Stocks trading between $10 and $50 can be particularly interesting as they frequently represent businesses that have survived their early challenges. However, investors should remain vigilant as some may still have unproven business models, leaving them vulnerable to the ebbs and flows of the broader market.
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. Keeping that in mind, here are three stocks under $50 to avoid and some other investments you should consider instead.
Chewy (CHWY)
Share Price: $39.66
Founded by Ryan Cohen, who later became known for his involvement in GameStop, Chewy (NYSE: CHWY) is an online retailer specializing in pet food, supplies, and healthcare services.
Why Does CHWY Worry Us?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 9% for the last three years
- Estimated sales growth of 5.8% for the next 12 months implies demand will slow from its three-year trend
- High servicing costs result in an inferior gross margin of 29.2% that must be offset through higher volumes
Chewy is trading at $39.66 per share, or 21.8x forward EV/EBITDA. Check out our free in-depth research report to learn more about why CHWY doesn’t pass our bar.
Hewlett Packard Enterprise (HPE)
Share Price: $24.01
Born from the 2015 split of the iconic Silicon Valley pioneer Hewlett-Packard, Hewlett Packard Enterprise (NYSE: HPE) provides edge-to-cloud technology solutions that help businesses capture, analyze, and act upon their data across hybrid IT environments.
Why Does HPE Give Us Pause?
- Annual sales growth of 4.2% over the last five years lagged behind its business services peers as its large revenue base made it difficult to generate incremental demand
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 7.5% annually
- Underwhelming 2.9% return on capital reflects management’s difficulties in finding profitable growth opportunities
At $24.01 per share, Hewlett Packard Enterprise trades at 10.6x forward P/E. Read our free research report to see why you should think twice about including HPE in your portfolio.
CNO Financial Group (CNO)
Share Price: $40.07
Rebranded from Conseco in 2010 to signal a fresh start after navigating financial challenges, CNO Financial Group (NYSE: CNO) develops and markets health insurance, annuities, and life insurance products primarily targeting middle-income pre-retirees and retirees.
Why Do We Think Twice About CNO?
- Net premiums earned remained stagnant over the last five years, indicating expansion challenges this cycle
- Expenses have increased as a percentage of revenue over the last four years as its pre-tax profit margin fell by 7.3 percentage points
- Policy losses and capital returns have eroded its book value per share this cycle as its book value per share declined by 4.9% annually over the last five years
CNO Financial Group’s stock price of $40.07 implies a valuation ratio of 1.5x forward P/B. To fully understand why you should be careful with CNO, check out our full research report (it’s free).
Stocks We Like More
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check 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 Comfort Systems (+782% 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
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