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 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. Keeping that in mind, here are three stocks under $10 to avoid and some other investments you should consider instead.
Optimum Communications (OPTU)
Share Price: $0.94
Based in Long Island City, Optimum Communications (NYSE:OPTU) is a telecommunications company offering cable, internet, telephone, and television services across the United States.
Why Are We Bearish on OPTU?
- Sluggish trends in its broadband subscribers suggest customers aren’t adopting its solutions as quickly as the company hoped
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
- 8× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Optimum Communications’s stock price of $0.94 implies a valuation ratio of 7.9x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why OPTU doesn’t pass our bar.
Plug Power (PLUG)
Share Price: $2.09
Powering forklifts for Walmart’s distribution centers, Plug Power (NASDAQ:PLUG) provides hydrogen fuel cells used to power electric motors.
Why Does PLUG Give Us Pause?
- Annual revenue growth of 4.3% over the last two years was below our standards for the industrials sector
- Cash-burning history makes us doubt the long-term viability of its business model
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
At $2.09 per share, Plug Power trades at 3.3x forward price-to-sales. If you’re considering PLUG for your portfolio, see our FREE research report to learn more.
Navient (NAVI)
Share Price: $9.29
Spun off from Sallie Mae in 2014 to handle the company's loan servicing and collection operations, Navient (NASDAQ:NAVI) provides education loan servicing and business processing solutions that help manage federal student loans, private education loans, and government services.
Why Do We Think NAVI Will Underperform?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 21.6% annually over the last five years
- Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
- High debt-to-equity ratio of 18.9× shows the firm carries too much debt relative to shareholder equity, increasing bankruptcy risk
Navient is trading at $9.29 per share, or 11.3x forward P/E. Read our free research report to see why you should think twice about including NAVI in your portfolio.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.