Stocks in the $10-50 range offer a sweet spot between affordability and stability as they’re typically more established than penny stocks. But their headline prices don’t guarantee quality, and investors should exercise caution as some have shaky business models.
These dynamics can cause headaches for even the most seasoned professionals, which is why we started StockStory - to help you separate the good companies from the bad. That said, here are three stocks under $50 to avoid and some other investments you should consider instead.
Amneal (AMRX)
Share Price: $12.04
Founded in 2002 and growing into one of America's largest generic drug producers, Amneal Pharmaceuticals (NASDAQ: AMRX) develops, manufactures, and distributes generic medicines, specialty branded drugs, biosimilars, and injectable products for the U.S. healthcare market.
Why Does AMRX Give Us Pause?
- Free cash flow margin shrank by 1.9 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Underwhelming 4.1% return on capital reflects management’s difficulties in finding profitable growth opportunities
Amneal is trading at $12.04 per share, or 14.1x forward P/E. If you’re considering AMRX for your portfolio, see our FREE research report to learn more.
Amentum (AMTM)
Share Price: $23.10
With operations spanning approximately 80 countries and a workforce of specialized engineers and technical experts, Amentum Holdings (NYSE: AMTM) provides advanced engineering and technology solutions to U.S. government agencies, allied governments, and commercial enterprises across defense, energy, and space sectors.
Why Does AMTM Worry Us?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 3.8% over the last two years was below our standards for the business services sector
- Sales are projected to remain flat over the next 12 months as demand decelerates from its two-year trend
- Poor free cash flow margin of 1.9% for the last four years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
At $23.10 per share, Amentum trades at 10x forward P/E. Read our free research report to see why you should think twice about including AMTM in your portfolio.
WaFd Bank (WAFD)
Share Price: $30.56
Founded in 1917 and rebranded from Washington Federal in 2023, WaFd (NASDAQ: WAFD) is a bank holding company that provides lending, deposit services, and insurance through its Washington Federal Bank subsidiary across eight western states.
Why Are We Hesitant About WAFD?
- Net interest income trends were unexciting over the last five years as its 6.9% annual growth was below the typical banking firm
- Net interest margin shrank by 76 basis points (100 basis points = 1 percentage point) over the last two years, suggesting the profitability of its loan book is decreasing or the market is becoming more competitive
- Sales were less profitable over the last two years as its earnings per share fell by 14.8% annually, worse than its revenue declines
WaFd Bank’s stock price of $30.56 implies a valuation ratio of 0.8x forward P/B. To fully understand why you should be careful with WAFD, check out our full research report (it’s free for active Edge members).
High-Quality Stocks for All Market Conditions
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