, Inc. PSTG
Prior Close: $16.41 USD
Pure Storage is an enterprise data storage and solutions firm that had gone on a strong run after it posted solid second quarter results. But PSTG has fallen from just over $20 per share to its current price after its Q3 revenues, which it reported on November 21, fell short of our estimates. Despite the miss, the firm’s current-year earnings picture has trended upward to help Pure Storage earn a Zacks Rank #2 (Buy) right now. PSTG also holds “A” grades for Growth and Momentum to help it boast an overall “B” VGM score.
Looking ahead, the Mountain View, California-based tech company’s full-year fiscal 2020 revenue is projected to pop roughly 21%, with 2021 expected to come in over 19% higher at $1.96 billion. The bottom end of the income statement appears even stronger, with PSTG’s adjusted FY20 earnings projected to surge 19% to $0.25 per share. Then Pure Storage’s fiscal 2021 EPS figure is expected to climb nearly 70% higher to $0.42. The recent downturn might present interested investors with an opportunity to buy PSTG on the dip.