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. That said, here are three stocks under $50 to avoid and some other investments you should consider instead.
LKQ (LKQ)
Share Price: $42.87
A global distributor of vehicle parts and accessories, LKQ (NASDAQ:LKQ) offers its customers a comprehensive selection of high-quality, affordably priced automobile products.
Why Do We Think LKQ Will Underperform?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Projected sales are flat for the next 12 months, implying demand will slow from its two-year trend
- Underwhelming 11.1% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its shrinking returns suggest its past profit sources are losing steam
LKQ’s stock price of $42.87 implies a valuation ratio of 11.9x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than LKQ.
Lincoln Educational (LINC)
Share Price: $16.42
Established in 1946, Lincoln Educational (NASDAQ:LINC) is a provider of specialized technical training in the United States, offering career-oriented programs to provide practical skills required in the workforce.
Why Does LINC Give Us Pause?
- Demand for its offerings was relatively low as its number of enrolled students has underwhelmed
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Eroding returns on capital suggest its historical profit centers are aging
At $16.42 per share, Lincoln Educational trades at 9.7x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including LINC in your portfolio.
Privia Health (PRVA)
Share Price: $26
Founded in 2016, Privia Health Group (NASDAQ: PRVA) partners with physicians to establish technology-driven medical practices, aiming to improve healthcare delivery efficiency and patient experience.
Why Are We Wary of PRVA?
- Smaller revenue base of $1.74 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Negative returns on capital show management lost money while trying to expand the business
Privia Health is trading at $26 per share, or 28.1x forward price-to-earnings. If you’re considering PRVA for your portfolio, see our FREE research report to learn more.
Stocks We Like More
With rates dropping, inflation stabilizing, and the elections in the rearview mirror, all signs point to the start of a new bull run - and we’re laser-focused on finding the best stocks for this upcoming cycle.
Put yourself in the driver’s seat by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Axon (+711% five-year return). Find your next big winner with StockStory today for free.
