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.
Wendy's (WEN)
Share Price: $11.67
Founded by Dave Thomas in 1969, Wendy’s (NASDAQ:WEN) is a renowned fast-food chain known for its fresh, never-frozen beef burgers, flavorful menu options, and commitment to quality.
Why Does WEN Give Us Pause?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new restaurants
- Projected sales are flat for the next 12 months, implying demand will slow from its six-year trend
- High net-debt-to-EBITDA ratio of 7× increases the risk of forced asset sales or dilutive financing if operational performance weakens
Wendy's is trading at $11.67 per share, or 11.5x forward P/E. Dive into our free research report to see why there are better opportunities than WEN.
TreeHouse Foods (THS)
Share Price: $21.84
Whether it be packaged crackers, broths, or beverages, Treehouse Foods (NYSE:THS) produces a wide range of private-label foods for grocery and food service customers.
Why Do We Steer Clear of THS?
- Declining unit sales over the past two years show it’s struggled to move its products and had to rely on price increases
- Gross margin of 16.5% is an output of its commoditized products
- Underwhelming 1.4% return on capital reflects management’s difficulties in finding profitable growth opportunities
TreeHouse Foods’s stock price of $21.84 implies a valuation ratio of 11.3x forward P/E. If you’re considering THS for your portfolio, see our FREE research report to learn more.
PENN Entertainment (PENN)
Share Price: $15.62
Established in 1982, PENN Entertainment (NASDAQ:PENN) is a diversified American operator of casinos, sports betting, and entertainment venues.
Why Do We Think PENN Will Underperform?
- Lackluster 1% annual revenue growth over the last two years indicates the company is losing ground to competitors
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 30.4% annually
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
At $15.62 per share, PENN Entertainment trades at 1.6x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why PENN doesn’t pass our bar.
Stocks We Like More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Strong Momentum Stocks for this week. 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.