If you have a limited amount of capital, you have two choices as far as the number of stocks you can purchase is considered. You can either buy more individual shares of a relatively cheap stock or just a few shares of a relatively expensive stock. Your returns, whether they are through capital gains or dividends, will not be impacted by the number of shares you hold.
Still, if you are in the mood for buying stocks that are currently trading at or below $20 per share, there are three that should be on your radar.
An aerospace company
Magellan Aerospace (TSX:MAL) is a Mississauga-based aerospace company that manufactures engines, assemblies, and components for aircraft and spaceships. The company was founded from the remains of a U.S.-based company in Ontario in 1996. It serves airlines, space agencies, and military services across the globe.
Despite being in an apparently exciting business, Magellan isn’t a very exciting stock, but it has been growing at a decent pace for the last 12 months. It has grown over 80% in the last 12 months and about 19% within the year. The company also offers a decent yield of 3.9%. The balance sheet is strong, but the net income and revenues have been slipping for the last few quarters.
At the time of writing this, the stock is trading at $10.5 per share.
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A timber company
Acadian Timber (TSX:ADN) is one of the largest timberland owners in Eastern Canada. The company manages 2.4 million acres of land, which is divided into three different forest segments, the largest of which is the crown lands under management (1.3 million acres). It also has a diverse product mix, but two products dominate: i.e., solid wood (61%) and packaging/tissue/special paper (22%).
Acadian finished 2020 strong, with sales volume and net income growing slightly compared to 2019. The company has a strong balance sheet, and the income is gradually growing back to normal levels. The share price has grown about 48% in the last 12 months, but a more impressive number is Acadian’s mouthwatering 5.9% yield. The payout ratio is very stable at 61%.
Currently, the stock is trading for $19.1 a share.
A manufacturing company
TerraVest Industries (TSX:TVK) manufactures home heating products for domestic consumers and specialized transportation vehicles and storage tanks for the energy sector. Despite being a manufacturing and infrastructure company, TerraVest is quite exposed to the energy sector. But the good news for its investors is that the exposure doesn’t result in the company’s stock tracking the performance of the energy sector.
The last 12 months have been relatively static for the company, but its growth prospects look relatively brighter if you go back further. In the last five years, the stock has grown almost 200%, which comes down to a five-year CAGR of 28%. The company also offers dividends, and the current yield is 2.2%. The current share price is $17.7 per share.
If you are looking for top TSX stocks that are currently trading for less than $20, the three companies should be on your radar for a decent mix of capital growth prospects and dividends. All three companies have recovered their valuations and are on their way to a stable financial recovery, which will (hopefully) translate into steady growth and sustainable dividends in the future.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. 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, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool owns shares of ACADIAN TIMBER CORP. The Motley Fool recommends TerraVest Industries Inc.