Investors can certainly boost their returns by concentrating on stocks trading between $1 and $10. However, a disciplined approach is necessary because many of these businesses are speculative and lack the underlying fundamentals to support their prices.
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 avoid and some other investments you should consider instead.
Krispy Kreme (DNUT)
Share Price: $3.45
Famous for its Original Glazed doughnuts and parent company of Insomnia Cookies, Krispy Kreme (NASDAQ: DNUT) is one of the most beloved and well-known fast-food chains in the world.
Why Do We Steer Clear of DNUT?
- Earnings per share have dipped by 38.7% annually over the past three years, which is concerning because stock prices follow EPS over the long term
- Cash burn has widened over the last year, making us question whether it can reliably generate shareholder value
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
Krispy Kreme’s stock price of $3.45 implies a valuation ratio of 4.9x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than DNUT.
Arcos Dorados (ARCO)
Share Price: $6.89
Translating to “Golden Arches” in Spanish, Arcos Dorados (NYSE: ARCO) is the master franchisee of the McDonald's brand in Latin America and the Caribbean, responsible for its operations and growth in over 20 countries.
Why Does ARCO Give Us Pause?
- Gross margin of 13% is below its competitors, leaving less money for marketing and promotions
- Poor expense management has led to an operating margin of 6.7% that is below the industry average
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of -0.5% for the last two years
Arcos Dorados is trading at $6.89 per share, or 11.5x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why ARCO doesn’t pass our bar.
Blink Charging (BLNK)
Share Price: $2.29
One of the first EV charging companies to go public, Blink Charging (NASDAQ: BLNK) is a manufacturer, owner, operator, and provider of electric vehicle charging equipment and networked EV charging services.
Why Does BLNK Fall Short?
- Sales trends were unexciting over the last two years as its 5.4% annual growth was below the typical industrials company
- Negative free cash flow raises questions about the return timeline for its investments
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
At $2.29 per share, Blink Charging trades at 1.9x forward price-to-sales. To fully understand why you should be careful with BLNK, check out our full research report (it’s free for active Edge members).
High-Quality Stocks for All Market Conditions
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our 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-micro-cap company Tecnoglass (+1,754% 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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