Investors can certainly boost their returns by concentrating on stocks trading between $1 and $10. However, a disciplined approach is necessary because many of these businesses are speculative and lack the underlying fundamentals to support their prices.

Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. That said, here are three stocks under $10 to avoid and some other investments you should consider instead.

Gray Television (GTN)

Share Price: $4.44

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 Avoid GTN?

1. Muted 5.4% annual revenue growth over the last five years shows its demand lagged behind its consumer discretionary peers
2. Stagnant returns on capital show management has failed to improve the company’s business quality
3. High net-debt-to-EBITDA ratio of 8× could force the company to raise capital at unfavorable terms if market conditions deteriorate

Gray Television is trading at $4.44 per share, or 1.4x forward P/E. To fully understand why you should be careful with GTN, check out our full research report (it’s free).

Target Hospitality (TH)

Share Price: $9.20

Building mini-communities at places such as oil drilling sites, Target Hospitality (NASDAQ: TH) is a provider of specialty workforce lodging accommodations and services.

Why Do We Pass on TH?

1. Performance surrounding its utilized beds has lagged its peers
2. Earnings per share fell by 3.7% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

Target Hospitality’s stock price of $9.20 implies a valuation ratio of 14.7x forward EV-to-EBITDA. If you’re considering TH for your portfolio, see our FREE research report to learn more.

NN (NNBR)

Share Price: $1.27

Formerly known as Nuturn, NN (NASDAQ: NNBR) provides metal components, bearings, and plastic and rubber components to the automotive, aerospace, medical, and industrial sectors.

Why Are We Out on NNBR?

1. Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years
2. Negative free cash flow raises questions about the return timeline for its investments
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

At $1.27 per share, NN trades at 24.2x forward P/E. Read our free research report to see why you should think twice about including NNBR in your portfolio.

High-Quality Stocks for All Market Conditions

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