2 struggling stocks that haven’t been this cheap in 5 years. Are they too risky to buy?

If you’re buying shares of a downed stock that’s trading at multi-year lows, chances are you’re going to have to take on significant risk. Whether it’s a troubling outlook for the future, weak fundamentals, or just a flawed business, there can be many reasons why a stock is in a steep decline. Bearishness can be contagious and can lead to a rapid free fall for some stocks.

Two stocks in particular this year are Intel (INTC -2.29%) and Power outlet (PLUG -6.28%). Their ratings tumbled amid financial results. Could these stocks be a steal at their current prices or are they too risky to even consider buying right now?

1. Intelligence

It’s been a disastrous year for chip maker Intel. Its shares have fallen 60% since January during a strong year for the market — the S&P 500 increased by 18% this year. Tech stocks are trading at levels not seen since 2012.

Bargain hunters may see an opportunity here, but it’s one that comes with many risks. Investors sold Intel shares as questions grew about the company’s ability to compete in the chip market and do so profitably. Not only has Intel’s bottom line gone in the wrong direction in recent years, but its cash flow has also deteriorated.

INTC Net Income (Quarterly) data by YCharts

The situation became so worrisome that management announced in August that it was suspending its dividend. And it’s not just cost-cutting, but Intel’s overall competitiveness that’s a concern. Japanese company SoftBank intended to produce an artificial intelligence chip with Intel, but ultimately decided not to because Intel did not meet its requirements.

Investors who buy Intel stock are effectively betting and hoping that the business can turn things around. But it’s a task that won’t be easy, and while the payoff may be high if successful, so is the risk. Investors may be better off taking a wait-and-see approach with the stock rather than buying it, as Intel could have more fights ahead.

2. Connect the power

Another contrarian investor might be tempted to take a chance right now is hydrogen fuel cell company Plug Power. Down more than 50%, it too has fallen to multi-year lows. You have to go back to 2019 for the last time this once-hot meme stock traded lower than it is now.

Investing in green energy stocks may seem like a great long-term plan, but it comes with risks. Not every business involved in green energy solutions will survive, and it is also debatable what type of energy consumers will prefer in the long run. Many people are not convinced by hydrogen in particular, with some experts believing it could be decades before it can be an affordable and practical alternative to oil.

This creates a worrying situation for Plug Power as it clouds the company’s long-term growth prospects. And in the short term, there are serious concerns about its liquidity.

Over the past 12 months, Plug Power has incurred operating losses of more than $1.1 billion. During this time, the company also used $904 million in cash from its day-to-day operating activities. That’s especially problematic for a business that reported just $62.4 million in cash and cash equivalents on its books at the end of June.

Plug Power may not be able to stay afloat without having to continually raise cash through equity offerings. For investors, the threat of dilution is significant and when combined with a questionable future, it is clear that this stock is not a suitable option for the vast majority of portfolios. There are much safer and better growth stocks to buy.