7 Under-$20 Stocks to Buy to Tap Into a Hidden Bull Market

While going after discounted equities merely for the psychologically satisfying numerical profile often leads to unpleasant results, on occasion, certain inexpensive ideas such as under $20 stocks to buy can be a great deal over time. To be sure, prospective participants must exercise caution. This is no arena for risk-averse traders. Still, patience and a contrarian attitude can possibly yield significant profitability.

Generally speaking, you get what you pay for. Arguably, then, under most circumstances, focusing on under-$20 stocks to buy will lead to corresponding results. Still, at times, you can fundamentally receive more value for the implied benefit associated with a low price tag. In other words, astute investors can tap into a hidden bull market.

To better the odds of finding a diamond in the rough, I’ve enlisted the help of Gurufocus.com. Finding fundamentally relevant market ideas tied to undervalued businesses, these under-$20 stocks to buy could move significantly higher in the years ahead.

If you’re willing to roll the dice, let’s get started with these discounted opportunities.

Vale (VALE)

One of the more credible ideas among under-$20 stocks to buy, Vale (NYSE:VALE) represents a metals and mining firm. Based in resource-rich Brazil, Vale garners fame for being the world’s largest producer of iron ore and nickel. Fundamentally, nickel will likely be the metal of the future, given its implications in electric vehicle (EV) batteries.

As of the close of the Oct. 5 session, VALE traded hands at $14.80. Up until recently, shares traded below parity for the year. Now, at the time of writing, the stock is up about 4%, likely reflecting massive changes in the global energy market. With Russia cutting off natural gas to Europe in retaliation for western nations’ support of Ukraine, many global leaders find themselves scrambling for viable alternatives.

Almost certainly, EVs will play a significant role — hence the implied future demand for nickel.

Gurufocus.com labels VALE modestly undervalued. The underlying firm features a balanced profile, with solid strengths in the balance sheet combined with excellent growth and profitability metrics. If you’re looking for under-$20 stocks to buy with a relevant narrative, this is it.

Petrobras (PBR)

Earlier in the week, energy prices increased amid concerns that OPEC+ nations would cut oil production. Per Reuters, the cartel and its non-member allies did just that, agreeing to slash output by two million barrels per day. Fundamentally and cynically, this framework should benefit Petrobras (NYSE:PBR). On the day of the OPEC announcement, PBR stock closed up more than 3%.

Nevertheless, PBR remains one of the riskier ideas among major international hydrocarbon specialists. Based in Brazil, Petrobras incurred multiple challenges over the past several years. As well, with an intense election going on in the country, the future of Petrobras is somewhat murky. But if you’re willing to accept certain political risks, PBR could be interesting.

According to Gurufocus.com, Petrobras’ business is modestly undervalued. While the company enjoys decent strengths in the balance sheet, the highlights center on the income statement. It commands a three-year revenue growth rate of 13%, ranked higher than 79% of PBR’s peers. As well, the hydrocarbon firm’s net margin stands at 28.4%, well above the industry median’s 4%.

Infosys (INFY)

While Infosys (NYSE:INFY) might not be a household name at the moment, it’s well worth keeping on your radar. An Indian multinational information technology firm, Infosys specializes in business consulting. In addition, it provides outsourcing and IT-related services. As a bonus, it currently trades at a bit below $18, numerically qualifying it for under-$20 stocks to buy.

Against a broader narrative, Infosys’ ties to India’s economy makes it incredibly enticing. According to analysts, the country stands poised to become the world’s third-biggest economy by 2030. From 2022 to the end of the forecasted period, India might enjoy average real GDP growth of 6%. Therefore, INFY stock can ride its home market’s coattails.

Presently, Gurufocus.com labels INFY as modestly undervalued. The underlying company commands robust strengths across the financial spectrum. For instance, the business features a debt-to-equity ratio of 0.08, lower than the industry median of 0.19. On the bottom line, Infosys’ return on equity measures 31%, beating out more than 93% of its peers.

Ambev (ABEV)

Another Brazilian company, Ambev (NYSE:ABEV) represents a brewing company. It offers beer under several brand names such as Skol, Brahma and Labatt Blue.

Interestingly, ABEV shares have performed well this year, especially considering the poor performance of the major equity indices. Ambev’s market value increased nearly 13% since the start of the year. This possibly suggests that Wall Street is attuned to the aforementioned cynical catalyst. Either way, ABEV trades hands at only a few cents above three bucks. Therefore, it’s one of the cheapest among under-$20 stocks to buy.

Even though Ambev qualifies as a penny stock under certain definitions, it enjoys robust financial strengths. For instance, it features a strong balance sheet, particularly a cash-to-debt ratio of 4.22. In comparison, the industry median is 0.67. Also, Ambev’s net margin stands at 17.6%, ranking higher than nearly 86% of its peers.

Volkswagen (VWAGY)

One of the biggest and most recognized automakers in the world, Volkswagen (OTCMKTS:VWAGY) presents an interesting case for under-$20 stocks to buy. With the introduction of the 2023 Volkswagen ID.4, the German stalwart moves into the EV space. Not only that, CarandDriver.com reports that its starting price pings under $39,000. So long as it can maintain this price point, Volkswagen provides excellent competition.

As well, the company owns several other luxury brands, appealing to both wealthy and middle-income consumers. Still, Wall Street doesn’t seem to care so much, instead focusing on macroeconomic anxieties. Therefore, VWAGY finds itself down nearly 44% YTD. That’s too bad, but simultaneously, it offers an enticing entry point for contrarian speculators.

Gurufocus.com identifies Volkswagen as modestly undervalued per its proprietary valuation metrics. However, against traditional indicators, VWAGY arguably represents a killer deal. For instance, its forward price-earnings (P/E) ratio sits at just over five times. In comparison, the auto industry median is 8.5 times.

Danone (DANOY)

A French multinational food-products corporation, Danone (OTCMKTS:DANOY) benefits to some degree from inelastic demand. Essentially, demand for the company’s products should remain relatively the same irrespective of price adjustments. Of course, price changes consumer behaviors. However, at the baseline, humans need a minimum calorie intake. Therefore, Danone may be more reliable during these strange times.

However, Wall Street doesn’t quite view it that way. Since the start of this year, DANOY has slipped 24%, disappointing stakeholders. However, in the trailing five days, the security has gained about 1%. Therefore, the market may see greater fundamental value in the company. Either way, at just under double digits, DANOY intrigues as one of the under-$20 stocks to buy.

Per Gurufocus.com, Danone’s business is significantly undervalued. Primarily, it has decent stability in the balance sheet and solid strengths in terms of profitability. For example, its 15% operating margin ranks better than almost 85% of the competition.

Its one major weakness centers on its lackluster growth. However, as consumption shifts from discretionary items to the necessities, this problem area could improve.

Swatch Group (SWGAY)

Right off the bat, I’m going to say that Swatch Group (OTCMKTS:SWGAY) represents the riskiest idea on this list of under-$20 stocks to buy. Yes, you can buy SWGAY, but it’d be best if you’re a speculator. For those that are more risk-averse, something like Vale would probably make more sense.

As you probably know, several indicators demonstrate that the consumer economy (at least for discretionary items) is fading. Given that Swatch Group specializes in several luxury brands — Omega, Blancpain and Harry Winston immediately come to mind — SWGAY seems unusually risky. Indeed, shares have fallen 26% YTD.

Gurufocus.com labels Swatch Group modestly undervalued. Perhaps not surprisingly, its growth rate could use some work. However, it’s a profitable business. Additionally, Swatch features excellent strengths in the balance sheet.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.