A stock price generally doesn't tell you much about the value of the stock itself. Beginning investors often assume low-priced stocks are cheap, but that isn't really the case. Instead, you're better off looking at valuation metrics like the price-to-earnings ratio, which will give you a measurement of how cheap or expensive a stock is based on its profits.

However, sometimes a low price can tip you off to opportunity. Stocks trading in single digits or the teens that have fallen from higher prices, for instance, sometimes present tempting turnaround opportunities. Below are three such stocks priced below $20. Keep reading to see why our contributors recommend you take a look at Changyou.com (NASDAQ:CYOU)Redfin Corporation (NASDAQ:RDFN), and Viking Therapeutics (NASDAQ:VKTX).

A row of $20 bills arranged diagonally.

Image source: Getty Images.

A beaten-down Chinese video game developer

Keith Noonan (Changyou.com): Changyou's revenue and active user base have been sinking as the mobile version of the company's Tian Long Ba Bu franchise has underperformed. The massively multiplayer online role-playing game (MMORPG) had a weaker-than-expected debut last year and has seen disappointing player retention following release, prompting steep sell-offs for the Chinese video game developer.

Like many smaller game companies, Changyou's sales rely on refreshes of just a few key franchises -- setting up a high-risk, high-reward dynamic. Shares have lost roughly two thirds of their value over the last year and now trade at less than $13, a reflection of what can happen when the product refresh cycle goes wrong. Broader sell-offs in the Chinese market and the country's recent move to suspend granting licenses for new video games have also dinged the stock. While additional moves from the Chinese government to regulate the video game industry remain a source of risk, the licensing suspension doesn't look to be a long-term issue, and Changyou's stock is very cheaply valued for investors willing to weather some uncertainty. 

The company has two new MMORPGs and several other games in its near-term release pipeline, and it also expects a rebound for its cinema advertising business. The company's June-ended quarter saw cinema advertising revenue decline 33% year over year as the business sold off assets and shifted its focus to larger customers, but it expects that the segment's sales will increase at least 38% sequentially in the third quarter and continue growing from there.

Investors should proceed with the understanding that there's limited visibility on whether the company's next titles will be hits, but Changyou is conservatively valued, trading at 0.9 times book value and 13 times this year's expected earnings. Shares could soar if the company manages to score a modest hit with one of its upcoming games.

A real estate disruptor

Jeremy Bowman (Redfin Corporation): Like other low-priced stocks, Redfin has fallen from its previous heights. The stock debuted on the  market a little more than a year ago and immediately surged after its IPO, which was priced at $15. Shares traded in the $20's most of the last year, but dove on its second-quarter earnings report after management warned that the real estate market was slowing, and are now trading near all-time lows.

Economic data that's come out since the August report has confirmed the slowing housing market, but Redfin still presents opportunity at its current price. That's because even if the housing market slows down, the real estate disruptor, which runs an online real estate brokerage that helps buyers and sellers avoid some of the usual costs associated with housing sales, should continue to gain market share and even grow  in a weaker housing market.

In the second quarter, the company saw its market share improve from 0.64% to 0.83% of existing-home sales, and that trend should continue, as buyers and sellers are likely to use its tools regardless of the strength of the housing market. Top-line growth is strong as well, as revenue increased 36% in the second quarter, and management sees that figure increasing 25% to 29% in the third quarter. Though Redfin is not yet profitable, that should change as the company builds out its business and takes a larger share of the housing market.

For long-term investors who can afford to be patient through the current housing slowdown, Redfin looks like a smart bet.

An outstanding bargain

George Budwell (Viking Therapeutics): Like most biotechs, shares of metabolic disease specialist Viking Therapeutics have been getting absolutely crushed this month. After reporting strong phase 2 data for its fatty liver disease drug candidate, VK2809, in September, the drugmaker's shares have lost a whopping 37% of their value from their recent highs. This rapid slide, though, should turn out to be a flat-out gift for patient investors. 

Viking's dramatic turn southward, after all, isn't the result of a clinical, regulatory, or financial setback. In fact, the company now has two high-value clinical candidates -- VK2809 indicated for fatty liver disease and VK5211 as a treatment for complications associated with hip fracture recovery -- ready to enter the next stage of their development. Both of these promising drugs are projected to have blockbuster sales potential. 

The bad news is that Viking may take longer than originally expected to become a full-fledged commercial operation. Specifically, the company's efforts to strike a licensing deal for VK5211 have yet to materialize, and VK2809 will likely require additional clinical work before it's ready to enter a late-stage study. Neither of these developmental hiccups is the end of the world by any means, but this moody market is clearly not interested in hearing about clinical delays. 

Nevertheless, the payoff for investors willing to tolerate this short-term volatility could be truly outstanding. Both of Viking's lead midstage candidates have produced stellar data throughout the course of their clinical programs. As a result, this small-cap biotech seems to have a better-than-average shot at bringing two top-selling drugs to market within the next few years. Not many clinical-stage biotechs -- especially those trading at less than $20 a share -- can make a similar claim, quite frankly. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.