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.
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.
Hilton Grand Vacations (HGV)
Share Price: $46.49
Spun off from Hilton Worldwide in 2017, Hilton Grand Vacations (NYSE:HGV) is a global timeshare company that provides travel experiences for its customers through its timeshare resorts and club membership programs.
Why Do We Avoid HGV?
- Demand for its offerings was relatively low as its number of members has underwhelmed
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
- 9× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
Hilton Grand Vacations’s stock price of $46.49 implies a valuation ratio of 7.8x forward P/E. Check out our free in-depth research report to learn more about why HGV doesn’t pass our bar.
Hub Group (HUBG)
Share Price: $41.80
Started with $10,000, Hub Group (NASDAQ:HUBG) is a provider of intermodal, truck brokerage, and logistics services, facilitating transportation solutions for businesses worldwide.
Why Do We Steer Clear of HUBG?
- Sales tumbled by 9% annually over the last two years, showing market trends are working against its favor during this cycle
- Performance over the past two years shows each sale was less profitable as its earnings per share dropped by 28% annually, worse than its revenue
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
At $41.80 per share, Hub Group trades at 21.6x forward P/E. Dive into our free research report to see why there are better opportunities than HUBG.
First Merchants (FRME)
Share Price: $40.54
Dating back to 1893 when it first opened its doors in Indiana, First Merchants (NASDAQ:FRME) is a Midwest regional bank providing commercial, consumer, and wealth management services through branches in Indiana, Ohio, Michigan, and Illinois.
Why Are We Out on FRME?
- Sales trends were unexciting over the last two years as its 3.7% annual growth was below the typical banking company
- 7.5% annual net interest income growth over the last five years was slower than its banking peers
- Earnings per share lagged its peers over the last two years as they only grew by 4% annually
First Merchants is trading at $40.54 per share, or 0.9x forward P/B. If you’re considering FRME for your portfolio, see our FREE research report to learn more.
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