The S&P 500 hit a new high for the first time in three months on Monday as investors responded positively to a somewhat stronger-than-projected Q3 earnings season, U.S.-China trade war progress, and interest rate cut optimism. Therefore, now seems like a solid time to think about adding a few less expensive 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. They also present the chance to take a larger position in a company.
When searching for these low-priced, or cheap stocks, we still look for similar trends in growth, value, and momentum. Then we apply the Zacks Rank to properly analyze the potential that these companies have.
Today we found 5 stocks currently trading for under $20 per share using our Zacks Stock Screener that investors might want to buy heading into November…
BRF S.A. BRFS
Prior Close: $8.90 USD
BRF S.A. is a Brazilian food giant that operates in everything from fresh poultry to frozen processed foods and much more. The firm has expanded its international reach to more than 150 countries and announced on Tuesday that it will invest roughly $120 million to build its first chicken processing plant in Saudi Arabia, which will help it grow in a vital market. Shares of BRFS have surged 55% in 2019 but have cooled off over the last three months, up 2%.
This will likely mean that its Q3 financial results, due out on November 8, will be the next catalyst for BRFS shares. Looking ahead, our current Zacks Consensus Estimates call for the company’s adjusted Q3 and Q4 earnings to swing positive from adjusted losses in the year-ago period to help lift full-year fiscal 2019 to +$0.16 per share, up from -$0.54 in 2018. BRF S.A. is then expected to see its FY20 EPS figure surge 222% above our current year estimate on 4% stronger sales. BRFS is currently a Zacks Rank #1 (Strong Buy) stock that boasts “A” grades for both Growth and Momentum in our Style Scores system.
Hewlett Packard Enterprise HPE
Prior Close: $16.46 USD
Hewlett-Packard split into Hewlett Packard Enterprise and HP Inc. HPQ back in 2015. Today, as its name suggests, HPE sells enterprise-level servers, storage, networking gear, and more. The firm has lost some ground to companies like Cisco CSCO. But HPE officially completed its previously announced purchase of supercomputing leader Cray Inc. in late September to help better compete in the quickly expanding high performance computing and artificial intelligence markets against rivals like IBM IBM.
HPE’s earnings estimate revision activity has turned more positive recently for its current quarter (Q4) and fiscal 2020. The tech firm’s full-year fiscal 2019 earnings are projected to jump 11.6%, with 2020 projected to come in roughly 6% higher. Plus, HPE has topped our quarterly earnings estimates by an average of 14.4% in the trailing four periods, and is a Zacks Rank #1 (Strong Buy) right now that holds “A” grades for Value and Growth. HPE stock is up 7% in the last 12 months and 23% in 2019 and currently pays an annualized dividend of $0.45 per share for a 2.73% yield—which comes in 1% higher than the 10-year U.S. Treasury’s 1.81% at the moment.
Luckin Coffee Inc. Sponsored ADR LK
Prior Close: $19.63 USD
Luckin Coffee is a Chinese chain that aims to challenge international giant Starbucks SBUX in the world’s second-largest economy. LK is focused on growth through mobile and digital ordering as well as delivery, as it tries to offer its customers a “100% cashier-less environment.” The company was founded just two years ago and focuses on speed, convenience, and affordability for China’s growing middle class. Luckin ended the second quarter with 2,963 stores, which marked a 375% jump from the same period in 2018.
The Beijing-based company went public in May 2019 at an IPO price of $17 per share. LK climbed as high as $27 this summer, only to sink back down. LK is set to release its third quarter 2019 financial results on November 13. Our estimates call for the company’s full-year sales to climb 467% in 2019 and another 190% in 2020. Luckin Coffee is currently a Zacks Rank #2 (Buy) that rocks a “B” grade for momentum. The firm might have been lost amid all the higher-profile IPOs from Uber UBER to Beyond Meat BYND. Yet, Luckin is essentially a bet on the Chinese consumer-level economy, which looks poised to grow.
Cronos Group Inc. CRON
Prior Close: $8.39 USD
Cronos Group is one of the so-called big four pure-play marijuana stocks, alongside Aurora Cannabis ACB, Tilray TLRY, and Canopy Growth CGC. The Canadian company boasts international production and distribution across five continents and is set to expand as legalization spreads. Marijuana has been completely legal in Canada for only a year, with “Cannabis 2.0,” which includes derivatives such as edibles and concentrates, just starting. Plus, weed is now recreationally legal in 11 states and D.C., with more to come.
Shares of CRON, like many of its marijuana peers, have been hammered over the last six months. Cronos stock is down 52% during this stretch, but it is still up 11% in the past 12 months, which could mean a comeback is in order. The company’s full-year 2019 sales are projected to skyrocket 237%, with 2020’s revenue actually expected to expand at an even higher clip of 266%. Plus, the company’s small losses aren’t expected to grow as it builds out its operations. CRON is a Zacks Rank #2 (Buy) right now that is a bet on marijuana stocks regaining momentum.
Pure Storage, Inc. PSTG
Prior Close: $19.33 USD
PSTG is an enterprise data storage and solutions firm that is nearing the edge of our qualifications here as it closes in on that $20 per share mark. Pure Storage shares have soared 40% since the firm posted stronger-than-projected Q2 fiscal 2020 results in August. Despite the climb, Pure Storage stock still rests nearly 20% below its 52-week highs, which could give the stock room to run heading into its earing release, which is due out on November 18, according to our Zacks Earnings Calendar.
Pure Storage is currently a Zacks Rank #2 (Buy) that holds an “A” grade for Growth. The Mountain View, California-based company is also part of our Computer- Storage Devices industry that sits in the top 30% of our 255 Zacks Industries. Peeking ahead, the company’s full-year fiscal 2020 revenue is projected to jump 23.3%, with 2021 expected to come in 21.5% higher at $2.04 billion. Meanwhile, PSTG’s adjusted FY20 earnings are projected to pop roughly 5% to $0.22 per share. Better yet, Pure Storage’s fiscal 2021 EPS figure is expected to soar 93% higher to $0.43 per share as it expands its reach in a growing industry.