The $10-50 price range often includes mid-sized businesses with proven track records and plenty of growth runway ahead. They also usually carry less risk than penny stocks, though they’re not immune to volatility as many lack the scale advantages of their larger peers.
This is precisely where StockStory comes in - we do the heavy lifting to identify companies with solid fundamentals so you can invest with confidence. Keeping that in mind, here are three stocks under $50 to avoid and some other investments you should consider instead.
Surgery Partners (SGRY)
Share Price: $12.05
With more than 180 locations across 33 states serving as alternatives to traditional hospital settings, Surgery Partners (NASDAQ: SGRY) operates a national network of outpatient surgical facilities including ambulatory surgery centers and short-stay surgical hospitals.
Why Are We Wary of SGRY?
- Weak unit sales over the past two years suggest it might have to lower prices to accelerate growth
- Estimated sales growth of 2.9% for the next 12 months implies demand will slow from its two-year trend
- 7× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
At $12.05 per share, Surgery Partners trades at 61.9x forward P/E. To fully understand why you should be careful with SGRY, check out our full research report (it’s free).
Carlyle (CG)
Share Price: $47.69
Founded in 1987 with just $5 million in capital and named after the iconic New York hotel where the founders first met, The Carlyle Group (NASDAQ: CG) is a global investment firm that raises, manages, and deploys capital across private equity, credit, and investment solutions.
Why Do We Think Twice About CG?
- 7% annual revenue growth over the last two years was slower than its financials peers
Carlyle’s stock price of $47.69 implies a valuation ratio of 10.3x forward P/E. Read our free research report to see why you should think twice about including CG in your portfolio.
Walker & Dunlop (WD)
Share Price: $44.64
Originating as a small mortgage banking firm during the Great Depression in 1937, Walker & Dunlop (NYSE: WD) provides commercial real estate financing, property sales, appraisal, and investment management services with a focus on multifamily properties.
Why Is WD Risky?
- Loans are facing significant end-market challenges during this cycle as net interest income has declined by 40.1% annually over the last five years
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 14.6% annually
- Annual tangible book value per share declines of 6.8% for the past five years show its capital management struggled during this cycle
Walker & Dunlop is trading at $44.64 per share, or 0.8x forward P/B. Dive into our free research report to see why there are better opportunities than WD.
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