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 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.
Under Armour (UAA)
Share Price: $6.86
Founded in 1996 by a former University of Maryland football player, Under Armour (NYSE: UAA) is an apparel brand specializing in sportswear designed to improve athletic performance.
Why Do We Steer Clear of UAA?
- Weak constant currency growth over the past two years indicates challenges in maintaining its market share
- Low free cash flow margin of -0.2% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Under Armour is trading at $6.86 per share, or 19.5x forward P/E. Dive into our free research report to see why there are better opportunities than UAA.
NeoGenomics (NEO)
Share Price: $6.75
Operating a network of CAP-accredited and CLIA-certified laboratories across the United States and United Kingdom, NeoGenomics (NASDAQ: NEO) provides specialized cancer diagnostic testing services, including genetic analysis, molecular testing, and pathology consultation for oncologists and healthcare providers.
Why Should You Dump NEO?
- Issuance of new shares over the last five years caused its earnings per share to fall by 12% annually while its revenue grew
- Push for growth has led to negative returns on capital, signaling value destruction, and its falling returns suggest its earlier profit pools are drying up
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
NeoGenomics’s stock price of $6.75 implies a valuation ratio of 30x forward P/E. If you’re considering NEO for your portfolio, see our FREE research report to learn more.
Fastly (FSLY)
Share Price: $6.90
Founded in 2011, Fastly (NYSE: FSLY) provides content delivery and edge cloud computing services, enabling enterprises and developers to deliver fast, secure, and scalable digital content and experiences.
Why Do We Avoid FSLY?
- 14.3% annual revenue growth over the last three years was slower than its software peers
- Bad unit economics and steep infrastructure costs are reflected in its gross margin of 54%, one of the worst among software companies
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
At $6.90 per share, Fastly trades at 1.6x forward price-to-sales. Check out our free in-depth research report to learn more about why FSLY doesn’t pass our bar.
Stocks We Like More
When Trump unveiled his aggressive tariff plan in April 2024, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at 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. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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