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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.

This is precisely where StockStory comes in - we do the heavy lifting to identify companies with solid fundamentals so you can invest with confidence. That said, here are three stocks under $50 to avoid and some other investments you should consider instead.

Jack in the Box (JACK)

Share Price: $23.62

Delighting customers since its inception in 1951, Jack in the Box (NASDAQ:JACK) is a distinctive fast-food chain known for its bold flavors, innovative menu items, and quirky marketing.

Why Do We Pass on JACK?

1. Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new restaurants

2. Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 24.2 percentage points

3. 10× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly

At $23.62 per share, Jack in the Box trades at 4.5x forward P/E. Check out our free in-depth research report to learn more about why JACK doesn’t pass our bar.

GEO Group (GEO)

Share Price: $26.03

With a global footprint spanning three continents and approximately 81,000 beds across 100 facilities, GEO Group (NYSE:GEO) operates secure facilities, processing centers, and reentry services for government agencies in the United States, Australia, and South Africa.

Why Are We Out on GEO?

1. Sales were flat over the last five years, indicating it’s failed to expand this cycle

2. Earnings per share fell by 31.5% annually over the last five years while its revenue was flat, showing each sale was less profitable

3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 8.9 percentage points

GEO Group is trading at $26.03 per share, or 14.8x forward P/E. If you’re considering GEO for your portfolio, see our FREE research report to learn more.

SoundHound AI (SOUN)

Share Price: $10.73

Founded in 2005, SoundHound AI (NASDAQ:SOUN) develops independent voice artificial intelligence solutions that enable businesses across various industries to offer customized conversational experiences to consumers.

Why Does SOUN Worry Us?

1. Bad unit economics and steep infrastructure costs are reflected in its gross margin of 44.1%, one of the worst among software companies

2. Efficiency fell over the last year as its operating margin declined by 39 percentage points because it pursued growth instead of profits

3. Cash-burning history makes us doubt the long-term viability of its business model