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. Keeping that in mind, here are three stocks under $50 to avoid and some other investments you should consider instead.
Chewy (CHWY)
Share Price: $38.05
Founded by Ryan Cohen, who later became known for his involvement in GameStop, Chewy (NYSE: CHWY) is an online retailer specializing in pet food, supplies, and healthcare services.
Why Does CHWY Fall Short?
- Annual sales growth of 9.8% over the last three years lagged behind its consumer internet peers as its large revenue base made it difficult to generate incremental demand
- Estimated sales growth of 4.5% for the next 12 months implies demand will slow from its three-year trend
- Gross margin of 28.8% reflects its high servicing costs
At $38.05 per share, Chewy trades at 24.1x forward EV/EBITDA. To fully understand why you should be careful with CHWY, check out our full research report (it’s free).
Zurn Elkay (ZWS)
Share Price: $34.28
Claiming to have saved more than 30 billion gallons of water, Zurn Elkay (NYSE: ZWS) provides water management solutions to various industries.
Why Does ZWS Worry Us?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Estimated sales growth of 3.5% for the next 12 months implies demand will slow from its two-year trend
- Issuance of new shares over the last five years caused its earnings per share to fall by 8.2% annually, even worse than its revenue declines
Zurn Elkay’s stock price of $34.28 implies a valuation ratio of 25.2x forward P/E. Check out our free in-depth research report to learn more about why ZWS doesn’t pass our bar.
IMAX (IMAX)
Share Price: $25.03
Originally developed for World Expo '67 in Montreal as an innovative projection system, IMAX (NYSE: IMAX) provides proprietary large-format cinema technology and systems that deliver immersive movie experiences with enhanced image quality and sound.
Why Are We Wary of IMAX?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years
- 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
IMAX is trading at $25.03 per share, or 20x forward P/E. Read our free research report to see why you should think twice about including IMAX in your portfolio.
Stocks That Overcame Trump’s 2018 Tariffs
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 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.
