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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.

American Eagle (AEO)

Share Price: $12.01

With a heavy focus on denim, American Eagle Outfitters (NYSE:AEO) is a specialty retailer offering an assortment of apparel and accessories to young adults.

Why Is AEO Not Exciting?

1. Muted 4.3% annual revenue growth over the last five years shows its demand lagged behind its consumer retail peers

2. Projected sales decline of 2.7% for the next 12 months points to a tough demand environment ahead

3. ROIC of 2.6% reflects management’s challenges in identifying attractive investment opportunities

American Eagle is trading at $12.01 per share, or 6.7x forward P/E. To fully understand why you should be careful with AEO, check out our full research report (it’s free).

Zumiez (ZUMZ)

Share Price: $13.75

With store associates called “Zumiez Stash Members”, Zumiez (NASDAQ:ZUMZ) is a specialty retailer of street and skate apparel, footwear, and accessories.

Why Are We Out on ZUMZ?

1. Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience

2. Smaller revenue base of $889.2 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy

3. Persistent operating losses suggest the business manages its expenses poorly

Zumiez’s stock price of $13.75 implies a valuation ratio of 33.6x forward P/E. Check out our free in-depth research report to learn more about why ZUMZ doesn’t pass our bar.

Avnet (AVT)

Share Price: $50.87

With a century-long history of adapting to technological evolution, Avnet (NASDAQ:AVT) is a global electronic components distributor that connects manufacturers of semiconductors and other electronic parts with businesses that need these components.

Why Does AVT Give Us Pause?

1. Sales tumbled by 8.3% annually over the last two years, showing market trends are working against its favor during this cycle

2. Earnings per share have contracted by 31% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance

3. Poor free cash flow margin of 0.1% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends