While inflation growth may be on the decline, the current cost of goods and services is still significantly higher than it was just two years ago. This situation arises because inflation measures ongoing growth rather than actual price differences, contributing to persistently low consumer confidence despite seemingly positive inflation statistics.
Meanwhile, high-flying tech stocks like Nvidia (NASDAQ:NVDA) are quickly becoming too expensive for retail traders. This is where under-$20 stocks shine. Affordable enough to allow for decent accumulation, each of the most undervalued stocks under $20 to buy in April is poised for rapid growth due to specific favorable conditions and bullish momentum, setting the stage for subsequent success.
Perimeter Solutions (PRM)
Perimeter Solutions (NYSE:PRM) is one of the most undervalued stocks under $20 to buy in April purely based on its relative anonymity. The company, a specialist in firefighting equipment and crucial fire suppression and extinguishment chemicals has experienced significant growth since 2010.
In the last year, Perimeter reported a 7.2% CAGR in total addressable market size since 2010 and forecasts it to climb to $100.2 billion by 2027, driven by the steady demand for firefighting equipment. They’re well on their way to growing alongside the wider market, having hit more than $322 million in sales last year.
Perimeter sets a goal to “provide private equity-like returns with the liquidity of a public market,” and it has successfully achieved this aim. This showcases its potential as a top investment choice for those scouting for stocks under $20.
Trading at a price-to-book ratio of just 0.97x, Perimeter is a unique small-cap value play among undervalued stocks under $20.
Aehr Test Systems (AEHR)
Aehr Test Systems (NASDAQ:AEHR) is a unique undervalued stock under $20 set to rise with the wider semiconductor tide. AEHR’s business model, focusing on developing and supplying test systems that ensure semiconductor reliability and quality, distinguishes it from both newcomers and established industry leaders.
With semiconductors becoming tinier, more intricate, and costlier, the demand for advanced testing systems is anticipated to skyrocket. This puts Aehr in an excellent position for substantial growth as a small-cap tech enterprise.
In January, the company reported impressive financial results, with a 45% year-over-year increase in revenue and a 63% rise in GAAP net income. CEO Gayn Erickson acknowledged potential challenges, like the slowdown in the electric vehicle market growth, which might impact order timings from existing and potential customers.
Nevertheless, AEHR’s expertise extends beyond the EV market, encompassing semiconductors for 5G technology, AI, machine learning, and more. Despite potential EV sector hurdles, AEHR is on track for an extraordinary year in 2024 and beyond, thanks to its wide-ranging yet specialized capabilities.
Lithium Americas (LAAC)
Lithium Americas (NYSE:LAAC) is another one of the most undervalued stocks under $20 to buy in April. All after it suffered from a sluggish lithium market in recent months. However, this trend could reverse in 2024, potentially sending the Argentinian-focused mining stock soaring. Demand is expected to increase by over 30% annually until 2030, largely on the heels of battery innovations and an emphasis on renewable energy transitions.
Despite the latent potential, lithium producers, including Lithium Americas, faced challenges in 2023, with slow demand and significant oversupply leading to lower spot prices. However, demand is picking up speed, and some analysts forecast a considerable undersupply within a year, likely elevating spot prices to Lithium Americas’ advantage.
One investment analyst has compared the importance of lithium and critical minerals in the 21st century to that of coal in the 19th century and oil in the 20th century. That comparison is likely on target, and Lithium Americas, trading below $20, is poised to benefit from the expanding energy segment.
Trading significantly below its book value and at a lower price-to-forward earnings ratio than in recent years, Lithium Americas represents both a solid value investment and a stock with substantial growth prospects.
Steelcase Inc (SCS)
Steelcase Inc (NYSE:SCS) stands out as a strong “nuts and bolts” undervalued stock under $20, manufacturing higher-end office furniture for enterprise clients and remote workers alike. Though I don’t own shares in the company, I am sitting on a Steelcase chair right now and can attest to its quality – if the stock performs as well as this chair, Steelcase has a bright future ahead!
Over the past year, the company has surged nearly 50% and now boasts a 3.06% forward dividend yield. That’s a hefty return for a company with a market capitalization of less than $1.5 billion. Of course, investors on the hunt for undervalued stocks under $20 should not just concentrate on dividends. They should also consider Steelcase’s consistent revenue and its sharply rising net income, which reached $777 million and $30.8 million, respectively, in the latest quarterly report.
Looking ahead, the company’s fiscal year 2025 outlook appears particularly promising as it leverages a more stable economy and ongoing remote work trends. Management has reported a 10% sales increase in just the first three weeks of the fiscal year and aims for 1% – 5% revenue growth with an EPS ranging between 85 cents and $1.00. Given the year-end EPS of 68 cents, the optimistic outlook from executives reinforces its potential as an undervalued stock under $20.
Sirius XM Holdings (SIRI)
When Warren Buffett invests in an under-$20 stock, it catches the attention of investors. This makes Sirius XM Holdings (NASDAQ:SIRI) a unique offering among undervalued stocks under $20 given the billionaire’s backing. Amid a period where Buffett’s Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) was more focused on selling than buying, his $167 million investment in Sirius XM is a green flag for value investors. This is especially notable considering the skepticism surrounding Sirius XM, which is currently one of the most shorted stocks at 25% short interest. But what makes Buffett optimistic about this under-$20 stock?
Buffett’s interest in Sirius XM goes beyond a simple corporate restructuring play; he sees it as a classic value investment. Sirius XM has been trading at low multiples, yet it promises a bright future. The company stands out as a cash-generating powerhouse, consistently achieving EBITDA margins of over 30% for the past four years and maintaining free cash flow above $1 billion during this time. Furthermore, Sirius XM provides a reasonable dividend yield of 4.69% with a payout ratio of 31%, indicating efficient cash management by its leadership to reward shareholders while it right-sizes its market presence.
Flexible Solutions International (FSI)
Flexible Solutions International (NYSEAMERICAN:FSI), a small-cap Canadian company specializing in sustainable chemical technologies, is on the lower end of undervalued stocks under $20, trading a hair below $2 a share.
Despite a disappointing performance in November 2023 that pushed per-share pricing down to today’s levels, a closer look suggests this downturn was a one-off anomaly rather than a reflection of systemic issues. With FSI’s next report eagerly anticipated, there’s speculation that the market may have overreacted, potentially overlooking the company’s deep value.
FSI’s standard ratios point to deep undervaluation, particularly its 0.72x price-to-book ratio and 0.59x price-to-sales stat. Further analysis using Net Current Asset Value Per Share (NCAV/PS) reinforces this perspective, showing that FSI trades close to its liquidation value, underpinning its undervalued stock under $20 position.
Supporting a rosier outlook, FSI demonstrates consistent sales growth, prudent financial management through occasional dividend distributions, and a strong asset-to-debt ratio. Despite facing a challenging quarter, FSI’s management remains optimistic, forecasting a recovery and growth throughout 2024.
Valley National Bancorp (VLY)
Last week, I covered Valley National Bancorp (NASDAQ:VLY), looking specifically at its potential as a unique play among cannabis stocks amid emerging regulatory developments. But this small-cap regional bank offers much more beyond its cannabis initiatives.
With its stock trading at just 0.6x book value and 8.2x earnings, Valley National is undervalued and equally overlooked. Its solid balance sheet and relatively low debt load, with a debt-to-equity ratio of merely 0.56 against the industry average of 1.2, reinforce the regional bank’s strength even as others tread on thin ice. Its recent stock buyback plan and a 5.97% trailing dividend yield underscores this capability.
Analysts generally view Valley National as undervalued, setting an average price target of $9.50, which is about 25% higher than its current share price. Moreover, sentiment towards the bank stock has become increasingly positive, with 56% of analysts recommending a “hold,” up from 50% suggesting a “sell” in the prior assessment period.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Jeremy Flint, an MBA graduate and skilled finance writer, excels in content strategy for wealth managers and investment funds. Passionate about simplifying complex market concepts, he focuses on fixed-income investing, alternative investments, economic analysis, and the oil, gas, and utilities sectors. Jeremy’s work can also be found at www.jeremyflint.work.