In this piece, we will take a look at the 12 best NASDAQ stocks under $20. If you want to skip details about how the NASDAQ has been the star of the market this year and want to see the top five stocks, then take a look at 5 Best NASDAQ Stocks Under $20.
The NASDAQ has been the best performing major stock market index in the U.S. this year. Led by the growth in mega cap technology stocks, the index has smashed worries of a market downturn as high interest rates dampened investor sentiment and grew capital flows to the money market and bank accounts to earn interest. The first half of the year saw the NASDAQ 100 index post its strongest gains in years, and the broader NASDAQ Composite also beat the S&P 500 and the NYSE in market performance. In terms of numbers, the NASDAQ 100 gained 40% during H1 2023 while the NASDAQ Composite was up by 33%. - more than twice the returns of the Dow Jones Industrial Average (DJIA) and the S&P500 which have gained 16.51% and 3.87%, respectively.
These gains have come on the back of several factors. Perhaps the most important of these is the current hype surrounding artificial intelligence following the massive success of the chatbot ChatGPT. The AI trend has significantly affected the NASDAQ index since our study of the top technology stocks that benefit from the AI boom shows that all of these belong to the NASDAQ index. Out of these, some of the biggest winners are Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), Meta Platforms, Inc. (NASDAQ:META), and NVIDIA Corporation (NASDAQ:NVDA). Among these, NVIDIA benefits simply because its graphics processing units (GPU) are simply unavoidable when training artificial intelligence models; Microsoft benefits because it has a massive $10 billion investment in ChatGPT; Amazon's Amazon Web Services (AWS) has numerous artificial intelligence tools for corporate customers; and Meta can use artificial intelligence to significantly upgrade its platform to provide better services to both consumers and advertisers.
Moving forward from the artificial intelligence stock market boom to the latest bit of market news, right now, it's earnings season in America. And this season is special since investors have been left scratching their heads throughout this year. 2023, like 2022, has been beset with worries of a recession. However, so far, the American economy is far from contracting, and a slew of data releases have injected fresh optimism into the market. July saw four crucial data sets released by both the Labor Department and others. These were a private payroll report, the unemployment claims report, the broader payroll report, and the inflation report. Out of these, only the private payrolls report indicated that the Federal Reserve's interest rate hiking cycle might continue. On the flip side, not only did the claims report show that the claims grew but the jobs report saw a major drop that was also the first time that the market had missed estimates in more than a year. The star of the show was the inflation report, which finally undershot estimates as well.
While we'll get to the latest earnings in a bit, what you need to know before that is how the latest data releases have affected American sentiment. A fresh reading of the University of Michigan's consumer sentiment index shows that optimism is the highest since September 2021, with the month over month increase of 12.7% being the largest jump for more than a decade and a half. The latest sentiment analysis is the second consecutive rise, and inflation expectations for the coming year sit at 3.4% - significantly lower than last year's estimates of 5.4% taken in April. Currently, inflation sits at 3% and had stood at 4.93% in April. The latter reading shows that the inflation expectations nearly met the actual data, and given the time that it takes for interest rate hikes to make their way through the economy, it's also possible that inflation in July 2024 is below the current expectations of 3.4%.
So, earnings. For NASDAQ stocks, during the first four days of the week that started on July 10th and ended on July 14th (weekend not included), 46 companies were slated to report earnings. Narrowing our analysis to 17 among these, ten beat analyst earnings per share estimates with the strongest beat coming from Daktronics, Inc. (NASDAQ:DAKT) whose EPS surpassed analyst estimates by 235%. Daktronics, which sells products such as display boards, saw its shares soar by 37% on the stock market, but it ended up losing nearly all of these in the coming days.
A crucial NASDAQ stock that reported earnings was PepsiCo, Inc. (NASDAQ:PEP). A consumer discretionary stock, Pepsi's results are often indicative of broader spending trends in the market, and the firm pulled in $22 billion in revenue during Q2 2023 which marked a ten percent annual growth. At the same time, its EPS jumped by 93% and also beat consensus estimates by 6.5%. Crucially, Pepsi is also forecasting 10% revenue growth for 2023, increasing the estimates from an earlier 8% as well as a 12% EPS growth also higher than the previous 9%. This implies that the economic outlook is improving, and what that entails for the NASDAQ and the stock market, in general, is for you to decide.
But while Pepsi's shares currently traded at $188, what NASDAQ stocks are worth looking at that trade below $20? Some top ones are First Citizens BancShares, Inc. (NASDAQ:FCNCP), Warner Bros. Discovery, Inc. (NASDAQ:WBD), and Hertz Global Holdings, Inc. (NASDAQ:HTZ) and you can check out the others below.
12 Best NASDAQ Stocks Under $20
Our Methodology
To compile our list of the best NASDAQ stocks to buy under $20, we first made a list of the 50 largest NASDAQ stocks with the highest market capitalization and a share price under $20. Then, the number of investors that had bought their shares during 2023's March quarter courtesy of Insider Monkey's database of 943 hedge funds was determined, and the top 12 out of these are listed as the best NASDAQ stocks under $20.
Lyft, Inc. (NASDAQ:LYFT) is a ridesharing company that allows people to book rides on demand. The firm's prospects are tied to the information technology industry and especially management's ability to cut down costs and improve efficiency particularly since its shares have tumbled from all time highs of $70+ to below $20 right now.
Insider Monkey took a look at 943 hedge funds for the March quarter of 2023 shareholdings to find out that 31 had bought and owned the firm's shares. Lyft, Inc. (NASDAQ:LYFT)'s largest hedge fund investor is Ken Fisher's Fisher Asset Management with a $101 million investment.
Just like Warner Bros. Discovery, Inc. (NASDAQ:WBD), First Citizens BancShares, Inc. (NASDAQ:FCNCP), and Hertz Global Holdings, Inc. (NASDAQ:HTZ), Lyft, Inc. (NASDAQ:LYFT) is a great NASDAQ stock under $20.
Huntington Bancshares Incorporated (NASDAQ:HBAN) is a regional bank that is one of the oldest firms on our list since it was set up in 1866. Its Q1 2023 earnings showed resilience amidst a regional banking crisis this year, as both revenue and EPS beat analyst estimates.
Insider Monkey's first quarter of 2023 hedge fund survey revealed that 31 out of the 943 had invested in Huntington Bancshares Incorporated (NASDAQ:HBAN). Among these, Ken Griffin's Citadel Investment Group was the largest shareholder through a $167 million stake.
R1 RCM Inc. (NASDAQ:RCM) provides software products to the healthcare industry. Its long term prospects will heavily be influenced by the propensity of hospitals to shift towards outsourcing - which in turn depends on cost and labor constraints.
As of Q1 2023, 32 of the 943 hedge funds part of Insider Monkey's database had held a stake in R1 RCM Inc. (NASDAQ:RCM).
Gen Digital Inc. (NASDAQ:GEN) is a cybersecurity company with well known products such as Avast and Norton. The growth in technology use would spell long term catalysts for the company; however, the average consensus rating is Buy which lingers towards Hold.
Insider Monkey dug through 943 hedge funds for their first quarter of 2023 shareholdings and found out that 32 had invested in Gen Digital Inc. (NASDAQ:GEN). Among these, the largest investor is Jeffrey Smith's Starboard Value LP courtesy of a $324 million investment.
Grab Holdings Limited (NASDAQ:GRAB) is an Asian company with a platform for food delivery, payments, and other services. A major potential headwind against the stock will be growing competition as setting up an application is relatively less capital intensive. However, customer loyalty might be hard for competitors to win, but isn't an infallible aspect.
As of March 2023, 32 out of the 943 hedge funds polled by Insider Monkey had bought and owned Grab Holdings Limited (NASDAQ:GRAB)'s shares. The firm's largest hedge fund shareholder in our database is Stephen Mildenhall's Contrarius Investment Management since it owns 29 million shares that are worth $89 million.
Freshworks Inc. (NASDAQ:FRSH) is a software as a service (SaaS) company that offers customer relationship products to businesses. A growth in consumer relationship management demand, particularly from small and medium businesses can help the firm; however, it faces quite a threat from one of the largest CRM companies, Salesforce.
34 of the 943 hedge funds part of Insider Monkey's database had invested in the firm during Q1 2023. Freshworks Inc. (NASDAQ:FRSH)'s largest hedge fund shareholder is Brian Ashford-Russell and Tim Woolley's Polar Capital since it owns a stake worth $37 million.
Paramount Global (NASDAQ:PARA) is one of the biggest media companies in America, owning large film channels and television networks. It created headlines earlier this year when it cut dividends from 24 cents to 5 cents, and over the long term, challenges can arise from the growth in internet based news and movie platforms.
Insider Monkey's first quarter of 2023 survey covering 943 hedge funds revealed that 34 had bought and owned Paramount Global (NASDAQ:PARA)'s shares. Warren Buffett's Berkshire Hathaway is the largest shareholder through a $2 billion investment.
First Citizens BancShares, Inc. (NASDAQ:FCNCP), Paramount Global (NASDAQ:PARA), Warner Bros. Discovery, Inc. (NASDAQ:WBD), and Hertz Global Holdings, Inc. (NASDAQ:HTZ) joins our list of top NASDAQ stocks under $50 according to hedge fund sentiment.
