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. Keeping that in mind, here are three stocks under $10 to avoid and some other investments you should consider instead.
Arhaus (ARHS)
Share Price: $8.76
With an aesthetic that features natural materials such as reclaimed wood, Arhaus (NASDAQ: ARHS) is a high-end furniture retailer that sells everything from sofas to rugs to bookcases.
Why Are We Wary of ARHS?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
- Revenue base of $1.29 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 5 percentage points
Arhaus is trading at $8.76 per share, or 17.5x forward P/E. Check out our free in-depth research report to learn more about why ARHS doesn’t pass our bar.
Hertz (HTZ)
Share Price: $6.04
Started with a dozen Model T Fords, Hertz (NASDAQ: HTZ) is a global car rental company providing vehicle rental services to leisure and business travelers.
Why Do We Avoid HTZ?
- Weak unit sales over the past two years suggest it might have to lower prices to accelerate growth
- Eroding returns on capital suggest its historical profit centers are aging
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
At $6.04 per share, Hertz trades at 5.1x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including HTZ in your portfolio.
GoodRx (GDRX)
Share Price: $4.18
Started in 2011 to tackle the problem of high prescription drug costs in America, GoodRx (NASDAQ: GDRX) operates a digital platform that helps consumers find lower prices on prescription medications through price comparison tools and discount codes.
Why Are We Out on GDRX?
- 3.3% annual revenue growth over the last two years was slower than its healthcare peers
- Subscale operations are evident in its revenue base of $797.4 million, meaning it has fewer distribution channels than its larger rivals
- Negative returns on capital show management lost money while trying to expand the business
GoodRx’s stock price of $4.18 implies a valuation ratio of 9.6x forward P/E. To fully understand why you should be careful with GDRX, check out our full research report (it’s free).
Stocks We Like More
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 5 Growth Stocks for this month. 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.
