Small-cap stocks are particularly vulnerable to higher interest rates. So it’s not surprising that many of these stocks are struggling in a higher-for-longer rate environment. But the when, not if, proposition for lower interest rates makes this a time to look for strong buy stocks under $20.
According to Fed chair Jerome Powell, the much-anticipated interest rate cuts won’t be happening any time soon. However, Powell did concede that the Federal Reserve is likely to cut rates at least three times in 2024.
Does that mean it’s time to dive in with both feet? Probably not. But it’s a great time to be getting your watchlist together. And that’s the purpose of looking at strong buy stocks under $20. Many of these small-cap stocks aren’t heavily covered by analysts. However, when these companies get even one Strong Buy rating, it’s worth investigating.
The stocks on this list, may not have Strong Buy ratings, but they do have a consensus Buy rating and catalysts that suggest they are ready to make a move higher.
Uranium Energy (UEC)
The bullish case for Uranium Energy (NYSEAMERICAN:UEC) is straightforward. The spot price of uranium recently hit 15-year highs. Demand is expected to outpace supply for the foreseeable future as climate change advocates embrace nuclear energy as a clean form of energy.
Is that enough reason to buy a stock that’s up 110.9% in the last 12 months? The answer lies in whether you believe that Uranium Energy can hit its production targets. To that end, the company recently announced an imminent restart of uranium production at its Christensen Ranch In-Situ Recovery (ISR) operations in Wyoming.
Uranium Energy also plans to restart production at its South Texas Hub & Spoke ISR Platform. Put together, the company controls the largest S-K 1300 compliant ISR resource base in the U.S. with over 75 million lbs. of Measured and Indicated resources.
The risk is the company’s own forecast for lower earnings in the next 12 months. Nevertheless, at this point, analysts are shrugging that off. UEC stock has a $10.30 consensus price target with all five analysts that issued a rating giving the stock a Strong Buy.
Hudbay Minerals (HBM)
Hudbay Minerals (NYSE:HBM) gives investors a different way to invest in metals and mining. The company is one of the world’s leading copper miners which accounts for approximately 50% of Hudbay’s revenue.
Investors are discovering that the global transition to renewable energy is likely to take longer than expected. That’s reflected in HBM stock, which has been flat in the last 12 months.
But copper will be needed for many applications including electric vehicles and to help update our existing electric infrastructure. To quantify that, consider that to reach the target of net zero carbon emissions by 2050, the world will need to mine 1.4 billion tons of copper. And to put that into perspective, the world has only mined 700 million tons of copper in all of history.
That means that a miner like Hudbay Minerals has a long runway. The company is forecasting 318% earnings growth that is starting to get priced into analysts’ estimates.
In the next 12 to 18 months, analysts give HBM stock a consensus price target that is 30% higher than its price as of February 1, 2024. And 12 out of 14 analysts have a Strong Buy or Buy rating on the stock.
Bionomics (BNOX)
I put Bionomics (NASDAQ:BNOX) on this list of strong buy stocks under $20 when I saw a forecast of 1,257% share price appreciation in the next 12 to 18 months. Admittedly that’s only two analysts, but then again, the clinical-stage biotechnology company trades for less than dollar a share as of this writing. Penny stocks don’t generally receive strong analyst coverage.
But as investors know, when it comes to biotech stocks, things can change fast. In the case of Bionomics, the catalyst is coming from the company’s lead candidate, BNC210. The therapeutic is being studied for different indicators. And as of February 1, the company is planning to initiate a first Phase 3 study of BNC210 for social anxiety disorder (SAD).
Even with positive results, Bionomics won’t be profitable in 2024. And since debuting in the public markets in 2022, investors have seen the stock drop by over 90%. This isn’t without risk, but if you have a high risk tolerance and the willingness to wait on an uncertain outcome, BNOX stock may be a profitable fit.
Blade Air Mobility (BLDE)
Blade Air Mobility (NASDAQ:BLDE) is another penny stock for this list. The concept of flying cars is becoming a reality. Blade Air isn’t a pure play in the sector. But for now, they’re serving as a crucial bridge, and will still have relevance even when electric vertical takeoff and landing (eVTOL) aircraft are available.
But while eVTOL’s may be the future of urban air mobility, Blade Air is most definitely the present. The company is seeing strong revenue growth and with its asset-light business model (it doesn’t own its aircraft) is closing in on profitability. That business model also means Blade should be able to make a seamless transition to incorporate eVTOLs when the time is right.
BLDE stock is up 43.75% in the last three months but is still down 33% in the last 12 months. Nevertheless, analysts are bullish on the stock giving it a $7.50 consensus price target which is 150% higher than its current price. And, all five analysts that have issued a rating give the stock a Strong Buy rating.
Groupon (GRPN)
It’s been said that American’s love a deal. But you would have hard time convincing Groupon (NASDAQ:GRPN) shareholders about the truth of that statement. The company’s revenue is down sharply year-over-year and the company’s earnings turned negative.
That’s because companies have now figured out how to get their message – and their discounts – directly to consumers.
But Groupon is one of the strong buy stocks under $20 because of high short interest. Yes, a short squeeze may not be the most convincing reason to buy a stock, but it’s hard to ignore.
A look at the GRPN stock chart shows an interesting tug-of-war going on around the $14 level. The shorts are trying to push it down, but the 10-, 20- and 50-day simple moving averages show that the bulls are making a stand.
Again, this may not be the right reason to own the stock. But three out of four analysts give the stock a Strong Buy or Buy rating with a consensus price target that could take the stock over 18% higher.
Cemex (CX)
Infrastructure spending will continue to flow through the economy in 2024. That should be bullish for Cemex (NYSE:CX). Bridges, roads, buildings are just a few of the examples of applications that require concrete. This will keep demand for the products that Cemex supplies relatively steady.
I put the Mexican-based company on this list due to its leadership in sustainable concrete production. Cement product accounts for approximately 7% of global CO2 emissions and the company’s Vertua product line has features that have a low or neutral CO2 footprint.
But Cemex has more than just a story to make it one of the strong buy stocks under $20. The company is growing revenue year-over-year and projects a 38% gain in earnings in the next 12 months. Of all the stocks on this list CX stock has the most analyst coverage. 19 analysts have issued a rating and 16 give it either a Strong Buy or Buy rating.
BlackSky Technology (BKSY)
Investing in space stocks is not for the risk-averse investor. But if you’re looking for an oversold name with some upside, BlackSky Technology (NYSE:BKSY) merits consideration.
BlackSky is a leader in delivering space-based intelligence to its customers. Not surprisingly, the company generates a significant portion of its revenue from U.S. government agencies. The company is growing revenue at an impressive pace. In its most recent earnings report, BlackSky reported record revenue that was 26% higher YOY and an 11% YOY growth in its high-margin imagery and analytics revenue.
BKSY is another penny stock on this list. It’s not profitable at the moment, but projects it will be adjusted EBITDA positive in the coming quarter. Analysts are forecasting 116% growth in the next 12 months. And four out of five analysts give the stock a Strong Buy rating.
On the date of publication, Chris Markoch 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.
