Stocks in the $10-50 range offer a sweet spot between affordability and stability as they’re typically more established than penny stocks. But their headline prices don’t guarantee quality, and investors should exercise caution as some have shaky business models.
This is precisely where StockStory comes in - we do the heavy lifting to identify companies with solid fundamentals so you can invest with confidence. Keeping that in mind, here are three stocks under $50 to avoid and some other investments you should consider instead.
Caleres (CAL)
Share Price: $11.69
The owner of Dr. Scholl's, Caleres (NYSE: CAL) is a footwear company offering a range of styles.
Why Are We Out on CAL?
- Sales trends were unexciting over the last five years as its 3.6% annual growth was below the typical consumer discretionary company
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
- High net-debt-to-EBITDA ratio of 7× could force the company to raise capital on unfavorable terms if market conditions deteriorate
At $11.69 per share, Caleres trades at 7x forward P/E. Dive into our free research report to see why there are better opportunities than CAL.
L.B. Foster (FSTR)
Share Price: $42.65
Founded with a $2,500 loan, L.B. Foster (NASDAQ: FSTR) is a provider of products and services for the transportation and energy infrastructure sectors, including rail products, construction materials, and coating solutions.
Why Are We Wary of FSTR?
- Sales pipeline suggests its future revenue growth may not meet our standards as its average backlog growth of 1.7% for the past two years was weak
- Sales are projected to tank by 2.1% over the next 12 months as demand evaporates further
- ROIC of 3.8% reflects management’s challenges in identifying attractive investment opportunities
L.B. Foster’s stock price of $42.65 implies a valuation ratio of 28.3x forward P/E. To fully understand why you should be careful with FSTR, check out our full research report (it’s free).
Tenaris (TEN)
Share Price: $39.41
Operating industrial facilities across the Americas, Europe, Middle East, and Asia, Tenaris (NYSE: TEN) manufactures seamless and welded steel pipes used in oil and gas drilling and transportation.
Why Does TEN Fall Short?
- Annual revenue growth of 7.2% over the last five years was below our standards for the energy upstream and integrated energy sector
- Revenue base of $854.6 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
Tenaris is trading at $39.41 per share, or 1.4x trailing 12-month price-to-sales. Check out our free in-depth research report to learn more about why TEN doesn’t pass our bar.
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