Low-priced stocks under £20 present a unique opportunity for those seeking high returns with a modest investment. By carefully filtering, investors can pinpoint stocks with significant growth potential.
We’ve used the InvestingPro Fair Value to identify low-priced stocks poised for potential price increases of more than a hefty 20%. This fair value upside underscores the expected growth trajectory of these stocks.
Learn More 📜
InvestingPro Fair Value is a metric designed to estimate the true worth of a stock. Using this value, users can assess whether a stock is currently undervalued or overvalued by comparing its current market price to its intrinsic worth.
Methodology: How We Picked These Stocks
Here on the Investing.com Academy, we believe in full transparency, setting us apart from many ‘black box’ providers that make investment suggestions but leave investors guessing how their criteria works.
By openly sharing our methodology, we want to empower our readers with the knowledge and confidence to understand why each stock made the list, ensuring that our recommendations align with their investment goals and risk tolerance. Our selection process combines three primary filters to identify the most promising stocks under £20 with high upside potential.
Pricing Criteria
Our focus is on identifying cheap stocks trading under £20.
Fair Value Assessment
We considered only stocks presenting a Fair Value upside potential of at least 20%, based on the InvestingPro fair value assessment. We place considerable weight on this metric in order to steer clear of overpriced stocks and pinpoint the shares with substantial upside potential.
Stock Market
We prioritised UK-listed stocks for this screener.
The primary goal with these screener options is to pursue investments that combine current value and growth potential.
Cheap Stocks Under £20 in November 2024
| Company Name | Stock Symbol | Sector | Fair Value Upside |
|---|---|---|---|
| Water Intelligence | WATR | Commercial Services & Supplies | 34.2% |
| Entain PLC | ENT | Hotels, Restaurants & Leisure | 38.1% |
| Glaxosmithkline PLC | GSK | Pharmaceuticals | 60.9% |
| Future PLC | FUTR | Media | 34.3% |
| CVS Group | CVSG | Healthcare Services | 42.9% |
1. Water Intelligence (WATR)
- Market Cap: £66.53M
- Fair Value Average: £5.13
- Fair Value Upside: 34.2%
Water Intelligence plc, together with its subsidiaries, provides leak detection and remediation services for potable and non-potable water in the United States, the United Kingdom, Australia, Canada, and internationally. The company offers water leak and repair solutions and is also involved in franchising activities, and operates corporate-owned stores. In addition, it provides clean water and waste-water solutions for residential, commercial, and municipal customers. Water Intelligence plc was incorporated in 1974 and is based in London, the United Kingdom.
2. Entain PLC (ENT)
- Market Cap: £4.55B
- Fair Value Average: £9.98
- Fair Value Upside: 38.1%
Entain PLC operates as a sports-betting and gaming company. The company provides online and multi-channel betting under the Ladbrokes name; and also includes Coral, Eurobet, 365Scores, Gala Bingo, Foxy Bingo and many more. Entain PLC was incorporated in 2004 and is headquartered in Douglas, Isle of Man.
3. Glaxosmithkline PLC (GSK)
- Market Cap: £59.20B
- Fair Value Average: £22.56
- Fair Value Upside: 60.9%
GSK PLC, together with its subsidiaries, engages in the research, development, and manufacture of vaccines, and specialty and general medicines to prevent and treat disease in the United Kingdom, the United States, and internationally. It operates through two segments, Commercial Operations and Total R&D. The company offers shingles, meningitis, respiratory syncytial virus, flu, polio, influenza, and pandemic vaccines. It also provides medicines for HIV, oncology, respiratory/immunology, and other specialty medicine products, as well as inhaled medicines for asthma and chronic obstructive pulmonary disease, and antibiotics for infections. It has a collaboration agreement with CureVac to develop mRNA-based influenza vaccines, and with Wave Life Sciences and Elsie Biotechnologies, Inc for oligonucleotide platform development. The company was formerly known as GlaxoSmithKline plc and changed its name to GSK plc in May 2022. GSK plc was founded in 1715 and is headquartered in Brentford, the United Kingdom.
4. Future PLC (FUTR)
- Market Cap: £957.7M
- Fair Value Average: £11.76
- Fair Value Upside: 34.3%
Future PLC, together with its subsidiaries, publishes and distributes content for games, entertainment, technology, sports, savings and wealth, lifestyle, knowledge and news, and B2B sectors primarily in the United States and the United Kingdom. It operates through Media and Magazine segments. The company offers content through various forms, as well as advertising, eCommerce, and direct consumer monetisation frameworks. It also provides print licensing, endorsement licensing, comparison shopping, video content production, energy auto switching, and digital media publishing services, as well as various sales and distribution services to third parties. Future PLC was founded in 1985 and is based in Bath, the United Kingdom.
- Market Cap: £650.7M
- Fair Value Average: £13.08
- Fair Value Upside: 42.9%
CVS Group PLC, together with its subsidiaries, engages in veterinary, pet crematoria, online pharmacy, and retail businesses. The company operates through four segments: Veterinary Practices, Laboratories, Crematoria, and Online Retail Business. It operates in animal veterinary practices and complementary veterinary diagnostic businesses. The company also provides pet cremation and clinical waste disposal services for veterinary practices. In addition, it operates Animed Direct, an online retail business that sells prescription and non-prescription medicines, pet foods, and other pet care products; and an online dispensary. It owns veterinary practices, laboratories, and crematories in the United Kingdom, Australia, the Netherlands, and the Republic of Ireland. CVS Group PLC was founded in 1999 and is headquartered in Diss, the United Kingdom.
How to Find Cheap Stocks Under £20
It’s possible to find the full list of stocks under £20 with a high upside easily using Investing Pro.
Step 1:
Visit the InvestingPro Screener tool.
Step 2:
Select ‘Price’ as a filter parameter on the Screener page, and set the threshold value to less than £20.
Step 3:
Add a filter for ‘InvestingPro Fair Value Upside’ above 20%.
Step 4:
Select ‘United Kingdom’ under the ‘Trading Region’ tab drop-down, and make sure to select the ‘Primary Trading Item’ option, as shown in the image below.
From here, investors can then see the full list of all companies calling in the desired screener filters’ range, shown in descending order (which can be changed to any column for further prioritisation).
Cheap Stocks FAQ (Frequently Asked Questions)
Q. What is the difference between penny stocks and cheap stocks under £20?
Penny stocks are typically priced under £1 and are often less stable (higher daily price volatility), while cheap stocks under £20 are slightly higher in price and may have better financial stability and growth prospects. Cheap stocks are also more widely available and often more liquid than penny stocks.
Q. Why Invest in Cheap Stocks?
Investors buy cheap stocks for several reasons:
- Potential for High Returns: If the company grows, the stock price can increase significantly, offering high-percentage returns.
- Affordability: These stocks allow investors to buy more full shares with a smaller amount of money.
- Speculative Trading: Some investors (usually swing and day traders) are attracted to the higher volatility and potential for quick gains.
- Faster Options Trading: For those interested in Options trading, obtaining 100 shares of a £20 share is far quicker than obtaining the same amount of shares for £200 each – allowing a faster route to start options trading.
Remember 📌
It’s important to remember that whether you purchase a full share of a stock for £20 or a fraction of a more expensive stock for £20, the value of your investment remains the same. Owning a full share or a part of a share does not inherently make one investment better than the other. Both scenarios mean you have invested £20 into a company, and both will appreciate or depreciate according to the stock’s performance.
The cost of the share or fraction you buy doesn’t determine the potential return on your investment—what matters is the underlying value and growth potential of the stock itself.
Q. Can Cheap Stocks Be Traded on Major Exchanges?
Yes, some cheap stocks are listed on major exchanges like the London Stock Exchange (LSE) or the NASDAQ. However, many also trade over-the-counter (OTC) or on smaller exchanges due to their lower market capitalisation and less stringent listing requirements.
Q. Are Cheap Stocks Riskier than More Expensive Stocks?
Cheap stocks can be riskier due to higher volatility and less liquidity than larger-cap stocks, but they can also offer substantial rewards. Portfolio diversification and conducting thorough research can help to mitigate risk, as can having a clear investment thesis and time horizon.
Q. Do Cheap Stocks Also Pay Dividends?
Yes, some dividend-paying stocks can be bought for £20 or less, and have upside growth potential, offering a mix of income and capital appreciation.
Q. Are Cheap Stocks Suitable for Beginner Investors?
Yes, cheap stocks can be suitable for beginners due to their affordability, but it’s important to conduct thorough research to mitigate risks in the same way as when investing in higher-cap stocks.
Q. How do I buy cheap stocks under £20?
You can buy cheap stocks through a stock brokerage account. Research your chosen stocks using InvestingPro, then place a buy order, and manage your investment via the brokerage platform of choice.
Q. What are the common pitfalls to avoid when investing in cheap stocks?
Avoid falling for hype, neglecting due diligence, failing to diversify, and not having an exit strategy. Emotional trading can also lead to poor investment decisions.
Q. How long should I hold onto cheap stocks to see significant returns?
The holding period varies; it can range from months to several years. Assessing company performance and market conditions regularly will help determine the optimal holding period.
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