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 swipe left on and some alternatives you should look into instead.
Funko (FNKO)
Share Price: $4.49
Boasting partnerships with media franchises like Marvel and One Piece, Funko (NASDAQ: FNKO) is a company specializing in creating and distributing licensed pop culture collectibles.
Why Do We Pass on FNKO?
- Products and services aren't resonating with the market as its revenue declined by 10% annually over the last two years
- Earnings per share fell by 15% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Funko is trading at $4.49 per share, or 21x forward P/E. If you’re considering FNKO for your portfolio, see our FREE research report to learn more.
Shoals (SHLS)
Share Price: $4.87
Started in Huntsville, Alabama, Shoals (NASDAQ: SHLS) designs and manufactures products that make solar energy systems work more efficiently.
Why Are We Hesitant About SHLS?
- Backlog growth averaged a weak 2.7% over the past two years, suggesting it may need to tweak its product roadmap or go-to-market strategy
- Earnings per share have contracted by 2% annually over the last four years, a headwind for returns as stock prices often echo long-term EPS performance
- Diminishing returns on capital suggest its earlier profit pools are drying up
At $4.87 per share, Shoals trades at 11.4x forward P/E. Check out our free in-depth research report to learn more about why SHLS doesn’t pass our bar.
Lumen (LUMN)
Share Price: $4.11
With approximately 350,000 route miles of fiber optic cable spanning North America and the Asia Pacific, Lumen Technologies (NYSE: LUMN) operates a vast fiber optic network that provides communications, cloud connectivity, security, and IT solutions to businesses and consumers.
Why Are We Out on LUMN?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 9.4% annually over the last five years
- 7.4 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Lumen’s stock price of $4.11 implies a valuation ratio of 1.2x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than LUMN.
Stocks We Like More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.
