3 Stocks Under $50 with Warning Signs

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.

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. That said, here are three stocks under $50 to avoid and some other investments you should consider instead.

Kohl's (KSS)

Share Price: $14.47

Founded as a corner grocery store in Milwaukee, Wisconsin, Kohl’s (NYSE:KSS) is a department store chain that sells clothing, cosmetics, electronics, and home goods.

Why Do We Avoid KSS?

1. Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
2. Forecasted revenue decline of 1.2% for the upcoming 12 months implies demand will fall even further
3. Responsiveness to unforeseen market trends is restricted due to its substandard operating margin profitability

Kohl's is trading at $14.47 per share, or 10.6x forward P/E. Check out our free in-depth research report to learn more about why KSS doesn’t pass our bar.

LKQ (LKQ)

Share Price: $28.90

A global distributor of vehicle parts and accessories, LKQ (NASDAQ:LKQ) offers its customers a comprehensive selection of high-quality, affordably priced automobile products.

Why Do We Steer Clear of LKQ?

1. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
2. Free cash flow margin is not anticipated to grow over the next year
3. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value

LKQ’s stock price of $28.90 implies a valuation ratio of 9.4x forward P/E. Dive into our free research report to see why there are better opportunities than LKQ.

Omnicell (OMCL)

Share Price: $43.75

Driven by the vision of an "Autonomous Pharmacy" with zero medication errors, Omnicell (NASDAQ:OMCL) provides medication management automation and adherence tools that help healthcare systems and pharmacies reduce errors and improve efficiency.

Why Do We Pass on OMCL?

1. Annual revenue growth of 5.4% over the last two years was below our standards for the healthcare sector
2. Earnings per share fell by 6.8% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
3. Below-average returns on capital indicate management struggled to find compelling investment opportunities, and its shrinking returns suggest its past profit sources are losing steam

At $43.75 per share, Omnicell trades at 23.2x forward P/E. To fully understand why you should be careful with OMCL, check out our full research report (it’s free).

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