Best Cheap UK Stocks Under £20 with High Upside

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.

Our focus is on identifying cheap stocks trading under £20.

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.

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.

• Market Cap: £71.33M
• Fair Value: £5.94
• Fair Value Upside: 42.8%

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.

• Market Cap: £4.09B
• Fair Value: £8.36
• Fair Value Upside: 30.9%

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.

• Market Cap: £61.73B
• Fair Value: £1.28
• Fair Value Upside: 49.6%

Sanderson Design Group plc, together with its subsidiaries, engages in the design, manufacture, marketing, and distribution of interior furnishings, fabrics, and wallpapers worldwide. The company operates in three segments: Brands, Licensing, and Manufacturing. The Brands segment designs, markets, sells, and distributes wallpapers, fabrics, wallcoverings, printing blocks, fragments, cushions, homewares, paints, and printed and woven textiles. The Licensing segment engages in brand licensing. The Manufacturing segment manufactures wallcoverings and printed fabrics. The company operates showrooms in Chelsea Harbour, London; and the D&D Building, Manhattan, New York. It serves interior designers, retailers, distributors, and architects. The company was formerly known as Walker Greenbank PLC and changed its name to Sanderson Design Group plc in November 2020. Sanderson Design Group plc was founded in 1860 and is headquartered in London, the United Kingdom.

• Market Cap: £1.21B
• Fair Value: £15.61
• Fair Value Upside: 44.7%

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: £4.82B
• Fair Value: £9.78
• Fair Value Upside: 29.2%

Beazley plc provides risk insurance and reinsurance solutions in the United States, the United Kingdom, rest of Europe, and internationally. It operates through Cyber Risks, Digital, MAP Risks, Property Risks, and Specialty Risks segments. It also underwrites life, health, and personal accident; and jewellery, fine art, and specific products risk insurance. The company was founded in 1986 and is based in London, the United Kingdom.

It’s possible to find the full list of stocks under £20 with a high upside easily using Investing Pro.

Visit the InvestingPro Screener tool.

Select ‘Price’ as a filter parameter on the Screener page, and set the threshold value to less than £20.

Add a filter for ‘InvestingPro Fair Value Upside’ above 20%.

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).

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.

Investors buy cheap stocks for several reasons:

1. Potential for High Returns: If the company grows, the stock price can increase significantly, offering high-percentage returns.
2. Affordability: These stocks allow investors to buy more full shares with a smaller amount of money.
3. Speculative Trading: Some investors (usually swing and day traders) are attracted to the higher volatility and potential for quick gains.
4. 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.

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.

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.

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.

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.

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.

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.

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.