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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, giving 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 volatility, induced by renewed aggressive rate hikes by the Fed and global growth concerns, 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. In fact, there is only a handful of ETFs that currently trade below $20 out of nearly 2,000 funds, suggesting that the choices are limited for investors who like to get a decent number of shares from their investment (read: Most Interesting New ETFs).
So, let us dig into some of the ETFs that are below $20 and have AUM of more than $50 million to ensure enough liquidity. Further, these funds have a Zacks ETF Rank #2 (Buy) or 3 (Hold). These low-priced ETFs could lead to huge gains in the coming months based on market trends.
Global X SuperDividend ETF (SDIV - Free Report) – Last Closing Price: $8.86
The appeal for dividend-focused ETFs has been on the rise as volatility grips the stock market. Soaring inflation and rising interest rates have sparked worries of a recession, resulting in a sharp-sell-off in high-growth stocks. Additionally, bouts of weak economic data across the globe are weighing on investor sentiment.
Global X SuperDividend ETF provides exposure to the 93 highest-dividend-paying equities around the world by tracking the Solactive Global SuperDividend Index. It has amassed $748.6 million in its asset base and sees a good trading volume of about 552,000 shares a day on average. Global X SuperDividend ETF has an expense ratio is 0.58% and carries a Zacks ETF Rank #3 with a Low risk outlook. It has lost about 23.7% so far this year.
Invesco S&P SmallCap Energy ETF (PSCE - Free Report) - Last Closing Price: $9.94
The outlook for the energy sector looks promising amid waning demand. This is especially true given OPEC’s new output cut and the unrest in Libya that will continue to keep supply in check. Invesco S&P SmallCap Energy ETF offers exposure to the companies that are principally engaged in producing, distributing or servicing energy-related products, including oil and gas exploration and production, refining, oil services and pipelines. It tracks the S&P Small Cap 600 Capped Energy Index, holding 28 stocks in its basket (read: Should You Buy Energy ETFs On Dip?).
Invesco S&P SmallCap Energy ETF has accumulated $130.3 million in its asset base and charges 29 bps in annual fees. It trades in an average daily volume of 237,000 shares and has a Zacks ETF Rank #2 with a High risk outlook. Invesco S&P SmallCap Energy ETF has jumped 36.7% so far this year.
Invesco KBW High Dividend Yield Financial ETF (KBWD - Free Report) – Last Closing Price: $17.34
A rising rate environment is highly beneficial for the financial sector as it bolsters profits for banks, insurance companies, discount brokerage firms and asset managers. Additionally, financial stocks have become extremely cheap after a heavy sell-off in the first half of the year. Invesco KBW High Dividend Yield Financial ETF ETF follows the KBW Nasdaq Financial Sector Dividend Yield Index, which is a modified-dividend yield-weighted index of companies principally engaged in the business of providing financial services and products. It holds 40 stocks in its basket and has 2.59% in expense ratio.
Invesco KBW High Dividend Yield Financial ETF has amassed $417.5 million in its asset base and trades in a volume of 79,000 shares a day on average. It has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook and has shed 10.4% so far this year (read: Fearing Stagflation? ETF Strategies to Win).
The Global X Cloud Computing ETF (CLOU - Free Report) – Last Closing Price: $17.27
Demand for cloud computing services surged during the pandemic and is expected to grow further, as work, school, and social activities moved increasingly to digital experiences. Global X Cloud Computing ETF seeks to invest in companies positioned to benefit from the increased adoption of cloud computing technology, including companies whose principal business is in offering computing Software-as-a-Service, Platform-as-a-Service, Infrastructure-as-a-Service, managed server storage space and data center real estate investment trusts, and/or cloud and edge computing infrastructure and hardware. The ETF tracks the Indxx Global Cloud Computing Index.
Global X Cloud Computing ETF holds 35 stocks in its basket with American firms accounting for 90.5% of assets. It has AUM of $641.3 million and trades in an average daily volume of 394,000 shares. The ETF charges 68 bps in annual fees and has a Zacks ETF Rank #2. It has tumbled nearly 33% this year.
U.S. Global Jets ETF (JETS - Free Report) - Last Closing Price: $17.91
Travel ETFs will surge on optimism that consumers will continue flying this year despite higher fares. U.S. Global Jets ETF provides exposure to the global airline industry, including airline operators and manufacturers from all over the world, by tracking the U.S. Global Jets Index. The product holds 57 securities and charges 60 bps in annual fees.
U.S. Global Jets ETF has gathered $2.5 billion in its asset base while seeing a heavy trading volume of nearly 5 million shares a day. JETS is down 15.1% this year and has a Zacks ETF Rank #2.
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5 Solid ETFs Under $20 for Your Portfolio
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, giving 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 volatility, induced by renewed aggressive rate hikes by the Fed and global growth concerns, 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. In fact, there is only a handful of ETFs that currently trade below $20 out of nearly 2,000 funds, suggesting that the choices are limited for investors who like to get a decent number of shares from their investment (read: Most Interesting New ETFs).
So, let us dig into some of the ETFs that are below $20 and have AUM of more than $50 million to ensure enough liquidity. Further, these funds have a Zacks ETF Rank #2 (Buy) or 3 (Hold). These low-priced ETFs could lead to huge gains in the coming months based on market trends.
Global X SuperDividend ETF (SDIV - Free Report) – Last Closing Price: $8.86
The appeal for dividend-focused ETFs has been on the rise as volatility grips the stock market. Soaring inflation and rising interest rates have sparked worries of a recession, resulting in a sharp-sell-off in high-growth stocks. Additionally, bouts of weak economic data across the globe are weighing on investor sentiment.
Global X SuperDividend ETF provides exposure to the 93 highest-dividend-paying equities around the world by tracking the Solactive Global SuperDividend Index. It has amassed $748.6 million in its asset base and sees a good trading volume of about 552,000 shares a day on average. Global X SuperDividend ETF has an expense ratio is 0.58% and carries a Zacks ETF Rank #3 with a Low risk outlook. It has lost about 23.7% so far this year.
Invesco S&P SmallCap Energy ETF (PSCE - Free Report) - Last Closing Price: $9.94
The outlook for the energy sector looks promising amid waning demand. This is especially true given OPEC’s new output cut and the unrest in Libya that will continue to keep supply in check. Invesco S&P SmallCap Energy ETF offers exposure to the companies that are principally engaged in producing, distributing or servicing energy-related products, including oil and gas exploration and production, refining, oil services and pipelines. It tracks the S&P Small Cap 600 Capped Energy Index, holding 28 stocks in its basket (read: Should You Buy Energy ETFs On Dip?).
Invesco S&P SmallCap Energy ETF has accumulated $130.3 million in its asset base and charges 29 bps in annual fees. It trades in an average daily volume of 237,000 shares and has a Zacks ETF Rank #2 with a High risk outlook. Invesco S&P SmallCap Energy ETF has jumped 36.7% so far this year.
Invesco KBW High Dividend Yield Financial ETF (KBWD - Free Report) – Last Closing Price: $17.34
A rising rate environment is highly beneficial for the financial sector as it bolsters profits for banks, insurance companies, discount brokerage firms and asset managers. Additionally, financial stocks have become extremely cheap after a heavy sell-off in the first half of the year. Invesco KBW High Dividend Yield Financial ETF ETF follows the KBW Nasdaq Financial Sector Dividend Yield Index, which is a modified-dividend yield-weighted index of companies principally engaged in the business of providing financial services and products. It holds 40 stocks in its basket and has 2.59% in expense ratio.
Invesco KBW High Dividend Yield Financial ETF has amassed $417.5 million in its asset base and trades in a volume of 79,000 shares a day on average. It has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook and has shed 10.4% so far this year (read: Fearing Stagflation? ETF Strategies to Win).
The Global X Cloud Computing ETF (CLOU - Free Report) – Last Closing Price: $17.27
Demand for cloud computing services surged during the pandemic and is expected to grow further, as work, school, and social activities moved increasingly to digital experiences. Global X Cloud Computing ETF seeks to invest in companies positioned to benefit from the increased adoption of cloud computing technology, including companies whose principal business is in offering computing Software-as-a-Service, Platform-as-a-Service, Infrastructure-as-a-Service, managed server storage space and data center real estate investment trusts, and/or cloud and edge computing infrastructure and hardware. The ETF tracks the Indxx Global Cloud Computing Index.
Global X Cloud Computing ETF holds 35 stocks in its basket with American firms accounting for 90.5% of assets. It has AUM of $641.3 million and trades in an average daily volume of 394,000 shares. The ETF charges 68 bps in annual fees and has a Zacks ETF Rank #2. It has tumbled nearly 33% this year.
U.S. Global Jets ETF (JETS - Free Report) - Last Closing Price: $17.91
Travel ETFs will surge on optimism that consumers will continue flying this year despite higher fares. U.S. Global Jets ETF provides exposure to the global airline industry, including airline operators and manufacturers from all over the world, by tracking the U.S. Global Jets Index. The product holds 57 securities and charges 60 bps in annual fees.
U.S. Global Jets ETF has gathered $2.5 billion in its asset base while seeing a heavy trading volume of nearly 5 million shares a day. JETS is down 15.1% this year and has a Zacks ETF Rank #2.