Most investors want to put their money in equities but may not be able to afford large stakes in valuable companies with higher-priced stocks. For them, low-priced stocks could be attractive as these will enable them to buy more shares instead of just a handful of higher-priced shares for the same amount. For example, an investor willing to spend $10,000 can either purchase at least 500 shares of a stock trading under $20 or only 100 shares of a stock trading at $100.
Additionally, stocks under $20 reap huge profits as an increase of as less as a dollar in share price adds 5% to the portfolio. This is in contrast to stocks priced at $100 or above, which see 1% or lower gains if shares move up by $1. Further, most of the low-priced stocks have high levels of liquidity, which give these stocks an added advantage. This means that cash can be converted quickly and investors could easily get their money out of the securities. In fact, trading in higher average daily volumes keeps the bid/ask spread tight and does not lead to extra cost for investors.
And guess what, the recent market rout led by the tech selloff has provided investors a great opportunity to tap some of these stocks. The preference is not only limited to the stock world but can be felt in the ETF space as well. In fact, there are only a handful of ETFs that currently trade below $20 out of nearly 2,000 funds, suggesting that choices are limited for investors who like to get a decent number of shares from their investment (read: Beaten-Down ETFs to Buy After Market Rout).
So, let us dig into some of the ETFs that are below $20 and are trading at a bargain price. These low-priced ETFs could lead to huge gains in the coming months.
iShares U.S. Oil Equipment & Services ETF (IEZ - Free Report)
With the pickup in economic activities and a potential coronavirus vaccine, the demand for oil is expected to increase thereby providing a boost to the energy sector. IEZ offers exposure to U.S. companies that provide equipment and services for oil exploration and extraction by tracking the Dow Jones U.S. Select Oil Equipment & Services Index.
Last Closing Price: $8.23
Zacks Rank: #3 (Hold)
AUM: $123 million
Expense Ratio: 0.42%
Decline in Last Week: 5.1%
Global X Telemedicine & Digital Health ETF (EDOC - Free Report)
Telemedicine and digital healthcare has been on a spike in recent months due to the coronavirus pandemic, which has kept patients from visiting their doctors. As such, the new entrant in the space, EDOC, has garnered $321.5 million in its asset base within six weeks of its launch. The fund invests in companies positioned to benefit from further advances in the field of telemedicine and digital health (read: Most Interesting New ETFs: Sports Betting & Telemedicine).
Last Closing Price: $15.91
Zacks Rank: N/A
AUM: $321.5 million
Expense Ratio: 0.68%
Decline in Last Week: 5.4%
iShares Global Clean Energy ETF (ICLN - Free Report)
The clean energy space seems attractive on the presumptive Democratic presidential candidate Joe Biden’s push for clean energy and infrastructure plans. This fund provides global exposure to companies that produce energy from solar, wind, and other renewable sources (read: Clean Energy Stocks & ETFs to Buy as Biden Gains Popularity).
Last Closing Price: $16.20
Zacks Rank: N/A
AUM: $1.3 billion
Expense Ratio: 0.46%
Decline in Last Week: 4.5%
Global X Genomics & Biotechnology ETF (GNOM - Free Report)
The COVID-19 pandemic has kept biotech players all over the world on their toes for a vaccine or a treatment. This new opportunity has made the sector the most attractive one to investors. GNOM seeks to invest in companies that potentially stand to benefit from further advances in the field of genomic science, such as companies involved in gene editing, genomic sequencing, genetic medicine/therapy, computational genomics and biotechnology.
Last Closing Price: $16.46
Zacks Rank: NA
AUM: $55.1 million
Expense Ratio: 0.50%
Decline in Last Week: 5.8%
Roundhill Sports Betting & iGaming ETF (BETZ - Free Report)
This fund is expected to benefit from the digital shift, which has led to the rapid adoption of esports and increased video game usage. This ETF debuted in early June and is designed to offer retail and institutional investors exposure to sports betting and iGaming industries (read: 5 Sector ETFs That Beat the Market in August).
Last Closing Price: $19.50
Zacks Rank: N/A
AUM: $108.4 million
Expense Ratio: 0.75%
Decline in Last Week: 4.3%
The above-mentioned ETFs should draw the attention of investors seeking to accumulate a larger number of low-priced funds that are poised to outperform. Even small investors could add a decent holding of some of these names with a modestly sized investment. These products could fetch higher returns.
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