From Kiplinger:
Stocks under $10 can be a cost-effective way for the little guy to diversify a portfolio, especially if you don’t have a lot of money left over to invest after you pay bills and pad your emergency fund. However, many low-priced stocks are priced low for a reason, so you need to pick stocks under $10 that have a good shot at turning into stocks over $10 in the not-too-distant future. Is it risky? Sure. Don’t plow your life’s savings into a stock simply because it seems cheap. But do take a chance on a promising stock when you can snag it at a bargain price.