Nasdaq
华尔街日报3 Stocks Under $50 with Questionable Fundamentals
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.
This is precisely where StockStory comes in - we do the heavy lifting to identify companies with solid fundamentals so you can invest with confidence. That said, here are three stocks under $50 to avoid and some other investments you should consider instead.
TEGNA (TGNA)
Share Price: $19.41
Spun out of Gannett in 2015, TEGNA (NYSE:TGNA) is a media company operating a network of television stations and digital platforms, focusing on local news and community content.
Why Should You Sell TGNA?
- Muted 1.3% annual revenue growth over the last five years shows its demand lagged behind its consumer discretionary peers
- Earnings growth underperformed the sector average over the last five years as its EPS grew by just 7.9% annually
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
At $19.41 per share, TEGNA trades at 8.3x forward P/E. Read our free research report to see why you should think twice about including TGNA in your portfolio.
Acadia Healthcare (ACHC)
Share Price: $14.01
With a network of over 250 facilities serving patients in 38 states and Puerto Rico, Acadia Healthcare (NASDAQ:ACHC) operates facilities providing mental health and substance use disorder treatment services across the United States.
Why Does ACHC Fall Short?
- Weak admissions over the past two years indicate demand is soft and that the company may need to revise its strategy
- Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 5.2 percentage points
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 21.7 percentage points
Acadia Healthcare’s stock price of $14.01 implies a valuation ratio of 8.3x forward P/E. Check out our free in-depth research report to learn more about why ACHC doesn’t pass our bar.
Ocular Therapeutix (OCUL)
Share Price: $11.78
Pioneering a drug delivery platform that can eliminate the need for monthly eye injections, Ocular Therapeutix (NASDAQ:OCUL) develops sustained-release treatments for eye diseases using its proprietary ELUTYX bioresorbable hydrogel technology that gradually releases medication.
Why Do We Steer Clear of OCUL?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 1.7% annually over the last two years
- Free cash flow margin dropped by 206.8 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
Ocular Therapeutix is trading at $11.78 per share, or 36.7x forward price-to-sales. To fully understand why you should be careful with OCUL, check out our full research report (it’s free for active Edge members).
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