Invest in These 4 Exceptional Stocks Under $20 as Fed Adopts a Hawkish Stance

With the Federal Reserve reinstating a hawkish outlook on monetary policy, investors are scouting for stocks that present a considerable opportunity at a modest price. The recent remarks from Fed Chair Jerome Powell at an International Monetary Fund event have highlighted uncertainties regarding whether the current interest rate levels are sufficient to quell inflation. Additionally, Powell underscored the limited assistance anticipated from the supply side improvements in combating inflation. This shift in tone suggests that additional interest rate hikes could be on the horizon, which in turn impacts investment decisions in the stock market.

Value investing, one of the proven strategies advocated by seasoned investors like Warren Buffett, emphasizes buying remarkable companies at fair prices rather than commonplace companies at enticing prices. In a market riddled with uncertainties, cherry-picking stocks with strong potential at a lower cost is becoming increasingly significant. Choosing the right portfolio of affordable stocks could offer investors the opportunity to capitalize on market rebounds and future growth.

For investors seeking to engage with the stock market in 2023, especially in the wake of the tech-led recovery from the previous year's turmoil, certain stocks stand out. These stocks combine affordability with strong performance indicators, making them attractive picks for investors who are ready to tap into the potential offered by a market that is yet to fully stabilize.

Selected Stocks Below $20

In alignment with the strategy of securing underpriced stocks with strong upside potential, we have identified four stocks in the sub-$20 category that not only bear a favorable Zacks Rank of #1 (Strong Buy) or #2 (Buy) but also boast a VGM Score of A or B, denoting an optimum blend of Value, Growth, and Momentum parameters. These stocks are:

American Eagle Outfitters, Inc. AEO, a prominent specialty retailer based in Pittsburgh, Pennsylvania, which offers a variety of clothing, accessories, and personal care products. Trading at $18.41, AEO has an anticipated earnings growth rate of 36.1% for the current year. Its Zacks Consensus Estimate for current-year earnings has seen a 7.3% enhancement over the past 60 days, and it holds a VGM Score of A.

OneSpaWorld Holdings Limited OSW, operator of health and wellness centers on cruise ships and resorts worldwide, based in Nassau, Bahamas. Currently at $11.00 a share, OSW expects an impressive earnings growth of 132.1% for the current year. Over the past 60 days, its consensus earnings estimates have risen by 6.6%. OSW possesses a Zacks Rank #2 and a VGM Score of A.

The Gap, Inc. GPS, globally known as Gap, is an American apparel retailer offering a wide range of clothing and accessories. With its stock price at $13.48, GPS anticipates a skyrocketing earnings growth rate of 277.5% for this year. The Zacks Consensus Estimate for its earnings has also modestly increased by 1.4% during the past two months. GPS comes with a Zacks Rank #2 and a VGM Score of A.

Xerox Holdings Corporation XRX, headquartered in Norwalk, Connecticut, is a well-recognized workplace technology firm that produces document management systems and solutions. Priced at $13.09 per share, XRX is looking at an expected earnings growth rate of 64.3% for the current year. Its earnings estimates have improved by 8.2% in the last 60 days, and the company has earned a Zacks Rank #2 and a VGM Score of A.

Investors seeking to navigate the volatility of the market while seizing growth opportunities would do well to consider these four stocks. Their robust performance scores and affordable price points make them ideal candidates in a market environment where the Fed's hawkish signals could spell further rate increases.

Investment, Stocks, Market