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.
These dynamics can cause headaches for even the most seasoned professionals, which is why we started StockStory - to help you separate the good companies from the bad. That said, here is one stock under $50 with huge potential and two best left ignored.
Two Stocks Under $50 to Sell:
Ellington Financial (EFC)
Share Price: $13.41
Operating under the guidance of Ellington Management Group, a respected name in structured credit markets, Ellington Financial (NYSE: EFC) acquires and manages a diverse portfolio of mortgage-related, consumer-related, and other financial assets to generate returns for investors.
Why Is EFC Risky?
- Incremental sales over the last five years were less profitable as its 4.8% annual earnings per share growth lagged its revenue gains
- Products and services are facing significant credit quality challenges during this cycle as tangible book value per share has declined by 5.7% annually over the last five years
- Below-average return on equity indicates management struggled to find compelling investment opportunities
Ellington Financial is trading at $13.41 per share, or 1x forward P/B. If you’re considering EFC for your portfolio, see our FREE research report to learn more.
Select Water Solutions (WTTR)
Share Price: $20.20
Managing over 24 billion barrels of produced water annually across major U.S. shale plays, Select Water Solutions (NYSE: WTTR) provides water sourcing, recycling, disposal, and treatment services for oil and gas producers.
Why Does WTTR Give Us Pause?
- Modest revenue base of $1.40 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- Gross margin of 23.5% is below its competitors, leaving less money to invest in exploration and production
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 0.2% for the last five years
At $20.20 per share, Select Water Solutions trades at 1.5x forward price-to-sales. Read our free research report to see why you should think twice about including WTTR in your portfolio.
One Stock Under $50 to Watch:
Celsius (CELH)
Share Price: $29.22
With its proprietary MetaPlus formula as the basis for key products, Celsius (NASDAQ: CELH) offers energy drinks that feature natural ingredients to help in fitness and weight management.
Why Could CELH Be a Winner?
- Impressive 56.1% annual revenue growth over the last three years indicates it’s winning market share
- Sales outlook for the upcoming 12 months implies the business will stay on its desirable three-year growth trajectory
- Earnings growth has massively outpaced its peers over the last three years as its EPS has compounded at 215% annually
Celsius’s stock price of $29.22 implies a valuation ratio of 17.3x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
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