They say a rising tide lifts all boats. Of course, the opposite is true as well. As the bear market rages on, it’s pulling down bad and good stocks alike. Of course, the silver lining is that the market turmoil is providing investors with a chance to pick up shares of the good ones at a major discount. So, today, we’ll be looking at seven stocks under $20 to buy and hold for long-term gains.
Each of these stocks is trading well below its respective 52-week high and could provide outsized returns for investors with long time horizons who buy now.
Stocks Under $20 to Buy and Hold: Amcor (AMCR)
Amcor (NYSE:AMCR), which dates back to the 1860s, has transformed into a leader in sustainable packaging, putting it in a strong position as the world continues to seek more environmentally friendly products.
Shares currently sit 19% below their 52-week high, made in June. On the plus side, they yield 4.4%, providing a nice payout for investors as they wait for the stock to trade higher.
Amcor’s fiscal year ended on June 30. The company reported a 14% increase in revenue to $14.5 billion. Meanwhile, net income increased nearly 17% to $939 million and adjusted EPS was up 11% on a comparable constant currency basis.
Amcor makes products that are poised to meet the demand of the future, and its dividend provides a level of safety.
Palantir Technologies (PLTR)
At first glance, big data analytics company Palantir Technologies (NYSE:PLTR) probably seems like a stock to avoid. Shares have fallen 71% from their 52-week high, made nearly a year ago.
In May, the firm posted weak first-quarter earnings and disappointing second-quarter guidance. Shortly thereafter, PLTR stock hit an all-time low of $6.44. Shares managed to mount a recovery over the summer, gaining as much as 80%. However, the stock cratered once more following the release of the company’s Q2 report. While earnings were in line with estimates and revenue was slightly ahead of expectations, the company’s guidance once again disappointed the Street.
Investors would do well to remember that Palantir is still a young stock, having gone public in September 2020. More importantly, the company provides analytics to the defense sector, providing a lucrative growth runway. The more large contracts Palantir lands, the greater it becomes entrenched in the burgeoning sector. At some point, that’s going to translate to rapid growth that makes PLTR a gamble worth taking now.
Stocks Under $20 to Buy and Hold: Infosys (INFY)
Infosys (NYSE:INFY) is an Indian firm that provides consulting, technology, outsourcing and digital services to companies around the world. Shares are down 31% from their 52-week high, made in January. However, INFY stock is up more than 240% over the past 10 years, compared with a return of about 155% for the S&P 500.
In the first half of 2022, revenue rose 15.7% year over year to $9 billion. Due to rising costs, however, profits were relatively flat. But this situation is far from abnormal in the current environment and Infosys doesn’t look to be in trouble. Analysts are forecasting revenue growth of 11.5% this year and 9.8% next year. Meanwhile, earnings per share are expected to increase roughly 3% in the current year and nearly 14% in the next.
Analysts have an average price target of $20.39 on INFY stock. That implies 12-month upside of 12.3%. If shares achieve this, they will actually underperform their average annualized return over the past decade, which is close to 13.8%. But keep in mind we are in a bear market.
Kinder Morgan (KMI)
Kinder Morgan (NYSE:KMI) is a Houston-based energy infrastructure firm that provides gas pipeline transportation and terminal storage services for oil and natural gas. The stock is up around 10% year to date but sits 13.4% below its 52-week high, made in June.
The reason to invest in KMI stock now relates to the shifting global energy landscape. Russia’s ongoing invasion of Ukraine has caused disruptions as Europe looks to distance itself from Russian energy and import more natural gas from the United States. And OPEC’s recent decision to slash oil production by 2 million barrels a day is causing the U.S. to reconsider its reliance on Saudi Arabia as an energy ally.
Logic dictates that the U.S. is likely to pump more oil domestically in order to assert increased control over prices at home. That directly benefits midstream pipeline firms like Kinder Morgan. While waiting for shares to rebound, investors can take comfort in the stock’s 6.5% dividend yield.
Stocks Under $20 to Buy and Hold: Nokia (NOK)
Nokia (NYSE:NOK) is down 28% from its 52-week high, made late last year. What’s worse, shares have gone nowhere over the past five years. But the Finnish telecom company is in the midst of a turnaround and should be a vital player in the world’s transition to 5G.
Pekka Lundmark took over as the company’s president and CEO in 2020, vowing to do “whatever it takes to lead in 5G.” In recent years, the U.S. has moved to ban Chinese tech firms, most notably Huawei, from the 5G space due to national security concerns. This has opened the door for Nokia and other Nordic competitors including Ericsson (NASDAQ:ERIC).
Under Lundmark, Nokia has begun to right its ship. In July, the company said it was on track to meet the high end of its full-year revenue forecast of 24.7 billion euros.
Shares have a modest dividend yield of 0.9%. That isn’t blowing any income investor’s socks off, but every little bit counts, especially these days.
Shares of French mobile and internet telecommunications firm Orange (NYSE:ORAN) are trading 28% below their 52-week high, made in May. What I like about this under-the-radar stock is the company’s strong fundamentals.
I find that companies that create value are generally among the best to invest in. The easiest way to identify value creation is by comparing the return on invested capital with the weighted average cost of capital. Firms with capital returns that exceed capital costs are said to be value-creating. Orange counts itself among such firms with ROIC of 3.8% and a WACC of 2.5%.
Orange also carries a P/E ratio that is lower than 85% of the telecommunications industry. For whatever reason, the investing world hasn’t gotten behind Orange. But that could change. In the meantime, shares throw off an enticing 8.5% dividend yield.
Stocks Under $20 to Buy and Hold: Ford Motor (F)
Shares of Ford Motor (NYSE:F) are down 54% from their 52-week high, made in January. Truth be told, the stock has delivered a pretty lackluster performance over the past 10 years, with an average annualized return of 5.1%, less than half that of the broader market. But that may be about to change.
Ford is known for its history of producing internal combustion vehicles pioneered by Henry Ford himself. Ford’s future, though, is electric. It is investing heavily to become an EV leader, to the tune of $20 billion over the next decade. EV stocks tend to command much higher valuations than legacy auto manufacturers.
Shares currently trade at 6.3 times next year’s earnings-per-share estimate of $1.89. For comparison, Tesla (NASDAQ:TSLA) is trading at 37.1 times next year’s earnings estimate.
Analysts’ average price target for F stock is $15.34, about 30% above the current share price, while the high target of $28 implies upside of well over 100%. Oh, and don’t forget Ford’s 5.1% dividend yield.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.