1 Cheap Stock Under $10 for Aggressive Investors to Buy on the Dip

Chinese variety store chain Miniso (MNSO) had the 14th-highest bearish price surprise on Monday, with a standard deviation of -2.99; its shares fell nearly 10%, their lowest point since November 2022. 

It’s been a while since I’ve looked at this volatile retail stock, but given how far MNSO has fallen, I can’t help but wonder whether it is oversold or simply trading where it ought to.

The last time I wrote about Miniso was in August 2023. Miniso was one of three retail stocks hitting new 52-week highs. The other two were Guess and TJX Companies (TJX). Two weeks later, MNSO hit an all-time high of $29.92; it’s down 69% since.

Of the three, I’ll always go with TJX as the better buy-and-hold stock. Its business model has been perfected over years of focus and commitment. 

Morningstar.com recently discussed how to decide if a stock is worth renting or owning. It helps explain why aggressive investors might want to consider renting rather than owning Miniso. 

Miniso Is Not a Buy-and-Forget Stock

One of the things Morningstar’s Chief Market Strategist Dave Sekera says about renting versus owning is that the former is often a stock with a low valuation and a temporarily discounted share price. Still, it’s not something whose value will compound over decades. 

I think Miniso has proven to be that kind of stock. 

Since its IPO in October 2020, its shares have traded over $25 on four occasions: Feb. 2021, Sept. 2023, Jan. 2025, and Sept. 2025. It also traded below $5 in Oct. 2022. If you rented MNSO over the next 11 months, by Sept. 2023, you would have had an annualized return of 571%. 

You could not confuse Miniso with TJX. 

Retail Fits the Bill 

I’ve followed retail closely for many years. My wife worked in multi-store management for two decades. I’ve seen a lot of volatility. Trendy retail stocks come and go. Miniso could be one of those stocks.

“When I think about sectors that you would prefer to rent stocks versus own, first of all, it would be any of those sectors where you see what we consider just to be a long-term structural decline,” Sekera says. “I mean, if you think about traditional media, certain types of retail, those would be areas where you might have temporary valuations get too low, but the sector overall is going to be on that long-term downward trend…”

Is Miniso operating in a retail segment that’s in a long-term downward trend? If the retailer’s Q2 2026 report is indicative, the answer could be yes. 

The company reported its Q2 2026 results on Aug. 28 before the markets opened. By yesterday’s open, it had lost nearly 15% of its value. As I write this on Tuesday morning, it has clawed back some of those losses.

The biggest problem for Miniso is that its Overseas business’s profitability has seriously deteriorated since the good old days in 2023. 

In Q2 2026, it reported that its Overseas Markets accounted for 44% of the Miniso brand’s 8,309 store locations but only 38.6% of the brand’s revenue, down 230 basis points from a year earlier. Meanwhile, Overseas Markets contributed only 10-15% of the company’s profits, down from 35-40% in 2023. 

It continues to open new stores overseas—75 in North America and 4 in Latin America — while closing 18 elsewhere, but they’re not delivering a satisfactory return on investment. As a result, its earnings per ADS in the second quarter were $0.26, down 21% from Q2 2025.

The profitability issue caused several analysts to downgrade MNSO stock: HSBC downgraded to Hold from Buy, cutting the target price by 40% to $10.80, while Citigroup cut it from Buy to Neutral with a 11.30 target, down 38% from its previous target. 

The good news: Of the 9 covering MNSO stock, 5 rate it a Buy (4.0 out of 5), with a 19.93 target. 

Is MNSO Cheap?

When I wrote about Miniso in August 2023, its stock was valued at 5.5 times its trailing 12-month sales of $1.53 billion. As of Q2 2026, it trades at 0.9 times its trailing 12-month sales of $3.47 billion. 

From this perspective, I think you could argue that despite profitability issues in its Overseas Markets, it remains profitable overall. 

The retailer’s trailing 12-month free cash flow as of June 30 was 1.75 billion Chinese yuan ($263 million), according to S&P Global Market Intelligence. Based on an enterprise value of $3.67 billion, it has an FCF yield of 7.2%. I consider anything above 8% to be in value territory. 

One big positive for aggressive investors is that the company announced on the Q2 2026 conference call that it would prioritize share repurchases over interim dividends due to the stock’s low valuation. Miniso plans to return at least 50% of adjusted net profits to shareholders.

In the first six months of 2026, it repurchased 532 million Chinese yuan ($80 million) in ordinary shares (1 ADS = 4 ordinary shares) and paid out 792 million Chinese yuan ($119 million) in dividends. It won’t pay a second dividend in 2026, allocating these funds to share repurchases.

Miniso’s China business continues to perform at a high level. While the Overseas Markets have not performed to expectations, it is refining and expanding its directly operated North American and European business, while closing 100 to 110 underperforming distributor stores in the second half of 2026. 

There is still a lot of work to do. However, if you are an aggressive investor, Miniso is a stock to consider renting over the next 12-18 months as it works out of its current profit slowdown.