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Investors can certainly boost their returns by concentrating on stocks trading between $1 and $10. However, a disciplined approach is necessary because many of these businesses are speculative and lack the underlying fundamentals to support their prices.
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. Keeping that in mind, here are three stocks under $10 to swipe left on and some alternatives you should look into instead.
Clarus (CLAR)
Share Price: $3.46
Initially a financial services business, Clarus (NASDAQ:CLAR) designs, manufactures, and distributes outdoor equipment and lifestyle products.
Why Do We Steer Clear of CLAR?
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Products and services aren't resonating with the market as its revenue declined by 17.4% annually over the last two years
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Earnings per share fell by 16.5% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
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Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
At $3.46 per share, Clarus trades at 8.5x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why CLAR doesn’t pass our bar.
eXp World (EXPI)
Share Price: $7.99
Founded in 2009, eXp World (NASDAQ:EXPI) is a real estate company known for its virtual, cloud-based approach to real estate brokerage.
Why Do We Think EXPI Will Underperform?
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Sluggish trends in its transactions suggest customers aren’t adopting its solutions as quickly as the company hoped
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Subpar operating margin of -0.3% constrains its ability to invest in process improvements or effectively respond to new competitive threats
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Push for growth has led to negative returns on capital, signaling value destruction
eXp World’s stock price of $7.99 implies a valuation ratio of 18x forward P/E. Read our free research report to see why you should think twice about including EXPI in your portfolio, it’s free.
Applied Digital (APLD)
Share Price: $5.35
Pivoting from its origins in cryptocurrency mining to become a key player in the AI infrastructure boom, Applied Digital (NASDAQ:APLD) designs and operates specialized data centers that provide high-performance computing infrastructure for artificial intelligence and blockchain applications.
Why Does APLD Fall Short?
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Historically negative EPS is a worrisome sign for conservative investors and obscures its long-term earnings potential
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Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
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Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution