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. That said, here are three stocks under $10 to avoid and some other investments you should consider instead.
Designer Brands (DBI)
Share Price: $3.54
Founded in 1969 as a shoe importer and distributor, Designer Brands (NYSE:DBI) is an American discount retailer focused on footwear and accessories.
Why Should You Sell DBI?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
- Earnings per share have contracted by 33.3% annually over the last six years, a headwind for returns as stock prices often echo long-term EPS performance
- High net-debt-to-EBITDA ratio of 12× increases the risk of forced asset sales or dilutive financing if operational performance weakens
Designer Brands’s stock price of $3.54 implies a valuation ratio of 5.5x forward EV-to-EBITDA. If you’re considering DBI for your portfolio, see our FREE research report to learn more.
iHeartMedia (IHRT)
Share Price: $3.02
Occasionally featuring celebrity hosts like Ryan Seacrest on its shows, iHeartMedia (NASDAQ:IHRT) is a leading multimedia company renowned for its extensive network of radio stations, digital platforms, and live events across the globe.
Why Do We Avoid IHRT?
- Sales stagnated over the last two years and signal the need for new growth strategies
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
iHeartMedia is trading at $3.02 per share, or 0.7x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including IHRT in your portfolio.
Wabash (WNC)
Share Price: $8.09
With its first trailer reportedly built on two sawhorses, Wabash (NYSE:WNC) offers semi trailers, liquid transportation containers, truck bodies, and equipment for moving goods.
Why Is WNC Risky?
- Backlog has dropped by 36.2% on average over the past two years, suggesting it’s losing orders as competition picks up
- Earnings per share have contracted by 39.2% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance
- High net-debt-to-EBITDA ratio of 27× could force the company to raise capital at unfavorable terms if market conditions deteriorate
At $8.09 per share, Wabash trades at 47x forward P/E. Dive into our free research report to see why there are better opportunities than WNC.
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 5 Strong Momentum Stocks for this week. 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. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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