The Best Cheap Stocks To Buy Now

Hand holding smartphone with stock graph, surveying cheap stocks.
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After tumbling in the early months of COVID-19, stocks rallied through the beginning of September. Since then, the S&P 500 and Nasdaq have experienced losses. The biggest factor that’s led to these wild swings is uncertainty.

COVID-19 infections are rising, the election results may not be known right away, and there’s continuing tension with China about trade.

That doesn’t mean it’s time to give up on the stock market. As the election is decided and a vaccine is closer, the market is expected to recover, so now is a good time to consider cheap stocks. Here’s our guide to the best cheap stocks to buy right now.

Cheap Stocks Projected To Increase In Value

Here are 25 stocks under $20 with the potential to grow.

Best Cheap Stocks
Company Name and Symbol Stock YTD% Change Sector Price
Apache Corporation (APA) -61.94% Energy $9.71
Baker Hughes Company (BKR) -50.64% Energy $12.83
Cabot Oil & Gas Corporation (COG) -2.38% Energy $17.16
Devon Energy Corporation (DVN) -62.25% Energy $9.73
DXC Technology Company (DXC) -51.16% Technology $18.72
Freeport-McMoRan Inc. (FCX) +21.49% Basic Materials $16.36
TechnipFMC PLC (FTI) -70.24% Energy $6.62
General Electric Company (GE) -42.74% Industrials $6.42
Huntington Bancshares Incorporated (HBAN) -38.13% Financial $9.58
Hanesbrands Inc. (HBI) +8.75% Consumer Cyclical $16.42
H&R Block, Inc. (HRB) -29.77% Consumer Cyclical $16.70
Howmet Aerospace Inc. (HWM) -24.19% Industrials $18.21
Invesco Ltd. (IVZ) -23.14% Asset Management $13.82
KeyCorp (KEY) -38.64% Financial $12.42
Kinder Morgan, Inc. (KMI) -41.85% Energy $12.60
The Mosaic Company (MOS) -15.39% Basic Materials $19.00
Mylan N.V. (MYL) -25.92% Healthcare $15.28
Norwegian Cruise Line Holdings Ltd. (NCLH) -70.43% Consumer Cyclical $16.96
Nielsen Holdings PLC (NLSN) -29.61% Industrials $14.47
Regions Financial Corporation (RF) -30.36% Financial $12.47
Schlumberger Limited (SLB) -61.27% Energy $15.81
Tapestry, Inc. (TPR) -40.12% Consumer Cyclical $16.67
The Williams Companies, Inc. (WMB) -19.52% Energy $19.40
Ford Motor Company (F) -25.91% Consumer Cyclical $7.01
Marathon Oil Corporation (MRO) -69.66% Energy $4.22

What Factors Affect Returns?

With any investment, there is a degree of risk as well as return. When deciding which cheap stocks to buy, here are key factors to keep in mind: P/E ratio, price-to-book value, cash flow and earnings reports.

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Read more about how each of these factors works when it comes to low-priced stocks.

P/E Ratio

To calculate a P/E ratio, simply take a company’s stock price and divide it by the company’s net earnings. In a general sense, stocks with a high P/E are considered expensive, and those with a lower P/E are considered cheap.

Price-to-Book Value

Book value is essentially a company’s net worth, as it equals a company’s assets minus its liabilities. Theoretically, if you had to liquidate a company, the company’s book value would be what remains. Stocks trading below book value could be good cheap stocks.

Cash Flow

Net cash flows, cash from operations and free cash flow are just a few of the cash flow metrics used to analyze a company’s value. A company with a low price relative to cash-flow measures is less expensive than one with a higher ratio.

Earnings Reports

Earnings reports offer a wealth of information on companies, including their profits and losses. They also note whether a company performed as expected for a given period. Digging into past earnings reports can help you anticipate future performance and decide whether cheap dividend stocks are a good buy.

Is There a Downside To Investing In Cheap Stocks?

There’s no such thing as a crystal ball on Wall Street. Even stocks that appear undervalued with high growth prospects might not go up in value for any number of reasons.

Some companies simply fail to live up to projections. And others are destined to remain undervalued for years, simply due to investor sentiment.

Potential for Loss

While your investment in cheap stocks is limited, there is the potential for loss. As with any investment, the best approach is diversification. Don’t put all your funds into one stock. Spread out your risk by investing in a variety of stocks and other investment vehicles like mutual funds.

Choosing the Top Brokers for Cheap Stocks

Here are the best brokers when it comes to cheap stocks.

  • Charles Schwab: This brokerage offers both personalized advice and online access for purchasing stocks on your own.
  • Merrill Edge: Merrill Edge offers $0 commission online trades and tools to help you manage your portfolio and decide what stocks to buy.
  • E-Trade: This company has an excellent mobile app and $0 commission trades.
  • Fidelity: Fidelity offers a high level of service with low fees and no account minimums.
  • TD Ameritrade: TD Ameritrade offers multiple trading platforms to help you make informed investment decisions.

Choose a user-friendly platform with low or no fees and excellent customer service. Research your stock choices and buy when you’re ready.

This article has been updated with additional reporting since its original publication.

Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.

About the Author

After earning a B.A. in English with a Specialization in Business from UCLA, John Csiszar worked in the financial services industry as a registered representative for 18 years. Along the way, Csiszar earned both Certified Financial Planner and Registered Investment Adviser designations, in addition to being licensed as a life agent, while working for both a major Wall Street wirehouse and for his own investment advisory firm. During his time as an advisor, Csiszar managed over $100 million in client assets while providing individualized investment plans for hundreds of clients.