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.
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.
Peloton (PTON)
Share Price: $7.60
Started as a Kickstarter campaign, Peloton (NASDAQ: PTON) is a fitness technology company known for its at-home exercise equipment and interactive online workout classes.
Why Do We Pass on PTON?
- Demand for its offerings was relatively low as its number of connected fitness subscribers has underwhelmed
- Historical operating margin losses point to an inefficient cost structure
- Performance over the past five years shows each sale was less profitable, as its earnings per share fell by 16.5% annually
Peloton is trading at $7.60 per share, or 40.3x forward P/E. Dive into our free research report to see why there are better opportunities than PTON.
RE/MAX (RMAX)
Share Price: $7.53
Short for Real Estate Maximums, RE/MAX (NYSE: RMAX) operates a real estate franchise network spanning over 100 countries and territories.
Why Do We Think RMAX Will Underperform?
- Performance surrounding its agents has lagged its peers
- Earnings per share fell by 7.1% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Low returns on capital reflect management’s struggle to allocate funds effectively
At $7.53 per share, RE/MAX trades at 6.1x forward P/E. Check out our free in-depth research report to learn more about why RMAX doesn’t pass our bar.
Heartland Express (HTLD)
Share Price: $7.55
Founded by the son of a trucker, Heartland Express (NASDAQ: HTLD) offers full-truckload deliveries across the United States and Mexico.
Why Is HTLD Risky?
- Sales tumbled by 14.2% annually over the last two years, showing market trends are working against its favor during this cycle
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 12.7 percentage points
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Heartland Express’s stock price of $7.55 implies a valuation ratio of 8.5x forward EV-to-EBITDA. To fully understand why you should be careful with HTLD, check out our full research report (it’s free for active Edge members).
High-Quality Stocks for All Market Conditions
Fresh US-China trade tensions just tanked stocks—but strong bank earnings are fueling a sharp rebound. Don’t miss the bounce.
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-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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