Stocks trading between $10 and $50 can be particularly interesting as they frequently represent businesses that have survived their early challenges. However, investors should remain vigilant as some may still have unproven business models, leaving them vulnerable to the ebbs and flows of the broader market.
This is precisely where StockStory comes in - we do the heavy lifting to identify companies with solid fundamentals so you can invest with confidence. That said, here are three stocks under $50 to avoid and some other investments you should consider instead.
Penguin Solutions (PENG)
Share Price: $16.89
Based in the US, Penguin Solutions (NASDAQ: PENG) is a diversified semiconductor company offering memory, digital, and LED products.
Why Is PENG Risky?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 9.4% annually over the last two years
- Operating margin of 2% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
- Low returns on capital reflect management’s struggle to allocate funds effectively, and its decreasing returns suggest its historical profit centers are aging
Penguin Solutions is trading at $16.89 per share, or 11.1x forward P/E. If you’re considering PENG for your portfolio, see our FREE research report to learn more.
Caesars Entertainment (CZR)
Share Price: $27.86
Formerly Eldorado Resorts, Caesars Entertainment (NASDAQ: CZR) is a global gaming and hospitality company operating numerous casinos, hotels, and resort properties.
Why Are We Cautious About CZR?
- Flat sales over the last two years suggest it must innovate and find new ways to grow
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
Caesars Entertainment’s stock price of $27.86 implies a valuation ratio of 1.5x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than CZR.
Hillenbrand (HI)
Share Price: $20.47
Hillenbrand, Inc. (NYSE: HI) is an industrial company that designs, manufactures, and sells highly engineered processing equipment and solutions for various industries.
Why Do We Avoid HI?
- Sales trends were unexciting over the last five years as its 7.2% annual growth was below the typical industrials company
- Incremental sales over the last two years were much less profitable as its earnings per share fell by 5.9% annually while its revenue grew
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 14.7 percentage points
At $20.47 per share, Hillenbrand trades at 8x forward P/E. To fully understand why you should be careful with HI, check out our full research report (it’s free).
Stocks That Overcame Trump’s 2018 Tariffs
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.
