Buying a few shares of a company doesn't have to set you back thousands of dollars. You can invest in a quality company with much less cash in hand. A stock isn't necessarily great just because it's cheap, but an expensive share price isn't always an indicator of a good buy, either.
Each of the three stocks I discuss here currently trades for less than $50 per share. These three businesses -- a 131-year-old food company, the world's largest telecommunications provider, and a top cannabis retailer -- have held their own throughout the coronavirus pandemic and continued to deliver value to investors in 2020 despite market headwinds. Here's why these bargain stocks are solid buys for the long-term investor.
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1. B&G Foods
B&G Foods (BGS 1.19%) has been in business since 1889. The company owns a portfolio of familiar brands, including Green Giant, Cream of Wheat, and Ortega. Shares of the company have climbed by nearly 53% over the past 12 months, but they still trade pretty cheaply at around $27 and 13 times trailing earnings.
Although B&G Foods hasn't delivered exponential sales growth over the past few years, the company's dividend keeps investors coming back for more. With a juicy yield of nearly 7% based on current share prices, the dividend far exceeds that of the average stock on the S&P 500.
The year 2020 saw healthy growth for the packaged food company, with net sales growing 9%, 38%, and 22%, respectively, during the first, second, and third quarters versus a year ago. B&G Foods' bottom line also surged during these quarters, at 67%, 146%, and 51%, respectively. In the company's third-quarter report, then-CEO Kenneth G. Romanzi said: "B&G Foods continued to benefit from very strong demand for our products as a result of the ongoing COVID-19 pandemic. Our portfolio of brands and products are very well-suited for the stay at home, work at home, cook and eat at home world."
Management expects full-year 2020 net sales will be somewhere in the $1.95 billion to $1.97 billion range. These figures would represent a significant uptick from the company's net sales in either 2018 ($1.7 billion) and 2019 ($1.66 billion).
The economic fallout over the past nine months has tested companies across all industries. Although investors shouldn't necessarily expect to see pandemic-level sales growth from B&G indefinitely, the company has also proven its recession resistance. And one of the things I like most about this stock is the fact that the industry it operates in naturally generates a consistent level of demand regardless of market conditions. B&G Foods' stellar dividend is just the cherry on top of this bargain buy.
2. AT&T
Shares of AT&T (T 1.02%) have definitely taken a hit since the start of the pandemic, and are down nearly 25% from one year ago. The stock is currently trading at just about $30 per share.
AT&T is another stock that pays a mouthwatering dividend; at the time of this writing, it yields 7.2%. The company's dedication to consistently raising its dividend has made it one of an elite group of stocks known as Dividend Aristocrats: companies that have raised their dividend for at least 25 consecutive years. AT&T has consistently boosted its payout for nearly 40 years.
The company faces some near-term headwinds. It reported year-over-year revenue declines ranging from 5% to 9% in each of the first three quarters of 2020.
The company also has $149 billion in net debt to pay down, which it faithfully chips away at each quarter. A significant portion of this high debt is attributable to the acquisitions of DIRECTV in 2015 and WarnerMedia in 2018. AT&T also signed a $5.5 billion term-loan agreement in April, which management said was intended "to provide additional financial flexibility to an already strong cash position."
With all this said, AT&T's underlying strength rests with its strong liquidity and robust wireless business. The company generated free cash flow of $3.9 billion, $7.6 billion, and $8.3 billion sequentially during the first three quarters of 2020, and closed the third quarter with $10 billion in available cash. Management asserted this in the company's third-quarter report: "Wireless postpaid growth was the strongest that it's been in years with one million net additions, including 645,000 phones. We added more than 350,000 fiber broadband customers and are on track to grow our fiber base by more than 25% this year."
AT&T is by no means a perfect investment -- but there's really no such thing when it comes to stock trading. The company is making meaningful progress in whittling away at its debt and continues to satisfy its dividend obligation to shareholders. If you're looking for a high-yield dividend stock to help fund your retirement or generate some extra cash for your portfolio, AT&T hits the mark on both counts.
3. Green Thumb Industries
The marijuana industry struggled more than usual in 2020, as widespread retail closures put a dent in many companies' profits and undermined already shaky balance sheets. But such was not the case for Green Thumb Industries (GTBIF 3.56%), which currently trades at about $25 per share. Over the past year, the stock price has swelled by nearly 170%.
The Chicago-based cannabis company recently opened its 50th retail location, and has over a dozen production facilities nationwide. Green Thumb posted remarkable year-over-year revenue increases in each of the first three quarters of 2020. Its first-quarter revenue grew 268% year over year, while the company reported 167.5% and 131.1% revenue growth in the second and third quarters, respectively.
In the third quarter alone, Green Thumb's adjusted operating EBITDA (earnings before interest, taxes, depreciation, and amortization) grew by more than 50%. The company's rapid and ongoing expansion of its retail presence in both new and existing markets hasn't hurt its liquidity, either. At last check, Green Thumb's total assets of $159.1 million ($78.1 million in cash) far outweighed its $97.1 million in debt.
The stars continue to align for Green Thumb, and analysts seem just as bullish as management about prospects in the coming years. They project that the company will have average annual earnings growth of 20% in the upcoming five-year period.
If you're an investor itching to buy into the cannabis hype, Green Thumb Industries offers an unbeatable combination of growth and liquidity that is increasingly tough to find in many of today's top marijuana stocks.
