When It Comes to Stocks Under $4, GoPro Isn’t a Best Buy


Camera company GoPro (NASDAQ:GPRO) stock has struggled to stay in double digits ever since it last went over $10 in September 2017.

Source: Larry George II / Shutterstock.com

It has been a long time since I’ve covered GoPro. So long that I had to look it up. I last wrote about GPRO stock in August 2017. At the time, I wondered if GoPro stock was a risk worth taking.

If you’re okay with above-average risk, it’s probably safe to assume that the GoPro stock price is close to a bottom with potential upside available to patient investors,” I wrote on Aug. 17, 2017. 

I also stated that I like to own companies that generate consistent profits, something that GoPro has never done. As a result, I wouldn’t be buying at any price. At the time it was trading around $9. As I write this, it’s currently trading around $3.82.

Trading almost 60% lower after 26 months, investors hot after low-priced stock deals are still taking positions in GPRO, an investment my InvestorPlace colleague Josh Enomoto recently called a “loser.”

That’s one way to drive a dagger into the back of GoPro CEO and founder Nick Woodman. GoPro stock has fallen in value by 84% since going public in June 2014 at $24 a share.

Is GoPro Stock a Better Buy Than IBM?

InvestorPlace contributor Chris Tyler believes that GPRO stock offers a potentially lucrative trading opportunity. He recently compared it to IBM (NYSE:IBM), suggesting that both tech stocks provide attractive buying opportunities at the moment. 

Tyler is an options strategist, so his perspective on a good trade is a lot different than a typical buy-and-hold investor. That said, he does make some excellent points about each companies’ fundamentals that support his option plays. 

More importantly, Chris’ story made me think about whether GoPro is the best stock to buy under $4, just as I might have contemplated in August 2017 whether GPRO was the best buy under $10. Whether we’re talking 2017 or 2019, there were and are better opportunities at each price point. 

One that comes to mind is Aurora Cannabis (NYSE:ACB), a stock that currently trades 21 cents below GPRO stock, but whose market cap is six times as large. 

If you’re thinking about buying 1,000 shares of GPRO, for the same price, you can buy the same amount of shares in one of the world’s largest cannabis companies. Like IBM, Aurora is a whole different kettle of fish to GoPro, but it provides a much more attractive risk/reward proposition, in my opinion. 

Bottom Line: Opt for a Stock Like ACB

SmallCap Power recently discussed three reasons why Aurora stock could recover once investor enthusiasm for Canadian cannabis stocks returns: 1) It’s the Canadian market share leader; 2) It has industry-leading gross margins, and 3) It could enter into a strategic partnership with a much larger company in the future. 

Around the same time as this article, I happened to discuss several catalysts for Aurora stock. Although I felt volatility would continue to plague cannabis stocks, ultimately, Aurora has too many irons in the fire not to be a compelling buy under $4.50. 

If you’re going to take a risk, 10 times out of 10, I’d recommend you forget about GoPro and buy ACB instead. The upside is so much better, while the downside is the same. 

At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media, https://investorplace.com/2019/10/when-it-comes-to-stocks-under-4-gopro-isnt-a-best-buy/.

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