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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, low-priced stocks often have the potential for significant percentage gains. For example, if a stock is priced at $20 and increases by $1, that's a 5% gain. This is in contrast to stocks priced at $100 or above, which see 1% or lower gains if shares move up by $1.
Further, 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.
However, low-priced stocks can be much more volatile than higher-priced stocks, thereby leading to significant losses if the stock price decreases. These are more susceptible to price manipulation, such as "pump and dump" schemes, which can lead to significant losses. Further, the low-priced stocks, especially penny stocks, belong to smaller and less-established companies. These companies may not be required to file with the SEC, making it harder to find reliable information (read: Insights Into 13F Filings: ETFs to Bet Like Billionaires).
Still, low-priced stocks are affordable and allow for greater diversification rather than investing in higher-priced stocks. And, the recent volatility 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.
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). These low-priced ETFs could lead to huge gains in the coming months based on market trends.
Invesco S&P SmallCap Energy ETF (PSCE - Free Report) - Last Closing Price: $8.58
The energy sector has been under pressure lately on weak Chinese demand, a strong dollar and debt default fears. This has opened up an opportunity for investors to flock to some ETFs in the sector at the cheap. The debt-ceiling deal, the ongoing output cuts by OPEC and its allies as well as upbeat corporate earnings pave the way for a bright outlook on the sector (read: Time for Inverse Energy ETFs?).
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 31 stocks in its basket. Invesco S&P SmallCap Energy ETF has accumulated $182.1 million in its asset base and charges 29 bps in annual fees. It trades in an average daily volume of 126,000 shares and has a Zacks ETF Rank #2 with a High risk outlook. Invesco S&P SmallCap Energy ETF has plunged 17.4% so far this year.
Invesco Global Clean Energy ETF (PBD - Free Report) - Last Closing Price: $18.27
The clean energy sector is expected to see continued growth given that the power generation in the United States from new renewables (primarily wind and solar) is expected to reduce coal and natural gas-fired energy production through 2024 at least. Wind and solar alone are expected to account for 16% of total energy production in 2023.
Invesco Global Clean Energy ETF follows the WilderHill New Energy Global Innovation Index and offers exposure to companies engaged in the business of the advancement of cleaner energy and conservation. It holds 120 securities in its basket, with each accounting for no more than 1.4% share. American firms make up for the largest share at 31.1%, while China and Taiwan round off the next two spots. PBD has AUM of $193.6 million and charges 75 bps in annual fees. It trades in an average daily volume of 23,000 shares and is down 1.5% so far this year.
Invesco High Yield Equity Dividend Achievers ETF (PEY - Free Report) – Last Closing Price: $18.34
Invesco High Yield Equity Dividend Achievers ETF offers exposure to well-diversified 51 stocks selected principally based on dividend yield and consistent growth in dividends. It tracks the NASDAQ US Dividend Achievers 50 Index, charging 52 bps in fees from investors. Utilities, financials, and consumer staples are the top three sectors accounting for double-digit exposure each.
Invesco High Yield Equity Dividend Achievers ETF has amassed $1.3 billion in AUM and sees an average daily volume of 437,000 shares a day. It has plunged 10.10% this year.
Global X Cloud Computing ETF (CLOU - Free Report) – Last Closing Price: $18.61
The demand for cloud computing will remain high as more companies adopt cloud computing to streamline their operations. Emerging technologies like Machine Learning and Artificial Intelligence (AI) enable cloud growth by allowing companies to tap into AI capabilities (read: Capitalizing on $7 Trillion in Generative AI with ETFs).
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. It tracks the Indxx Global Cloud Computing Index and holds 35 stocks in its basket, with American firms accounting for 85% of assets. Global X Cloud Computing ETF has AUM of $546.4 million and trades in an average daily volume of 173,000 shares. The ETF charges 68 bps in annual fees and has gained 15.7% this year.
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4 Top-Ranked ETFs Under $20 for Solid Gains
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, low-priced stocks often have the potential for significant percentage gains. For example, if a stock is priced at $20 and increases by $1, that's a 5% gain. This is in contrast to stocks priced at $100 or above, which see 1% or lower gains if shares move up by $1.
Further, 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.
However, low-priced stocks can be much more volatile than higher-priced stocks, thereby leading to significant losses if the stock price decreases. These are more susceptible to price manipulation, such as "pump and dump" schemes, which can lead to significant losses. Further, the low-priced stocks, especially penny stocks, belong to smaller and less-established companies. These companies may not be required to file with the SEC, making it harder to find reliable information (read: Insights Into 13F Filings: ETFs to Bet Like Billionaires).
Still, low-priced stocks are affordable and allow for greater diversification rather than investing in higher-priced stocks. And, the recent volatility 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.
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). These low-priced ETFs could lead to huge gains in the coming months based on market trends.
Invesco S&P SmallCap Energy ETF (PSCE - Free Report) - Last Closing Price: $8.58
The energy sector has been under pressure lately on weak Chinese demand, a strong dollar and debt default fears. This has opened up an opportunity for investors to flock to some ETFs in the sector at the cheap. The debt-ceiling deal, the ongoing output cuts by OPEC and its allies as well as upbeat corporate earnings pave the way for a bright outlook on the sector (read: Time for Inverse Energy ETFs?).
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 31 stocks in its basket. Invesco S&P SmallCap Energy ETF has accumulated $182.1 million in its asset base and charges 29 bps in annual fees. It trades in an average daily volume of 126,000 shares and has a Zacks ETF Rank #2 with a High risk outlook. Invesco S&P SmallCap Energy ETF has plunged 17.4% so far this year.
Invesco Global Clean Energy ETF (PBD - Free Report) - Last Closing Price: $18.27
The clean energy sector is expected to see continued growth given that the power generation in the United States from new renewables (primarily wind and solar) is expected to reduce coal and natural gas-fired energy production through 2024 at least. Wind and solar alone are expected to account for 16% of total energy production in 2023.
Invesco Global Clean Energy ETF follows the WilderHill New Energy Global Innovation Index and offers exposure to companies engaged in the business of the advancement of cleaner energy and conservation. It holds 120 securities in its basket, with each accounting for no more than 1.4% share. American firms make up for the largest share at 31.1%, while China and Taiwan round off the next two spots. PBD has AUM of $193.6 million and charges 75 bps in annual fees. It trades in an average daily volume of 23,000 shares and is down 1.5% so far this year.
Invesco High Yield Equity Dividend Achievers ETF (PEY - Free Report) – Last Closing Price: $18.34
Invesco High Yield Equity Dividend Achievers ETF offers exposure to well-diversified 51 stocks selected principally based on dividend yield and consistent growth in dividends. It tracks the NASDAQ US Dividend Achievers 50 Index, charging 52 bps in fees from investors. Utilities, financials, and consumer staples are the top three sectors accounting for double-digit exposure each.
Invesco High Yield Equity Dividend Achievers ETF has amassed $1.3 billion in AUM and sees an average daily volume of 437,000 shares a day. It has plunged 10.10% this year.
Global X Cloud Computing ETF (CLOU - Free Report) – Last Closing Price: $18.61
The demand for cloud computing will remain high as more companies adopt cloud computing to streamline their operations. Emerging technologies like Machine Learning and Artificial Intelligence (AI) enable cloud growth by allowing companies to tap into AI capabilities (read: Capitalizing on $7 Trillion in Generative AI with ETFs).
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. It tracks the Indxx Global Cloud Computing Index and holds 35 stocks in its basket, with American firms accounting for 85% of assets. Global X Cloud Computing ETF has AUM of $546.4 million and trades in an average daily volume of 173,000 shares. The ETF charges 68 bps in annual fees and has gained 15.7% this year.