3 Stocks Under $50 with Questionable Fundamentals
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.
Chewy (CHWY)
Share Price: $38.05
Founded by Ryan Cohen, who later became known for his involvement in GameStop, Chewy (NYSE:CHWY) is an online retailer specializing in pet food, supplies, and healthcare services.
Why Does CHWY Fall Short?
Annual sales growth of 9.8% over the last three years lagged behind its consumer internet peers as its large revenue base made it difficult to generate incremental demand
Estimated sales growth of 4.5% for the next 12 months implies demand will slow from its three-year trend
Gross margin of 28.8% reflects its high servicing costs
At $38.05 per share, Chewy trades at 24.1x forward EV/EBITDA. Check out our free in-depth research report to learn more about why CHWY doesn't pass our bar.
Zurn Elkay (ZWS)
Share Price: $34.28
Claiming to have saved more than 30 billion gallons of water, Zurn Elkay (NYSE:ZWS) provides water management solutions to various industries.
Why Does ZWS Worry Us?
Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
Estimated sales growth of 3.5% for the next 12 months implies demand will slow from its two-year trend
Issuance of new shares over the last five years caused its earnings per share to fall by 8.2% annually, even worse than its revenue declines
Zurn Elkay's stock price of $34.28 implies a valuation ratio of 25.2x forward P/E. To fully understand why you should be careful with ZWS, check out our full research report (it's free).
IMAX (IMAX)
Share Price: $25.03
Originally developed for World Expo '67 in Montreal as an innovative projection system, IMAX (NYSE:IMAX) provides proprietary large-format cinema technology and systems that deliver immersive movie experiences with enhanced image quality and sound.
Why Are We Wary of IMAX?
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