Stocks under $10 pique our interest because they have room to grow (as well as the most affordable option contract premiums). That doesn’t mean they’re bargains though, and we urge investors to be careful as many have risky business models.
Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. That said, here are three stocks under $10 to avoid and some other investments you should consider instead.
Olaplex (OLPX)
Share Price: $1.50
Rising to fame on TikTok because of its “bond building" hair products, Olaplex (NASDAQ: OLPX) offers products and treatments that repair the damage caused by traditional heat and chemical-based styling goods.
Why Do We Steer Clear of OLPX?
- Products have few die-hard fans as sales have declined by 14.2% annually over the last three years
- Performance over the past three years shows each sale was less profitable as its earnings per share dropped by 45.3% annually, worse than its revenue
- 16.1 percentage point decline in its free cash flow margin over the last year reflects the company’s increased investments to defend its market position
Olaplex is trading at $1.50 per share, or 20.3x forward P/E. Dive into our free research report to see why there are better opportunities than OLPX.
The Honest Company (HNST)
Share Price: $4.80
Co-founded by actress Jessica Alba, The Honest Company (NASDAQ: HNST) sells diapers and wipes, skin care products, and household cleaning products.
Why Are We Wary of HNST?
- Subscale operations are evident in its revenue base of $389.4 million, meaning it has fewer distribution channels than its larger rivals
- Capital intensity has ramped up over the last year as its free cash flow margin decreased by 6.6 percentage points
- Negative returns on capital show that some of its growth strategies have backfired
The Honest Company’s stock price of $4.80 implies a valuation ratio of 17.6x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including HNST in your portfolio.
iHeartMedia (IHRT)
Share Price: $1.93
Occasionally featuring celebrity hosts like Ryan Seacrest on its shows, iHeartMedia (NASDAQ: IHRT) is a leading multimedia company renowned for its extensive network of radio stations, digital platforms, and live events across the globe.
Why Do We Pass on IHRT?
- Sales stagnated over the last two years and signal the need for new growth strategies
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
At $1.93 per share, iHeartMedia trades at 0.4x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why IHRT doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2024, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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