Stocks trading in the $1-10 range are generally smaller players with less risk than their penny stock counterparts. But that doesn’t mean the underlying businesses are cheap, and we advise caution as many have questionable fundamentals.
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.
Under Armour (UAA)
Share Price: $5.74
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 Avoid UAA?
- Constant currency growth was below our standards over the past two years, suggesting it might need to invest in product improvements to get back on track
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
At $5.74 per share, Under Armour trades at 48.6x forward P/E. Read our free research report to see why you should think twice about including UAA in your portfolio.
Array (ARRY)
Share Price: $7.40
Going public in October 2020, Array (NASDAQ: ARRY) is a global manufacturer of ground-mounting tracking systems for utility and distributed generation solar energy projects.
Why Do We Pass on ARRY?
- Sales tumbled by 5.6% annually over the last two years, showing market trends are working against it during this cycle
- 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
Array is trading at $7.40 per share, or 10.5x forward P/E. To fully understand why you should be careful with ARRY, check out our full research report (it’s free).
Kosmos Energy (KOS)
Share Price: $2.78
Operating in some of the world's deepest waters with projects located up to 120 kilometers offshore, Kosmos Energy (NYSE: KOS) explores for, develops, and produces oil and natural gas from deepwater offshore fields.
Why Are We Cautious About KOS?
- Subscale operations are evident in its revenue base of $1.37 billion, meaning it has fewer distribution channels than its larger rivals
- Expenses have increased as a percentage of revenue over the last five years as its EBITDA margin fell by 11.9 percentage points
- Cash burn makes us question whether it can achieve sustainable long-term growth
Kosmos Energy’s stock price of $2.78 implies a valuation ratio of 8.3x forward P/E. Dive into our free research report to see why there are better opportunities than KOS.
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.
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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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
