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. That said, here are three stocks under $10 to avoid and some other investments you should consider instead.
ON24 (ONTF)
Share Price: $4.71
Started in 1998 as a platform to broadcast press conferences, ON24’s (NYSE: ONTF) software helps organizations organize online webinars and other virtual events and convert prospects into customers.
Why Do We Avoid ONTF?
- Billings have dropped by 3.3% over the last year, suggesting it might have to lower prices to stimulate growth
- Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
- Long payback periods on sales and marketing expenses limit customer growth and signal the company operates in a highly competitive environment
At $4.71 per share, ON24 trades at 1.5x forward price-to-sales. Dive into our free research report to see why there are better opportunities than ONTF.
Stitch Fix (SFIX)
Share Price: $4.41
One of the original subscription box companies, Stitch Fix (NASDAQ: SFIX) is an online personal styling and fashion service that curates personalized clothing selections for customers.
Why Is SFIX Risky?
- Demand for its offerings was relatively low as its number of active clients has underwhelmed
- Persistent operating margin losses suggest the business manages its expenses poorly
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Stitch Fix’s stock price of $4.41 implies a valuation ratio of 12.5x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including SFIX in your portfolio.
Petco (WOOF)
Share Price: $2.96
Historically known for its window displays of pets for sale or adoption, Petco (NASDAQ: WOOF) is a specialty retailer of pet food and supplies as well as a provider of services such as wellness checks and grooming.
Why Should You Sell WOOF?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
- Earnings per share have contracted by 41% annually over the last four years, a headwind for returns as stock prices often echo long-term EPS performance
- High net-debt-to-EBITDA ratio of 8× could force the company to raise capital at unfavorable terms if market conditions deteriorate
Petco is trading at $2.96 per share, or 21.1x forward P/E. Check out our free in-depth research report to learn more about why WOOF doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check 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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free.
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
