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. Keeping that in mind, here is one stock under $10 with huge potential and two that may have trouble.
Two Stocks Under $10 to Sell:
Clear Channel Outdoor (CCO)
Share Price: $2.39
With thousands of digital and traditional displays lighting up America's highways, city streets, and airports, Clear Channel Outdoor (NYSE: CCO) operates billboards, street furniture, and airport displays, connecting advertisers with millions of consumers across the US.
Why Are We Hesitant About CCO?
- Annual sales declines of 2.9% for the past five years show its products and services struggled to connect with the market during this cycle
- Negative free cash flow raises questions about the return timeline for its investments
Clear Channel Outdoor’s stock price of $2.39 implies a valuation ratio of 13.9x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including CCO in your portfolio.
RPC (RES)
Share Price: $7.03
Operating primarily in the Permian Basin with 10 hydraulic fracturing fleets, RPC (NYSE: RES) provides specialized services and equipment like hydraulic fracturing, coiled tubing, and cementing to help oil and gas companies complete and maintain wells.
Why Do We Think Twice About RES?
- Smaller revenue base of $1.75 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- High extraction costs and unfavorable asset economics are reflected in its low gross margin of 28.1%
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
RPC is trading at $7.03 per share, or 0.8x forward price-to-sales. To fully understand why you should be careful with RES, check out our full research report (it’s free).
One Stock Under $10 to Watch:
Gevo (GEVO)
Share Price: $1.78
Operating one of the largest dairy-based renewable natural gas facilities in the United States, Gevo (NASDAQ: GEVO) produces sustainable aviation fuel and other renewable hydrocarbon fuels from plant-based feedstocks like corn.
Why Do We Like GEVO?
- Market share has increased this cycle as its 19% annual revenue growth over the last ten years was exceptional
- EBITDA profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
At $1.78 per share, Gevo trades at 2.5x forward price-to-sales. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
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