Investors can certainly boost their returns by concentrating on stocks trading between $1 and $10. However, a disciplined approach is necessary because many of these businesses are speculative and lack the underlying fundamentals to support their prices.
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 pass on and some alternatives you should look into instead.
Xerox (XRX)
Share Price: $3.30
Pioneering the modern office copier and inventing technologies like Ethernet and the laser printer, Xerox (NASDAQ: XRX) provides document management systems, printing technology, and workplace solutions to businesses of all sizes across the globe.
Why Is XRX Risky?
- 1.5% annual revenue growth over the last five years was slower than its business services peers
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 50.9% annually
- 5× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Xerox’s stock price of $3.30 implies a valuation ratio of 10.6x forward P/E. Check out our free in-depth research report to learn more about why XRX doesn’t pass our bar.
Franklin BSP Realty Trust (FBRT)
Share Price: $6.97
Operating as a specialized real estate investment trust (REIT) with roots dating back to 2012, Franklin BSP Realty Trust (NYSE: FBRT) originates and manages a diversified portfolio of commercial real estate debt investments secured by properties in the United States and abroad.
Why Do We Pass on FBRT?
- Annual net interest income declines of 2.3% for the past five years show its loan book struggled during this cycle
- Earnings per share have contracted by 28.6% annually over the last four years, a headwind for returns as stock prices often echo long-term EPS performance
- Low return on equity reflects management’s struggle to allocate funds effectively
Franklin BSP Realty Trust is trading at $6.97 per share, or 0.5x forward P/B. To fully understand why you should be careful with FBRT, check out our full research report (it’s free).
ProFrac (ACDC)
Share Price: $4.61
Operating one of the largest electric-powered fracturing fleets in North America, ProFrac (NASDAQ: ACDC) provides hydraulic fracturing services that help oil and gas companies extract hydrocarbons from underground shale formations.
Why Are We Out on ACDC?
- Gross margin of 32.1% is below its competitors, leaving less money to invest in exploration and production
- Expenses have increased as a percentage of revenue over the last five years as its EBITDA margin fell by 14.9 percentage points
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
At $4.61 per share, ProFrac trades at 6.3x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including ACDC in your portfolio.
High-Quality Stocks for All Market Conditions
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
