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. Keeping that in mind, here are three stocks under $10 to avoid and some other investments you should consider instead.
Health Catalyst (HCAT)
Share Price: $1.99
Built on its "Health Catalyst Flywheel" methodology that emphasizes measurable outcomes, Health Catalyst (NASDAQ: HCAT) provides data and analytics technology and services that help healthcare organizations manage their data and drive measurable clinical, financial, and operational improvements.
Why Do We Steer Clear of HCAT?
- Annual revenue growth of 4.4% over the last two years was well below our standards for the software sector
- Long payback periods on sales and marketing expenses limit customer growth and signal the company operates in a highly competitive environment
- Negative free cash flow raises questions about the return timeline for its investments
At $1.99 per share, Health Catalyst trades at 0.5x forward price-to-sales. Check out our free in-depth research report to learn more about why HCAT doesn’t pass our bar.
Wabash (WNC)
Share Price: $9.81
With its first trailer reportedly built on two sawhorses, Wabash (NYSE: WNC) offers semi trailers, liquid transportation containers, truck bodies, and equipment for moving goods.
Why Do We Avoid WNC?
- Sales pipeline suggests its future revenue growth won’t meet our standards as its backlog averaged 28.7% declines over the past two years
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
Wabash’s stock price of $9.81 implies a valuation ratio of 33.7x forward EV-to-EBITDA. If you’re considering WNC for your portfolio, see our FREE research report to learn more.
Arbor Realty Trust (ABR)
Share Price: $8.62
With roots dating back to 2003 and a focus on the stability of multifamily housing, Arbor Realty Trust (NYSE: ABR) is a specialized lender that provides financing solutions for multifamily and commercial real estate while also originating and servicing government-backed mortgage loans.
Why Are We Out on ABR?
- Annual net interest income growth of 6% over the last five years was below our standards for the banking sector
- Performance over the past two years shows each sale was less profitable as its earnings per share dropped by 31% annually, worse than its revenue
- Annual tangible book value per share declines of 5.1% for the past two years show its capital management struggled during this cycle
Arbor Realty Trust is trading at $8.62 per share, or 0.8x forward P/B. Read our free research report to see why you should think twice about including ABR in your portfolio.
Stocks We Like More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
