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?
Nope!
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 highs.
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. (DXYN)
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.
(BEE)
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 strong.
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. (HA)
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 Tahiti.
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 Insider Trader and Value Investor
services. You can follow her on twitter at @TraceyRyniec.
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 Report
DIXIE GRP INC (DXYN): Free Stock Analysis Report
HAWAIIAN HLDGS (HA): Free Stock Analysis Report
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