On March 6, Dan Niles, founder and portfolio manager at Niles Investment Management, joined CNBC’s ‘Power Lunch’ to provide a cautious perspective on the current market rally, warning investors not to prematurely assume an all-clear signal. Regarding the broader market sell-off and the conflict involving Iran, Niles explained that the primary uncertainty is the duration of the war.
Highlighting the irony of software and MAG7 tech stocks outperforming during the outbreak of hostilities, Niles explained that he anticipated this continued rally in software. Addressing concerns about market complacency and commodity shortages, he argued that price often leads the narrative rather than the news itself. While his personal view is that stocks should be lower, he acknowledges the market is currently signaling a resolution, perhaps reacting to a declining number of missiles being fired daily. He emphasized that the market is attempting to sort through the situation, but he remains a proponent of being hyper-selective.
Niles concluded by advising investors to get messy, referring to a strategy of diversifying into specific subsectors of the S&P 500. He noted that while the MAG7 is down 7% and the S&P is down about 1% year-to-date, other sectors are thriving: utilities are up 9%, and a mix of materials, energy, staples, and industrials are up between 9% and 25%. He points out that the equal-weighted S&P is up 4% and the Russell 2000 is up 3%, suggesting that diversified investors are not suffering as much as those concentrated in tech.
That being said, we’re here with a list of the 12 most promising stocks under $20.
Our Methodology
We used screeners to identify promising stocks that are trading below $20 per share. We limited our final selection to companies that are widely held by hedge funds and have recently reported noteworthy developments likely to impact investor sentiment. These stocks are also popular among analysts.
Note: All data was sourced on March 6.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
12 Most Promising Stocks Under $20
12. Permian Resources Corporation (NYSE:PR)
Permian Resources Corporation (NYSE:PR) is one of the most promising stocks under $20. On February 26, Permian Resources reported financial results for 2025, highlighting an 18% year-over-year increase in free cash flow per share to $1.94. The company exceeded its oil production guidance by 5%, averaging 188.6 thousand barrels of oil per day in Q4. Management attributed this success to a highly repeatable business model focused on the Delaware Basin, which saw drilling & completion/D&C costs drop to a record low of $700 per foot.
The company’s strategy for 2026 focuses on doing more with less, guiding to a 5% increase in total production despite a $120 million reduction in capital expenditures. Key to this plan is a further reduction in D&C costs to an anticipated $675 per foot, a 20% decrease compared to 2024 levels. Permian Resources also addressed regional infrastructure constraints by reducing its exposure to ‘Waha’ gas pricing. Through new midstream agreements, Permian Resources Corporation (NYSE:PR) expects its gas realizations to shift from a $0.4 discount to a $0.5 premium relative to Waha benchmarks in 2026.
Permian Resources maintained an aggressive ground game in acquisitions, closing ~700 transactions in 2025 totaling $1.1 billion. These deals added 250 high-rate-of-return locations, ensuring that the company acquired more inventory than it drilled for the third consecutive year.
Permian Resources Corporation (NYSE:PR) is an independent oil and natural gas company that develops crude oil and associated liquids-rich natural gas reserves in the US. The company’s assets primarily focus on the Delaware Basin, which is a sub-basin of the Permian Basin.
11. Axia Energia (NYSE:AXIA)
Axia Energia (NYSE:AXIA) is one of the most promising stocks under $20. On February 27, Axia Energia reported 2025 earnings, signaling the conclusion of its corporate turnaround and a shift toward sustained growth. Under the new ‘AXIA’ brand, which management noted represents a fundamental change in ownership culture rather than just a logo update, the company achieved an adjusted net income of BRL 1.2 billion for Q4, which was a 141% increase year-over-year.
This was supported by record dividend payouts of BRL 8.3 billion and the resolution of major liabilities, including the sale of its stake in Eletronuclear and an agreement with the government regarding compulsory loans. Operational efficiency and capital allocation reached new heights as the company ramped up investments to BRL 9.6 billion for the year, the highest level since 2015.
Management anticipates this trajectory will accelerate to an annual investment level of BRL 12 billion to BRL 14 billion for 2026 and 2027, driven by recent wins in transmission auctions and grid modernization. Axia Energia (NYSE:AXIA) is now prioritizing governance and employee engagement as it prepares to migrate to the Novo Mercado, the highest governance level of the Brazilian stock exchange, on April 1. The company also recently launched its first stock purchase program, which saw 22% of its workforce become shareholders.
Axia Energia (NYSE:AXIA), through its subsidiaries, generates, transmits, and commercializes electricity in Brazil. The company generates electricity through hydroelectric, thermoelectric, nuclear, wind, and solar plants.
