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. That said, here are three stocks under $10 to avoid and some other investments you should consider instead.
Stitch Fix (SFIX)
Share Price: $3.40
One of the original subscription box companies, Stitch Fix (NASDAQ: SFIX) is an online personal styling and fashion service that curates personalized clothing selections for customers.
Why Should You Dump SFIX?
- Sluggish trends in its active clients suggest customers aren’t adopting its solutions as quickly as the company hoped
- Suboptimal cost structure is highlighted by its history of operating losses
- Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
Stitch Fix’s stock price of $3.40 implies a valuation ratio of 12.4x forward EV-to-EBITDA. To fully understand why you should be careful with SFIX, check out our full research report (it’s free).
Vestis (VSTS)
Share Price: $6.45
Operating a network of more than 350 facilities with 3,300 delivery routes serving customers weekly, Vestis (NYSE: VSTS) provides uniform rentals, workplace supplies, and facility services to over 300,000 business locations across the United States and Canada.
Why Do We Pass on VSTS?
- Flat sales over the last two years suggest it must find different ways to grow during this cycle
- Earnings per share have dipped by 49.7% annually over the past three years, which is concerning because stock prices follow EPS over the long term
- Capital intensity has ramped up over the last four years as its free cash flow margin decreased by 6 percentage points
Vestis is trading at $6.45 per share, or 7.9x forward P/E. Check out our free in-depth research report to learn more about why VSTS doesn’t pass our bar.
10x Genomics (TXG)
Share Price: $8.75
Founded in 2012 by scientists seeking to overcome limitations in traditional biological research methods, 10x Genomics (NASDAQ: TXG) develops instruments, consumables, and software that enable researchers to analyze biological systems at single-cell resolution and spatial context.
Why Do We Steer Clear of TXG?
- Cash-burning history makes us doubt the long-term viability of its business model
- Negative returns on capital show management lost money while trying to expand the business, and its decreasing returns suggest its historical profit centers are aging
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
At $8.75 per share, 10x Genomics trades at 1.8x forward price-to-sales. If you’re considering TXG for your portfolio, see our FREE research report to learn more.
Stocks We Like More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.
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.
