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 downside that can come from buying these securities is precisely why we started StockStory - to isolate the long-term winners from the losers so you can invest with confidence. Keeping that in mind, here are three stocks under $10 to avoid and some other investments you should consider instead.
Krispy Kreme (DNUT)
Share Price: $3.31
Famous for its Original Glazed doughnuts and parent company of Insomnia Cookies, Krispy Kreme (NASDAQ: DNUT) is one of the most beloved and well-known fast-food chains in the world.
Why Are We Out on DNUT?
- Earnings per share have contracted by 100% annually over the last three years, a headwind for returns as stock prices often echo long-term EPS performance
- Cash burn makes us question whether it can achieve sustainable long-term growth
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
Krispy Kreme’s stock price of $3.31 implies a valuation ratio of 32.4x forward P/E. Dive into our free research report to see why there are better opportunities than DNUT.
Herbalife (HLF)
Share Price: $10.01
With the first products sold out of the trunk of the founder’s car, Herbalife (NYSE: HLF) today offers a portfolio of shakes, supplements, personal care products, and weight management programs to help customers reach their nutritional and fitness goals.
Why Are We Wary of HLF?
- Shrinking unit sales over the past two years indicate demand is soft and that the company may need to revise its product strategy
- Demand will likely be weak over the next 12 months as Wall Street expects flat revenue
- Earnings per share have dipped by 21.7% annually over the past three years, which is concerning because stock prices follow EPS over the long term
Herbalife is trading at $10.01 per share, or 4.9x forward P/E. To fully understand why you should be careful with HLF, check out our full research report (it’s free).
Gray Television (GTN)
Share Price: $5.60
Specializing in local media coverage, Gray Television (NYSE: GTN) is a broadcast company supplying digital media to various markets in the United States.
Why Do We Think GTN Will Underperform?
- Sales stagnated over the last two years and signal the need for new growth strategies
- Estimated sales decline of 11.7% for the next 12 months implies an even more challenging demand environment
- Capital intensity will likely ramp up in the next year as its free cash flow margin is expected to contract by 8.3 percentage points
At $5.60 per share, Gray Television trades at 1x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including GTN in your portfolio.
High-Quality Stocks for All Market Conditions
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 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-small-cap company Exlservice (+354% 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
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