Most stocks that make it big start small. Even a mega-cap stock like Tesla, which is changing hands at around $740 a share right now, was trading under $40 apiece barely three years ago.
Of course, it's not easy to become a Tesla, as it's been an exceptional growth stock. Yet if you can find promising stocks while they're still trading in low double-digits, chances are you could make good money in the long term. For example, here are three stocks trading under $20 right now that look like promising buys for the long term.
The sell-off in this legacy auto stock is overdone
Ford Motor (F 0.08%) stock is trading for less than $14 a share, as of this writing. I'd call it a steal deal at this price, as with Ford shares, you get to own a piece of a legacy automaker that's also making a big leap into the future of automobiles: electric vehicles (EVs).
Ford delivered its first all-electric F-150 Lightning pickup truck on May 26. For those in the know, Ford's traditional F-150 has been the best-selling truck in America for nearly four decades now.
An all-electric version of the popular truck, therefore, has unsurprisingly received a lot of attention. So much attention, in fact, that Ford sold out reservations for 2022 F-150 Lightning faster than expected and stopped taking orders late last year once it booked 200,000 reservations.
Ford has played its cards well, so far. It launched its much-awaited first electric pickup at top speed so it can be the industry's front runner. Rivian is bogged down by cost pressures and struggling to produce its R1T pickup truck, while General Motors' Hummer EV truck is significantly higher-priced than Ford's F-150 Lightning.
Image source: Ford.
Ford, in fact, even invested in Rivian in its early days in a bid to work together on EVs. It soon discarded the plan, though, and is now dumping its Rivian shares to cut potential losses if Rivian's shares fall further.
Ford already has two other EVs in the market -- the Mustang Mach-E and the E-Transit -- and both are selling out rapidly. In between, Ford's traditional vehicles are in high demand, too. In April, Ford brand SUVs hit April monthly sales records. The company can easily put the money its traditional cars are bringing in into growth opportunities like EVs.
There's so much growth potential ahead, but Ford stock is selling for barely 0.4 times sales. Ford stock could still feel some pressure in the near term, but long-term investors who buy the stock now will bag a winner-in-the-making, going by Ford's aggressive plans. By 2026, for example, Ford expects EVs to make up one-third of its total global vehicle volumes and foresees that rising to 50% by 2030.
A stock that's turning around
It's been a choppy ride for solar stocks so far this year as investors dumped shares on fears of rising interest rates and their impact on the cost of solar projects. SunPower (SPWR -1.02%) has been no different.
Shares of the solar company seemed to be on the road to recovery after tumbling since late October, when they skidded all over again after April. SunPower stock is now down roughly 18% since April 1 and trading around $17.30 a share, as of this writing.
Having churned its portfolio over the past year or so, SunPower now focuses exclusively on residential solar solutions. It's a market with strong potential. Residential solar installations in the U.S. hit record highs in 2021 as costs came down and gave more homeowners an opportunity to replace or complement conventional fuels and electricity with solar solutions to save money on their utility bills.
SunPower's solutions range from solar panels to battery storage, electric-vehicle (EV) charging, and grid servicers. The company acquired Blue Raven Solar last year, has signed multiple agreements in recent months, and is in talks with First Solar to develop high-efficiency modules.
In its first quarter, SunPower added 16,500 new customers, up 40% year over year, and its customer backlog hit a record high of 13,800 bookings. SunPower expects to add 73,000-80,000 new customers in 2022 and grow twice as much as the market by 2025.
Those are encouraging numbers. With SunPower's financials also looking stronger than it did a few years ago, this is among the few stocks that should interest you if you're bullish on clean energy and solar, in particular.
This stock's dividend has more than doubled since 2016
Kinder Morgan (KMI 0.27%) stock is trading just under $20 a share right now, but it's still nowhere close to the high premium it was commanding in 2015. That was also the year when Kinder Morgan slashed its dividend, as debt weighed heavily on the company and its shares plunged.
The energy infrastructure giant has come a long way since, with its debt dropping and cash flows rising steadily over time. Kinder Morgan also started growing its dividend again -- between 2016 and 2022, its absolute annual dividend per share amount has grown by 122%.
Today, Kinder Morgan stock yields 5.6%. It's one of the largest natural gas pipeline operators in the U.S. and transports nearly 40% of the nation's gas consumption and exports.
The best part is that you needn't worry much about the potential volatility in natural gas prices, since Kinder Morgan generates the bulk of its cash flow under long-term contracts. That ensures a lot of stability and predictability and is primarily why the company can pay higher dividends year after year.
Kinder Morgan has a solid asset base, robust expansion plans, and is financially a much stronger company than it was five years ago. Although the world is switching to cleaner energy sources, natural gas is also considered the "cleanest" fossil fuel, so its consumption isn't going away anytime soon.
Kinder Morgan is one of the best oil and gas midstream companies out there. Its stock, therefore, is one of the best energy stocks you could own for as little as $20 apiece.
