Stocks trading in the $1-10 range are generally smaller players with less risk than their penny stock counterparts. But that doesn’t mean the underlying businesses are cheap, and we advise caution as many have questionable fundamentals.
The bad behavior exhibited by lower-quality companies in this space can spook even the most seasoned professionals, which is why we started StockStory - to separate the good from the bad. Keeping that in mind, here are three stocks under $10 to swipe left on and some alternatives you should look into instead.
ThredUp (TDUP)
Share Price: $4.17
Founded to revolutionize thrifting, ThredUp (NASDAQ: TDUP) is a leading online fashion resale marketplace offering a wide selection of gently-used clothing and accessories.
Why Do We Steer Clear of TDUP?
- Sluggish trends in its orders suggest customers aren’t adopting its solutions as quickly as the company hoped
- Historical operating margin losses point to an inefficient cost structure
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
ThredUp’s stock price of $4.17 implies a valuation ratio of 24.4x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including TDUP in your portfolio.
Hain Celestial (HAIN)
Share Price: $0.79
Sold in over 75 countries around the world, Hain Celestial (NASDAQ: HAIN) is a natural and organic food company whose products range from snacks to teas to baby food.
Why Do We Avoid HAIN?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Sales were less profitable over the last three years as its earnings per share fell by 32.1% annually, worse than its revenue declines
- 6× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
Hain Celestial is trading at $0.79 per share, or 16.5x forward P/E. To fully understand why you should be careful with HAIN, check out our full research report (it’s free).
Janus (JBI)
Share Price: $5.08
Standing out with its digital keyless entry into self-storage room technology, Janus (NYSE: JBI) is a provider of easily accessible self-storage solutions.
Why Is JBI Not Exciting?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 8.4% annually over the last two years
- Falling earnings per share over the last four years has some investors worried as stock prices ultimately follow EPS over the long term
- Waning returns on capital imply its previous profit engines are losing steam
At $5.08 per share, Janus trades at 6.4x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than JBI.
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