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.
SunOpta (STKL)
Share Price: $6.18
Committed to clean-label foods, SunOpta (NASDAQ: STKL) is a sustainability-focused food and beverage company specializing in the sourcing, processing, and packaging of organic products.
Why Are We Cautious About STKL?
- Annual revenue declines of 4.9% over the last three years indicate problems with its market positioning
- Smaller revenue base of $763.2 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Commoditized products, bad unit economics, and high competition are reflected in its low gross margin of 15.6%
SunOpta is trading at $6.18 per share, or 25.9x forward P/E. Check out our free in-depth research report to learn more about why STKL doesn’t pass our bar.
Hanesbrands (HBI)
Share Price: $6.31
A classic American staple founded in 1901, Hanesbrands (NYSE: HBI) is a clothing company known for its array of basic apparel including innerwear and activewear.
Why Do We Steer Clear of HBI?
- Constant currency growth was below our standards over the past two years, suggesting it might need to invest in product improvements to get back on track
- Estimated sales for the next 12 months are flat and imply a softer demand environment
- Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
At $6.31 per share, Hanesbrands trades at 11.8x forward P/E. Dive into our free research report to see why there are better opportunities than HBI.
Mister Car Wash (MCW)
Share Price: $5.60
Formerly known as Hotshine Holdings, Mister Car Wash (NYSE: MCW) offers car washes across the United States through its conveyorized service.
Why Is MCW Risky?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
Mister Car Wash’s stock price of $5.60 implies a valuation ratio of 12.2x forward P/E. To fully understand why you should be careful with MCW, check out our full research report (it’s free).
Stocks We Like More
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 5 Strong Momentum Stocks for this week. 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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