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.
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 swipe left on and some alternatives you should look into instead.
Torrid (CURV)
Share Price: $2.16
Promoting a message of body positivity and inclusiveness, Torrid Holdings (NYSE:CURV) is a plus-size women’s apparel and accessories retailer.
Why Are We Out on CURV?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Free cash flow margin dropped by 7.9 percentage points over the last year, implying the company became more capital intensive as competition picked up
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
Torrid’s stock price of $2.16 implies a valuation ratio of 8.5x forward EV-to-EBITDA. If you’re considering CURV for your portfolio, see our FREE research report to learn more.
Under Armour (UAA)
Share Price: $6.40
Founded in 1996 by a former University of Maryland football player, Under Armour (NYSE:UAA) is an apparel brand specializing in sportswear designed to improve athletic performance.
Why Do We Pass on UAA?
- Underwhelming constant currency revenue performance over the past two years suggests its product offering at current prices doesn’t resonate with customers
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
- 6× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
Under Armour is trading at $6.40 per share, or 34.6x forward P/E. Read our free research report to see why you should think twice about including UAA in your portfolio.
Custom Truck One Source (CTOS)
Share Price: $7.17
Inspired by a family gas station, Custom Truck One Source (NYSE:CTOS) is a distributor of trucks and heavy equipment.
Why Do We Avoid CTOS?
- 2.1% annual revenue growth over the last two years was slower than its industrials peers
- Issuance of new shares over the last five years caused its earnings per share to fall by 6.8% annually while its revenue grew
- 6.8 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
At $7.17 per share, Custom Truck One Source trades at 91.3x forward P/E. Dive into our free research report to see why there are better opportunities than CTOS.
Stocks We Like More
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