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3 Cheap Stocks Under $20 to Buy for the Holiday Season and Beyond

Wall Street had been hoping for good news on the coronavirus front as cases rise in Europe and the U.S., and they certainly got what they were craving. The market began back-to-back weeks by surging to records on positive vaccine news, first from Pfizer PFE and then from Moderna.

Analysts at Goldman Sachs GS and elsewhere have turned far more bullish for 2021 since the Pfizer announcement. And the S&P 500 is now up roughly 12% in 2020 and 10% since the end of October. On top of that, the U.S. economy continues to show signs of improvement, as it bounces back from its coronavirus fall.

The S&P 500 earnings outlook and stronger-than-expected Q3 results help support the economic comeback figures. Traders are also apparently pleased enough with the likelihood of divided government (also read: What to Expect from the Retail Sector).

The wave of positive factors doesn’t necessarily mean investors should dive back into the hardest hit social distancing industries such as travel and leisure. Nonetheless, the current environment, fueled by the combination of factors we already touched on, along with low interest rates, means investors might want to buy stocks as we enter the second half of the fourth quarter and beyond.  

Today we dive into three highly-ranked stocks that are all trading for under $20 per share that appear worth considering…

Mattel, Inc. MAT

Prior Close: $14.36 USD

The iPhone AAPL age has seen a rise in kids playing with phones and tablets. But there could be a push from some parents to get their children to spend less time on screens, especially as millions of kids are remote learning on Zoom ZM and other platforms. Mattel, which boasts a portfolio that includes Barbie, Hot Wheels, Fisher-Price, and more, said recently it’s seeing higher-than-expected demand. The toy and games power topped Q3 estimates in October, with sales up 10% and adjusted earnings up 265%.

More specifically, Mattel’s Barbie category jumped 29%, which was its largest quarterly expansion going back at least two decades. It’s worth pointing out that MAT has actively increased its range of dolls to feature more skin tones, hair colors, career paths, and body sizes to help appeal to a wider swath of people. And Mattel’s Toys-Games-Hobbies industry, which includes the likes of Hasbro HAS and Activision Blizzard ATVI, ranks in the top 11% of our over 250 Zacks industries at the moment.

Zacks estimates call for the firm’s adjusted Q4 earnings to soar 100% on 6.5% stronger revenue. Better still, Mattel’s first quarter fiscal 2021 sales are projected to climb over 9% to $648.2 million. Mattel’s FY21 outlook appears strong and its longer-term earnings revisions help it grab a Zacks Rank #2 (Buy) right now. MAT also boasts a “B” grade for Growth and an “A” for Momentum in our Style Scores system.

Mattel shares have surged over 75% in the last six months to crush its industry’s 9% climb. This run includes a 15% jump in the last month that has MAT trading right near its recent 52-week highs. Overall, the stock is up over 22% in the past 12 months. But investors might be pleased to know that Mattel was trading above $30 back in 2016. This could give the stock miles of room to run. And along with its under $15 a share price tag, MAT trades at 1.1X forward sales, which marks a big discount against its industry’s 5.3X.

Glu Mobile GLUU 

Prior Close: $8.75 USD

Glu stands somewhat in contrast to Mattel, but both companies can still grow as the American consumer drives the economy. Plus, the overall trends provide a strong tailwind for mobile video gaming. For instance, mobile gaming is projected to play a pivotal role in the growth of the global gaming industry that is set to climb from $159 billion in 2020 and over $200 billion by 2023. Glu’s offerings include Deer Hunter, Kim Kardashian: Hollywood, MLB Tap Sports Baseball, Disney Sorcerer’s Arena DIS, and other popular titles.

Glu beat our Q3 earnings estimates by roughly 60% in the first week of November. Meanwhile, Glu’s revenue soared 48% to a company record of $158.5 million, with bookings up 22%. Peeking ahead, Zacks estimates call for its fiscal 2020 sales to climb 31% to $553 million, with another 10.1% expansion projected in FY21. The mobile gaming firm’s adjusted earnings are expected to skyrocket over 140% this year and another 34% next year.

Glu’s impressive post-release earnings revisions help it grab a Zacks Rank #1 (Strong Buy) right now, alongside its “A” grade for Growth in our Styles Scores system. The company is also part of the same highly-ranked industry as Mattel, and simply put: millions and millions of people are addicted to their smartphones.

GLUU stock has surged 30% since its Q3 earnings release and the stock is up over 60% in the past year. Plus, Glu shares still hover 20% off their April 2019 highs. And GLUU trades below its own year-long highs in terms of forward sales and at a big discount to its industry at 2.5X vs. 5.3X.

Nautilus, Inc. NLS

Prior Close: $18.73 USD

Nautilus is one of the legacy players in the home-workout industry that Peloton PTON has thrived in during the pandemic. NLS and its home-gym portfolio includes Bowflex, Nautilus, Octane Fitness, and Schwin. These offerings feature free weights, treadmills, ellipticals, indoor cycling equipment, and more, which makes it a much more diverse firm than PTON.

The company beat our Q3 earnings and revenue estimates on November 9, with sales up a whopping 152%. Nautilus entered the fourth quarter with a backlog of $72.8 million, as it races to bolster production to keep up with demand. On top of that, NLS saw its gross profit soar over 250% to $67.9 million.

Zacks estimates call for its fourth quarter revenue to surge 83%, with Q1 projected to climb another 56%. Meanwhile, adjusted earnings are projected to soar by roughly 530% in both Q4 and the first quarter of next year. Nautilus has seen its earnings outlook surge since its report to help it earn a Zacks Rank #1 (Strong Buy), and investors should note that it has blown away our bottom-line estimates by an average of 300% in the trailing four periods.

Nautilus rocks an “A” grade for Momentum and a “B” for Growth in our Style Scores system and it’s part of an industry that rests in the top 3% of our over 250 Zacks industries. NLS stock has suffered a substantial earnings and vaccine-focused selloff recently.

Yet, Nautilus, Peloton, and others could continue to see increased demand as gyms might be some of the last things to return to normal, even if we have a vaccine. And Wall Street also likely used the news and the report as a chance to take profits on the stock that’s still up over 930% in 2020. Investors might want to consider NLS, which is now trading over 35% off its recent highs, as it rolls out more digital offerings.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Mattel, Inc. (MAT): Free Stock Analysis Report
 
The Goldman Sachs Group, Inc. (GS): Free Stock Analysis Report
 
Apple Inc. (AAPL): Free Stock Analysis Report
 
Activision Blizzard, Inc (ATVI): Free Stock Analysis Report
 
Pfizer Inc. (PFE): Free Stock Analysis Report
 
The Walt Disney Company (DIS): Free Stock Analysis Report
 
Hasbro, Inc. (HAS): Free Stock Analysis Report
 
Nautilus Group, Inc. The (NLS): Free Stock Analysis Report
 
Glu Mobile Inc. (GLUU): Free Stock Analysis Report
 
Zoom Video Communications, Inc. (ZM): Free Stock Analysis Report
 
Peloton Interactive, Inc. (PTON): Free Stock Analysis Report
 
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