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 bad behavior exhibited by lower-quality companies in this space can spook even the most seasoned professionals, which is why we started StockStory - to separate the good from the bad. That said, here are three stocks under $10 to avoid and some other investments you should consider instead.
Flowers Foods (FLO)
Share Price: $7.08
With Wonder Bread as its premier brand, Flowers Foods (NYSE: FLO) is a packaged foods company that focuses on bakery products such as breads, buns, and cakes.
Why Are We Out on FLO?
- Shrinking unit sales over the past two years show it’s struggled to move its products and had to rely on price increases
- Forecasted revenue decline of 3.1% 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 24.3% annually while its revenue grew
Flowers Foods’s stock price of $7.08 implies a valuation ratio of 10x forward P/E. Check out our free in-depth research report to learn more about why FLO doesn’t pass our bar.
Lucky Strike (LUCK)
Share Price: $6.50
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 Do We Steer Clear of LUCK?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its stores
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
- High net-debt-to-EBITDA ratio of 8× could force the company to raise capital on unfavorable terms if market conditions deteriorate
At $6.50 per share, Lucky Strike trades at 10.3x forward EV-to-EBITDA. To fully understand why you should be careful with LUCK, check out our full research report (it’s free).
Pangaea (PANL)
Share Price: $8.06
Established in 1996, Pangaea Logistics (NASDAQ: PANL) specializes in global logistics and transportation services, focusing on the shipment of dry bulk cargoes.
Why Do We Think Twice About PANL?
- Gross margin of 19.8% reflects its high production costs
- Efficiency has decreased over the last five years as its operating margin fell by 4.9 percentage points
- Falling earnings per share over the last four years has some investors worried as stock prices ultimately follow EPS over the long term
Pangaea is trading at $8.06 per share, or 8.8x forward P/E. Read our free research report to see why you should think twice about including PANL in your portfolio.
High-Quality Stocks for All Market Conditions
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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-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
