8 Stocks Under $10 to Avoid at All Costs

Federal Signal

Federal Signal (FSS) is, according to its own Web site, "a leading global designer and manufacturer of products and total solutions that serve municipal, governmental, industrial and institutional customers." The company makes products such as lighting systems, license plate recognition systems, parking systems, sewer cleaners, street sweepers and industrial cleaning systems.

Don't get me wrong -- Federal Signal makes great products that are very necessary for our society to continue to operate and manage. However, its core customers are under a tremendous amount of budgetary pressure, which will result in years of fiscal belt-tightening. Some municipalities have filed or will file for bankruptcy. The federal government is cutting back its assistance to state and local governments.

I don't see how this company will grow from here given the headwinds that it faces.

Real Networks

Why buy the cow when you can get the milk for free? Real Networks (RNWK) provides digital media products and services, which is indeed a growing segment of technology. However, Real Networks, best known for its RealPlayer technology, is losing the war in digital communications.

With companies such as Microsoft (MSFT) and Apple (AAPL) giving similar and substitutable products to its users for free, the Real Networks business model is flawed. Revenues have steadily declined and the company consistently posts quarterly losses.

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