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. That said, here are three stocks under $10 to swipe left on and some alternatives you should look into instead.
Angi (ANGI)
Share Price: $5.18
Created by IAC’s mergers of Angie’s List and HomeAdvisor, ANGI (NASDAQ: ANGI) operates the largest online marketplace for home services in the US.
Why Does ANGI Fall Short?
- Service Requests have declined by 19.2% annually over the last two years, suggesting it may need to revamp its features or user experience to stay competitive
- Forecasted revenue decline of 4% for the upcoming 12 months implies demand will fall even further
- Highly competitive market means it’s on the never-ending treadmill of sales and marketing spend
At $5.18 per share, Angi trades at 4.3x forward EV/EBITDA. To fully understand why you should be careful with ANGI, check out our full research report (it’s free).
Sportsman's Warehouse (SPWH)
Share Price: $1.40
A go-to destination for individuals passionate about hunting, fishing, camping, hiking, shooting sports, and more, Sportsman's Warehouse (NASDAQ: SPWH) is an American specialty retailer offering a diverse range of active gear, equipment, and apparel.
Why Do We Steer Clear of SPWH?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Earnings per share decreased by more than its revenue over the last three years, showing each sale was less profitable
- High net-debt-to-EBITDA ratio of 16× increases the risk of forced asset sales or dilutive financing if operational performance weakens
Sportsman's Warehouse’s stock price of $1.40 implies a valuation ratio of 16.4x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including SPWH in your portfolio.
AMC Networks (AMCX)
Share Price: $8.12
Originally the joint-venture of four cable television companies, AMC Networks (NASDAQ: AMCX) is a broadcaster producing a diverse range of television shows and movies.
Why Do We Avoid AMCX?
- Products and services aren't resonating with the market as its revenue declined by 3.7% annually over the last five years
- Low free cash flow margin of 11.2% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
AMC Networks is trading at $8.12 per share, or 0.2x forward price-to-sales. If you’re considering AMCX for your portfolio, see our FREE research report to learn more.
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