Back to top

Image: Bigstock

Why These ETFs Under $20 Seem Solid Picks for 2020

Read MoreHide Full Article

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 (read: Fearing a Replay of December 2018? ETF Strategies to Try).

And guess what, the current market 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 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 pretty worthy 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 over $50 million and average daily volume of at least 50,000 shares. These low-priced ETFs could lead to huge gains in the coming months.

ETFMG Prime Junior Silver ETF (SILJ - Free Report)

Silver will likely get a boost from the global woes including uncertainty over U.S.-China trade deal and new tariff talks, Brexit issues, geopolitical tension and November election. SILJ provides direct global exposure to small-cap securities in the silver mining exploration and production industry by tracking the Prime Junior Silver Miners & Explorers Index (read: Russell 2000 Hits New 1-Year High: 5 Best-Performing ETFs).

Last Closing Price: $11.20
Zacks Rank: NA
AUM: $118.2 million
Expense Ratio: 0.69%
Average Daily Volume (in shares): 346,000

Global X Cloud Computing ETF (CLOU - Free Report)

Cloud computing is a fast-emerging technology with many companies preferring to adopt it for cost-cutting. According to ResearchAndMarkets.com, the total cloud computing market size is expected to grow 18.1% from $271.96 billion in 2018 to $623.93 billion by 2023. In particular, CLOU 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 (SaaS), Platform-as-a-Service (PaaS), Infrastructure-as-a-Service (IaaS), managed server storage space and data center real estate investment trusts, and/or cloud and edge computing infrastructure and hardware (read: 6 Most Successful ETF Launches YTD).

Last Closing Price: $15.59
Zacks Rank: NA
AUM: $460.6 million
Expense Ratio: 0.68%
Average Daily Volume (in shares): 258,000

Global X SuperDividend ETF (SDIV - Free Report)

Investors will continue to hunt for juicy yields in 2020 given the continued uncertainty, which will weigh on the equity markets. This is because the companies that pay dividends generally act as a hedge against economic uncertainty and provide downside protection by offering outsized payouts or sizable yields on a regular basis. SDIV follows the Solactive Global SuperDividend Index and invests in 100 of the highest dividend yielding equity securities in the world.

Last Closing Price: $17.03
Zacks Rank: #3 (Hold)
AUM: $923.6 million
Expense Ratio: 0.08%
Average Daily Volume (in shares): 351,000

Invesco High Yield Equity Dividend Achievers ETF (PEY - Free Report)

This fund offers exposure to stocks selected principally based on dividend yield and consistent growth in dividends. It tracks the NASDAQ US Dividend Achievers 50 Index (read: 5 Dividend ETFs to Tap if the Initial Trade Deal Fails).

Last Closing Price: $18.37
Zacks Rank: #3
AUM: $915.4 million
Expense Ratio: 0.53%
Average Daily Volume (in shares): 147,000

JPMorgan Alerian MLP Index ETN (AMJ - Free Report)

Most MLPs are engaged in the processing and transportation of energy commodities such as natural gas, crude oil, and refined products. As such, they are not directly linked to the price of oil and are likely to be the major beneficiaries of an oil boom in the long term. Acting as toll-takers, these MLPs earn revenues on volumes that flow through pipes and not on the commodity price. This product offers exposure to midstream energy midstream Master Limited Partnerships (MLPs) by tracking the Alerian MLP Index. Investors should note that it is currently trading near its 52-week low price.

Last Closing Price: $19.84
Zacks Rank: NA
AUM: $2.3 billion
Expense Ratio: 0.85%
Average Daily Volume (in shares): 1.6 million

Bottom Line

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.

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>