For many investors, it's just more fun to buy "cheaper" stocks,
i.e. stocks that are actually priced under $20 a share.
I get it. You can buy more shares. There's something about owning
100 shares of a company versus just a handful even if you're
spending the same amount of money to get the shares.
But with most of the major stock indices hitting new all-time
highs, and stock splitting being out of favor with most companies,
many of the hottest stocks like Google, Priceline and Tesla all
trade much higher than $20 a share. In fact, those three are all
trading above $200 a share.
Does that mean that an investor who wants to own a hot stock with
good fundamentals but which trades under $20 is doomed to sit on
the sidelines until a big correction comes?
There are plenty of good quality names still available but you have
to dig a little deeper because they're not the well-known bigger
cap names. And that's where the Zacks Rank can help.
Use the Zacks Rank to Find Stocks
I did a screen for companies with a Zacks Rank #1 (Strong Buy) or
Zacks Rank #2 (Buy), which means the earnings outlook is solid, and
also looked for companies which traded under $20.
That search yielded 308 stocks but that list is far too unwieldy to
be usable. I had to narrow it further.
From that list, I narrowed it down by looking for companies with
double digit earnings growth and respectable P/Es.
The following 3 companies have strong earnings growth and solid
fundamentals and they're also trading at or near their 52-week
And you can buy each one of them at under $20.
Now that's HOT!
3 Sizzling Growth Stocks Under $20
1. The Dixie Group
2. Strategic Hotels & Resorts
3. Hawaiian Holdings
1. The Dixie Group, Inc.
The Dixie Group makes high-end carpets and rugs for residential and
commercial customers through the brands Fabrica International,
Masland Carpets, Dixie Home, Masland Contract and Avant.
High end products are booming thanks to a resurgence in home prices
and new stock market highs. Rising asset prices are putting more
money into consumers' pockets.
On Feb 19, Dixie reported fourth quarter results and beat the Zacks
Consensus for the 4th quarter in a row. Sales soared 34.7% year
over year even though the overall carpet market only saw mid-single
digit gains. Residential was up 30.5% while commercial rose 45.5%.
But what about the weather? The company did see significant
weather-related issues. January sales were up just 2.3% but
February sales through Feb 19 had gained 16.2%.
Forward P/E = 21.8
Expected 2014 earnings growth = 16.1%
Expected 2015 earnings growth = 45.8%
Zacks Rank #1 (Strong Buy)
2. Strategic Hotels & Resorts, Inc.
Strategic Hotels is a real estate investment trust (REIT) which
owns 18 high-end hotels and resorts in the United States, Mexico
and Europe under such brands as the Four Seasons, Ritz and
Fairmont. It has been trying to find a buyer for its Marriott
Grosvenor Square Hotel and when it does it will exit the European
market to focus solely on North America.
Strategic is a diverse combination of resorts and urban hotels. The
resorts face little threat from new supply due to locations on the
ocean or in the mountains where further growth is hindered. In the
urban areas, Strategic has been facing the onslaught of new hotel
properties, especially in Chicago.
In the fourth quarter, however, Strategic posted 9.6% RevPAR
growth, far above the U.S. industrywide average for the quarter of
just 5.1%. Occupancy rose as luxury travel continues to remain
Forward P/E = 17.6
Expected 2014 earnings growth = 37.7%
Expected 2015 earnings growth = 15.3%
Zacks Rank #2 (Buy)
3. Hawaiian Holdings, Inc.
Hawaiian Holdings is the parent company of Hawaiian Airlines, which
is the largest and longest-servicing airlines in Hawaii. It offers
non-stop service from Hawaii to the U.S. mainland as well as Japan,
South Korea, Taiwan, Australia, New Zealand, American Samoa and
It hopes to begin non-stop service to Beijing in April 2014.
2014 will be a year with less capacity growth as the company
focuses mainly on existing routes and North America. But the
company will be adding daily non-stops to Maui from Los Angeles
starting in July 2014.
Consumers are traveling again, especially from Asia. Hawaiian is
tapping into the demand.
Forward P/E = 11.7
Expected 2014 earnings growth = 27.3%
Expected 2015 earnings growth = 10.7%
Zacks Rank #2 (Buy)
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Tracey Ryniec is the Value Stock Strategist for Zacks.com. She
is also the Editor of the
services. You can follow her on twitter at
Strategic Hotels & Resorts, Inc. is a real estate investment
trust (REIT) which owns and provides value-enhancing asset
management of high-end hotels and resorts in the United States,
Mexico and Europe. The Company currently has ownership interests in
18 properties with an aggregate of 8,271 rooms and 851,600 square
feet of meeting space.
STRATEGIC HOTEL (BEE): Free Stock Analysis
DIXIE GRP INC (DXYN): Free Stock Analysis
HAWAIIAN HLDGS (HA): Free Stock Analysis Report
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