Cheap stocks are only worth something if they have growth potential. Otherwise, they're just dead weight in your portfolio. This is true whether a stock is cheap by valuation or just by share price. But if you can find a high-quality company that really does have wings on which to fly, then you have something.

Here are two stocks in the financial sector under $20 per share that look to have solid growth potential -- CURO Group Holdings (NYSE:CURO) and MGIC Investment (NYSE:MTG).

CURO Group Holdings

CURO Group, based in Wichita, Kansas, provides consumer finance to nonprime or underbanked consumers -- those who may have traditional bank accounts, but rely on alternative financial services like money orders, check-cashing services, and short-term loans.

A man holding out three stacks of $20 bills.

Image source: Getty Images.

CURO offers its clients short-term loans that are accessible through its 400-plus stores in 14 states, as well as online. It has several brands, including Speedy Cash, Avio Credit, and Revolve Finance in the U.S., and Cash Money and LendDirect in Canada. It also offers prepaid debit cards under the Opt+ brand.

Further, CURO owns a 40% stake in Katapult, a company that provides online lease-purchase services for nonprime U.S. consumers -- these are lease-to-own loans for consumers and small businesses. In December, Katapult announced it would go public through a merger with FinServ Acquisition Corp., which will net CURO $130 million in cash and 21% ownership in the new company from its $27.5 million initial investment.

CURO, which went public in 2017, saw its stock price go up 20.8% in 2020. This year it is up about 4% year to date, trading at less than $15 per share. Despite the solid returns, 2020 was a difficult year, as loan balances decreased 19.5% in the U.S. and revenue was down about 26% for the year. But the numbers gradually improved as the lockdowns eased and the economy improved. By the fourth quarter, loan balances were up year over year.

The company is poised for growth as the economy improves, particularly in the second half. Surveys show a growing adoption rate in the U.S. among lower-income consumers for non-bank financial technology products like those offered by CURO. And usage is expected to grow, particularly among consumers in the $30,000 and below income category.

CURO has a low price-to-earnings ratio under 9 and excellent liquidity, which will be boosted once the Katapult deal closes. This looks like a slow and steady grower and has a consensus median price target of $25 per share.

MGIC Investment

Another good buy under $20 is MGIC Investment, which provides private mortgage insurance (PMI) and other credit risk management solutions to commercial lenders -- banks, mortgage brokers, credit unions, etc. -- and government sponsored entities (GSEs). The company, based in Milwaukee, literally invented PMI when it was founded in 1957, and it remains the industry leader. 

The company had a difficult year in 2020, , due to the pandemic as home sales dropped, particularly in the first half of the year. As a result, the stock price was down about 9% in 2020.

But the market improved as the year wore on as home sales increased and the refinance market was strong. MGIC's revenue was only down about 2.9% in the fourth quarter year over year, and up from the third quarter.

Another promising sign was new insurance written was way up in the fourth quarter, up 72% year over year to $33.2 billion. Also, loan delinquencies were down from the third quarter, but still up year over year. In addition, the company's loss ratio was just 17.5% in the quarter, which is good on its face, but down from an excellent loss ratio of 8.9% a year ago.

The stock is available at an extremely low valuation right now, trading a little bit below book value with a price-to-earnings ratio around 10.

While there remains a lot of uncertainty in the housing market, MGIC has a great pipeline of new business, it's a market leader, and it has excellent credit quality. It's also very efficient, with a 53% operating margin. It's a great value right now and is a definite buy. 

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.