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 swipe left on and some alternatives you should look into instead.
Lucky Strike (LUCK)
Share Price: $7.60
Born from the transformation of traditional bowling alleys into modern entertainment destinations, Lucky Strike (NYSE:LUCK) operates bowling alleys and other entertainment venues with upscale amenities, arcade games, and food and beverage services across North America.
Why Are We Out on LUCK?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its stores
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
- 7× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Lucky Strike’s stock price of $7.60 implies a valuation ratio of 41.1x forward P/E. If you’re considering LUCK for your portfolio, see our FREE research report to learn more.
Bark (BARK)
Share Price: $9.47
Making a name for itself with the BarkBox, Bark (NYSE:BARK) specializes in subscription-based, personalized pet products.
Why Do We Pass on BARK?
- Lackluster 5.2% annual revenue growth over the last five years indicates the company is losing ground to competitors
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
At $9.47 per share, Bark trades at 26.6x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why BARK doesn’t pass our bar.
Alight (ALIT)
Share Price: $0.65
Born from a corporate spinoff in 2017 to focus on employee experience technology, Alight (NYSE:ALIT) provides human capital management solutions that help companies administer employee benefits, payroll, and workforce management systems.
Why Do We Steer Clear of ALIT?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 3.7% annually over the last five years
- Issuance of new shares over the last two years caused its earnings per share to fall by 16.1% annually, even worse than its revenue declines
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Alight is trading at $0.65 per share, or 2.1x forward P/E. To fully understand why you should be careful with ALIT, check out our full research report (it’s free).
High-Quality Stocks for All Market Conditions
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