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.
Shutterstock (SSTK)
Share Price: $5.40
Originally featuring a library that included many of founder Jon Oringer’s photos, Shutterstock (NYSE: SSTK) is now a digital platform where customers can license and use hundreds of millions of pieces of content.
Why Does SSTK Worry Us?
- Customer spending has dipped by 85.9% on average as it focused on growing its requests
- Forecasted revenue decline of 2.3% for the upcoming 12 months implies demand will fall off a cliff
- Incremental sales over the last three years were much less profitable as its earnings per share fell by 56.4% annually while its revenue grew
At $5.40 per share, Shutterstock trades at 0.4x forward price-to-gross profit. Dive into our free research report to see why there are better opportunities than SSTK.
Xponential Fitness (XPOF)
Share Price: $4.98
Owner of Club Pilates, Stretch Lab, BFT and Pure Barre, Xponential Fitness (NYSE: XPOF) is a boutique fitness brand offering diverse and specialized exercise experiences.
Why Are We Bearish on XPOF?
- Sales trends were unexciting over the last five years as its 19.5% annual growth was below the typical consumer discretionary company
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
- High net-debt-to-EBITDA ratio of 5× increases the risk of forced asset sales or dilutive financing if operational performance weakens
Xponential Fitness is trading at $4.98 per share, or 8.7x forward P/E. Read our free research report to see why you should think twice about including XPOF in your portfolio.
AMC Entertainment (AMC)
Share Price: $2.48
With a profile that was raised due to meme stock mania beginning in 2021, AMC Entertainment (NYSE: AMC) operates movie theaters primarily in the US and Europe.
Why Are We Out on AMC?
- Lackluster 7.9% annual revenue growth over the last two years indicates the company is losing ground to competitors
- Free cash flow margin is not anticipated to grow over the next year
- 11× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
AMC Entertainment’s stock price of $2.48 implies a valuation ratio of 13.1x forward EV-to-EBITDA. To fully understand why you should be careful with AMC, check out our full research report (it’s free).
Stocks We Like More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
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.
