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.
Udemy (UDMY)
Share Price: $7.16
With courses ranging from investing to cooking to computer programming, Udemy (NASDAQ: UDMY) is an online learning platform that connects learners with expert instructors who specialize in a wide range of topics.
Why Are We Wary of UDMY?
- Customer spending has dipped by 1.6% on average as it focused on growing its buyers
- Sales are projected to remain flat over the next 12 months as demand decelerates from its three-year trend
- High marketing expenses suggest it needs to spend heavily on new customer acquisition to sustain momentum
Udemy’s stock price of $7.16 implies a valuation ratio of 11.1x forward EV/EBITDA. If you’re considering UDMY for your portfolio, see our FREE research report to learn more.
Purple (PRPL)
Share Price: $0.74
Founded by two brothers, Purple (NASDAQ: PRPL) creates sleep and home comfort products such as mattresses, pillows, and bedding accessories.
Why Should You Dump PRPL?
- Sales tumbled by 6.3% annually over the last two years, showing consumer trends are working against its favor
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
Purple is trading at $0.74 per share, or 24.6x forward EV-to-EBITDA. To fully understand why you should be careful with PRPL, check out our full research report (it’s free).
PacBio (PACB)
Share Price: $1.33
Pioneering what scientists call "HiFi long-read sequencing," recognized as Nature Methods' method of the year for 2022, Pacific Biosciences (NASDAQ: PACB) develops advanced DNA sequencing systems that enable scientists and researchers to analyze genomes with unprecedented accuracy and completeness.
Why Should You Sell PACB?
- Sales trends were unexciting over the last two years as its 6.6% annual growth was below the typical healthcare company
- Free cash flow margin dropped by 29.9 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
At $1.33 per share, PacBio trades at 2.4x forward price-to-sales. Dive into our free research report to see why there are better opportunities than PACB.
High-Quality Stocks for All Market Conditions
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio 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 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
