The $10-50 price range often includes mid-sized businesses with proven track records and plenty of growth runway ahead. They also usually carry less risk than penny stocks, though they’re not immune to volatility as many lack the scale advantages of their larger peers.
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 are three stocks under $50 to avoid and some other investments you should consider instead.
Papa John's (PZZA)
Share Price: $23.29
Founded by the eclectic John “Papa John” Schnatter, Papa John’s (NASDAQ: PZZA) is a globally recognized pizza delivery and carryout chain known for “better ingredients” and “better pizza”.
Why Is PZZA Risky?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its menu offerings and dining experience
- Forecasted revenue decline of 5.6% for the upcoming 12 months implies demand will fall off a cliff
- Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 2.6 percentage points
Papa John's is trading at $23.29 per share, or 20.8x forward P/E. Dive into our free research report to see why there are better opportunities than PZZA.
Mattel (MAT)
Share Price: $14.58
Known for the creation of iconic toys such as Barbie and Hotwheels, Mattel (NASDAQ: MAT) is a global children's entertainment company specializing in the design and production of consumer products.
Why Do We Avoid MAT?
- Muted 1.2% annual revenue growth over the last five years shows its demand lagged behind its consumer discretionary peers
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 8.9% for the last two years
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
At $14.58 per share, Mattel trades at 11.2x forward P/E. Read our free research report to see why you should think twice about including MAT in your portfolio.
Integra LifeSciences (IART)
Share Price: $17.66
Founded in 1989 as a pioneer in regenerative medicine technology, Integra LifeSciences (NASDAQ: IART) develops and manufactures medical technologies for neurosurgery, wound care, and surgical reconstruction, including regenerative tissue products and surgical instruments.
Why Do We Think IART 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
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 4.6% annually while its revenue grew
- High net-debt-to-EBITDA ratio of 5× could force the company to raise capital on unfavorable terms if market conditions deteriorate
Integra LifeSciences’s stock price of $17.66 implies a valuation ratio of 7.2x forward P/E. Dive into our free research report to see why there are better opportunities than IART.
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