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 avoid and some other investments you should consider instead.
Portillo's (PTLO)
Share Price: $7.75
Begun as a Chicago hot dog stand in 1963, Portillo’s (NASDAQ:PTLO) is a casual restaurant chain that serves Chicago-style hot dogs and beef sandwiches as well as fries and shakes.
Why Does PTLO Fall Short?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new restaurants
- Poor free cash flow margin of -0.4% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
At $7.75 per share, Portillo's trades at 18.7x forward P/E. To fully understand why you should be careful with PTLO, check out our full research report (it’s free).
Lucky Strike (LUCK)
Share Price: $9.47
Born from the transformation of traditional bowling alleys into modern entertainment destinations, Lucky Strike (NYSE:LUCK) operates bowling alleys and other entertainment venues with upscale amenities, arcade games, and food and beverage services across North America.
Why Should You Dump LUCK?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
Lucky Strike’s stock price of $9.47 implies a valuation ratio of 31.7x forward P/E. Dive into our free research report to see why there are better opportunities than LUCK.
Funko (FNKO)
Share Price: $2.50
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 Are We Out on FNKO?
- Annual sales declines of 9.7% for the past two years show its products and services struggled to connect with the market
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
Funko is trading at $2.50 per share, or 12x forward P/E. If you’re considering FNKO for your portfolio, see our FREE research report to learn more.
High-Quality Stocks for All Market Conditions
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound 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-small-cap company Exlservice (+354% 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
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.