7 Stocks Under $20 to Buy and Hold Forever
It is currently as good a time as ever for long-term investors to buy stocks. With that in mind, I decided to look for seven cheap stocks trading under…
It is currently as good a time as ever for long-term investors to buy stocks. With that in mind, I decided to look for seven cheap stocks trading under $20 to buy and hold forever.
There are clearly many good, undervalued names to buy. Major indexes remain well underwater for the year as we approach the end of 2022. For example, the S&P 500 is down 17% this year.
But the stock markets will rebound, due to their cyclical nature. So long-term investors have a strong chance of seeing the value of their capital increase. As a result, they should simply put money into the market and watch their funds increase as the market rebounds.
So let’s look at seven, solid, cheap stocks trading under $20 to buy and hold forever.
Most of these names are benefiting from non-cyclical trends and have reached positive, turning points.FSR Fisker $6.88 F Ford $12.12 CMPS COMPASS Pathways $9.84 PRTS CarParts.com $6.78 TOST Toast $18.76 MPW Medical Properties Trust $11.39 CPNG Coupang $16.17
Fisker (FSR)Source: Eric Broder Van Dyke / Shutterstock.com
A product of the highly-speculative SPAC era, Fisker (NYSE:FSR) stock nonetheless has a chance to become a great success story .
The electric-vehicle company announced that it would go public via a SPAC merger with a blank-check company in the summer of 2020. Electric-vehicle SPACs were extremely popular at the time.
The glut of capital, spurred on by the government’s loose fiscal policy, enabled many dubious firms to list their stocks publicly. However, Fisker appeared to be a legitimately strong company.
Rather than build manufacturing operations from scratch a la Tesla (NASDAQ:TSLA), Fisker decided to outsource the manufacturing of its EVs to Magna International (NYSE:MGA).
Magna has a strong history as a manufacturer of automobiles, as it has served well-known companies across multiple sectors of the industry.
The benefit of Fisker’s strategy has become apparent as Fisker began production of its Ocean EV on Nov. 17, as promised.
That’s a massive achievement and should result in approximately 300 deliveries next quarter, with 8,000 in the subsequent quarter, followed by 15,000 in Q3.
Ford (F)Source: Vitaliy Karimov / Shutterstock.com
Ford (NYSE:F) stock truly has the potential to undergo a complete transformation in the coming decade. That transformation will be sparked by the automaker’s transition into an electric-vehicle maker.
It’s a pivot that promises to take F stock much higher than the $12.12 per share price at which it closed on Friday.
But make no mistake about it: F stock is likely to remain muted for a few months. Consequently, there is time for long-term investors to buy the shares at an attractive price.
On the one hand, Ford is going through a rough patch. Last quarter, the company struggled through supply-chain issues that left 40,000 of its vehicles nearly complete but awaiting parts from suppliers. As a result, its Q3 delivery total was stunted.
Meanwhile, Ford reported that it had paid its suppliers about $1 billion more than it had anticipated.
On the other hand, the company’s electrification is well underway. Last month, the number of EVs it delivered more than doubled versus November 2021 to 6,255 vehicles.
So buy F stock to benefit from the company’s bright future and invest the shares’ 4.55% dividend into buying more of the stock. Alternatively, you can use the payout to supplement your income.
COMPASS Pathways (CMPS)Source: PillPack
COMPASS Pathways (NASDAQ:CMPS) is a stock representing a company at the forefront of a new paradigm in healthcare: Treating mental health issues with psychoactive therapeutics.
COMPASS Pathways’ first foray into this field involves using psilocybin, or “‘shrooms,” to treat treatment-resistant depression (TRD).
The results of a Phase 2b study undertaken by COMPASS Pathways on the use of 25 mg of psilocybin as a treatment for TRD were recently published in The New England Journal of Medicine. The company called the results “positive.”
COMPASS reported that “After a single 25mg dose of COMP360 psilocybin, in combination with psychological support, 29.1% of participants with TRD were in remission by week 3 (p<0.002) – this is higher than the response rates seen for equivalent lines of treatment in the Sequenced Treatment Alternatives to Relieve Depression (STAR*D) study*
The company is now entering a Phase 3 program which includes three clinical trials and could pave the way to commercialization of psilocybin as a treatment for TRD. The clinical trials are expected to commence by the end of this year.
COMPASS Pathways is also investigating psilocybin for use in the treatment of post-traumatic stress disorder and anorexia.
The company reported a cash position of $173.1 million at the end of the third quarter. It should have sufficient funds to stay afloat for some time, given that it reported net losses of $18.4 million and $60.6 million for Q3 and the first nine months of 2022, respectively.
What’s particularly intriguing about CMPS stock is that all ten analysts who cover it rate it a “buy” and assign it an average price target of $46.
CarParts.com (PRTS)Source: Shutterstock
CarParts.com (NASDAQ:PRTS) is a company that provides after-market car parts and accessories in the United States and the Philippines. Analysts are fond of the stock, as they have a media price target on it of $10, versus Friday’s closing price of $6.78.
One reason to believe that CarParts.com’s shares could continue to appreciate is that the firm’s last four quarterly reports have featured earnings per share that came in above analysts’ average estimates.
There’s another reason to believe that CPTS stock is poised to climb: The company recently hired Michael Huffaker as its new Chief Operating Officer. Huffaker is a former VP of Amazon’s (NASDAQ:AMZN) Fresh Grocery division.
CarParts delivered record results in Q2 and Q3. Last quarter, its revenues increased 16% year-over-year, while its gross profits rose 19% YOY.
That was the 11th consecutive quarter of double-digit-percentage sales growth for the company. Additionally, CarParts’ net income is poised to enter positive territory.
Toast (TOST)Source: TonelsonProductions / Shutterstock.com
Toast (NYSE:TOST) is a booming software-as-a-service (SAAS) company that primarily serves the restaurant industry. It provides point-of-sale terminals, customer-facing kiosks, analytics, ordering-and-delivery solutions, and kitchen-display systems.
In Q3, Toast increased the total number of locations that utilize its offerings by more than 40% YOY, reaching over 74,000. The firm’s revenues grew even faster, increasing by 55% YOY to $752 million.
That performance led management to increase its full-year revenue guidance from$ 2.62 -$2.66 billion to $2.69-$2.72 billion.
Like CarParts, Toast is close to becoming profitable, making it an interesting name to consider.
Toast posted a net loss of $175 million through the first nine months of 2022, much better than the net loss of $488 million that it generated during the first nine months of of 2021.
Medical Properties Trust (MPW)Source: Roman Zaiets / Shutterstock.com
Medical Properties Trust (NYSE:MPW) is a healthcare-focused real estate investment trust (REIT). The benefits of REITs cannot be overstated for long-term-oriented investors seeking income. That’s because REITs are legally obligated to distribute at least 90% of their taxable income to investors in the form of dividends.
Medical Properties Trust’s dividend yields 10.2%, and investors can redirect the dividend directly back into purchasing its shares. Those that do will receive 10.2% of the value of each share purchased with the payout.
That’s fairly attractive considering that the company has done so well following the onset of Covid-19. Providing evidence of that assertion, it has increased its dividend by 12% during that period while six other REITs have decreased theirs by an average of 31%.
Moreover, analysts, on average, believe that MPW stock will rise above $16 in the next 12 to 18 months, versus Friday’s closing price of $11.
Coupang (CPNG)Source: Michael Vi / Shutterstock.com
Coupang (NASDAQ:CPNG) is a South Korean e-commerce platform that is just hitting its stride. That should pique investors’ interest.
Also noteworthy is that Coupang is still growing rapidly. In Q3, Coupang its sales jumped 27% versus Q3 of 2021, excluding currency fluctuations, to $5.1 billion.
The truly important thing to note about the company is that it is moving beyond one of its main problems: Losses. In Q3 the company’s net income came in at $91 million. That represented a major, positive turning point, as Coupang had reported a $324 million net loss during the same period a year earlier.
Coupang’s net loss of $194 million through the first nine months of 2022 is equally important because it represented a vast improvement over the $1.137 billion net loss that Coupang racked up over the first nine months of 2021.
Those net losses had been a major sticking point for investors who remained interested in its fast-growing revenues but wondered if the company’s losses would continue to surge indefi8nitely.
Coupang’s Q3 results should go a long way towards easing that fear and provide investors with a strong reason to invest in CPNG stock.
On the date of publication, Alex Sirois 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.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks.Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.
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