Stocks that trade for under $10 are often attractive to investors who are looking to make an outsized profit from a relatively low investment. Two of the best examples of this strategy are stocks like Palantir Technologies Inc. (NASDAQ: PLTR) and Robinhood Markets Inc. (NASDAQ: HOOD), which traded for less than $10 just two years ago.
Unfortunately, if finding quality stocks under $10 was easy, every investor would do that. The reality is that buying cheap stocks carries risk. Many cheap stocks are cheap for a reason. Many of these companies are small-cap companies with challenges to their business models, and many are not profitable and/or have little revenue.
