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, 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 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 are from the hottest areas currently. These low-priced ETFs could lead to huge gains in the coming months.
iShares U.S. Oil Equipment & Services ETF (IEZ - Free Report)
The energy sector is poised for a strong rebound driven by an astounding rally in oil price after the historic collapse in April. Demand is improving and supply glut is shrinking. This is especially true given the past and potential production cuts by major oil producers and an uptick in demand due to the lifting of COVID-19 restrictions. 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. The fund has recently been upgraded on improving fundamentals (read: Crude Saw Best Month Ever: Are Energy ETFs Ready to Jump?).
Last Closing Price: $9.28
Zacks Rank: #3 (Hold)
AUM: $222.1 million
Expense Ratio: 0.42%
Average Daily Volume (in shares): 319,000
ETFMG Prime Junior Silver ETF (SILJ - Free Report)
Silver has become the most sought-after commodity in the precious metal space lately. The white metal gained nearly 24% in May, representing the biggest monthly jump in nearly a decade. Most of the upside is being driven by optimism over the pickup in industrial demand as the economy has reopened after several months of coronavirus-driven shutdowns. In addition, the prospect of rising inflation triggered by unprecedented stimulus measures has compelled investors to turn to silver to hedge against near-record-low interest rates. SILJ provides direct exposure to the silver mining exploration and production industry by tracking the Prime Junior Silver Miners & Explorers Index (read: ETFs Ways to Tap the Rise in Silver Price).
Last Closing Price: $11.38
Zacks Rank: NA
AUM: $226.3 million
Expense Ratio: 0.69%
Average Daily Volume (in shares): 680,000
Global X SuperDividend ETF (SDIV - Free Report)
Investors continued to hunt for juicy yields in a near-zero interest environment amid a series of drastic dividend cuts. Additionally, market uncertainty also raised the appeal for dividend investing. 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: $11.46
Zacks Rank: #3
AUM: $623.9 million
Expense Ratio: 0.59%
Average Daily Volume (in shares): 532,000
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 (read: Race for Coronavirus Vaccine Heats Up: Biotech ETFs to Gain).
Last Closing Price: $16.78
Zacks Rank: NA
AUM: $35.1 million
Expense Ratio: 0.68%
Average Daily Volume (in shares): 17,000
Invesco KBW High Dividend Yield Financial ETF (KBWD - Free Report)
The financial sector, which was hit hard by the COVID-19 pandemic, has finally heaved a sigh of relief. This is primarily thanks to easing lockdown measures that have instilled confidence among investors. The latest bouts of data indicate that economic activity has started to pick up and economic damage from the coronavirus pandemic has been less severe than anticipated. Pickup in economic activities will lead to high demand for the services in the sector. This 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.
Last Closing Price: $13.92
Zacks Rank: #2 (Buy)
AUM: $214.2 million
Expense Ratio: 1.58%
Average Daily Volume (in shares): 124,000
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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