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.
Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. Keeping that in mind, here are three stocks under $50 to avoid and some other investments you should consider instead.
Lovesac (LOVE)
Share Price: $15.30
Known for its oversized, premium beanbags, Lovesac (NASDAQ: LOVE) is a specialty furniture brand selling modular furniture.
Why Should You Dump LOVE?
- Sales trends were unexciting over the last five years as its 19.5% annual growth was below the typical consumer discretionary company
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Lovesac is trading at $15.30 per share, or 10.8x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why LOVE doesn’t pass our bar.
Warner Bros. Discovery (WBD)
Share Price: $28.36
Formed from the merger of WarnerMedia and Discovery, Warner Bros. Discovery (NASDAQ: WBD) is a multinational media and entertainment company, offering television networks, streaming services, and film and television production.
Why Do We Pass on WBD?
- Products and services aren't resonating with the market as its revenue declined by 5.1% annually over the last two years
- Free cash flow margin is projected to show no improvement next year
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Warner Bros. Discovery’s stock price of $28.36 implies a valuation ratio of 11.5x forward EV-to-EBITDA. To fully understand why you should be careful with WBD, check out our full research report (it’s free for active Edge members).
LGI Homes (LGIH)
Share Price: $43.93
Based in Texas, LGI Homes (NASDAQ: LGIH) is a homebuilding company specializing in constructing affordable, entry-level single-family homes in desirable communities across the United States.
Why Do We Avoid LGIH?
- Demand cratered as it couldn’t win new orders over the past two years, leading to an average 10.4% decline in its backlog
- Eroding returns on capital suggest its historical profit centers are aging
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
At $43.93 per share, LGI Homes trades at 11.5x forward P/E. Dive into our free research report to see why there are better opportunities than LGIH.
High-Quality Stocks for All Market Conditions
Check out the high-quality names we’ve flagged in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
