Rock-bottom prices don't always mean rock-bottom businesses. The stocks we're examining today have all touched their 52-week lows, creating a classic investor's dilemma: bargain opportunity or value trap?
Price charts only tell part of the story. Our team at StockStory evaluates each company's underlying fundamentals to separate temporary setbacks from structural declines. Keeping that in mind, here are two stocks poised to prove the bears wrong and one facing legitimate challenges.
One Stock to Sell:
Helios (HLIO)
One-Month Return: -23.7%
Founded on the principle of treating others as one wants to be treated, Helios (NYSE: HLIO) designs, manufactures, and sells motion and electronic control components for various sectors.
Why Do We Pass on HLIO?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Revenue growth over the past five years was nullified by the company’s new share issuances as its earnings per share fell by 2.9% annually
- 6.2 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
Helios is trading at $27.47 per share, or 11.8x forward price-to-earnings. Read our free research report to see why you should think twice about including HLIO in your portfolio.
Two Stocks to Watch:
Chipotle (CMG)
One-Month Return: +0.9%
Born from a desire to offer quick meals with fresh, flavorful ingredients, Chipotle (NYSE: CMG) is a fast-food chain known for its healthy, Mexican-inspired cuisine and customizable dishes.
Why Will CMG Outperform?
- Rapid rollout of new restaurants to capitalize on market opportunities makes sense given its strong same-store sales performance
- Average same-store sales growth of 7.7% over the past two years indicates its restaurants are resonating with diners
- Enormous revenue base of $11.31 billion provides significant leverage in supplier negotiations
At $50.50 per share, Chipotle trades at 37.9x forward price-to-earnings. Is now the time to initiate a position? Find out in our full research report, it’s free.
PACCAR (PCAR)
One-Month Return: -8%
Founded more than a century ago, PACCAR (NASDAQ: PCAR) designs and manufactures commercial trucks of various weights and sizes for the commercial trucking industry.
Why Do We Like PCAR?
- Operating margin expanded by 6.3 percentage points over the last five years as it scaled and became more efficient
- ROIC punches in at 30.7%, illustrating management’s expertise in identifying profitable investments, and its returns are climbing as it finds even more attractive growth opportunities
- Returns on capital are climbing as management makes more lucrative bets
PACCAR’s stock price of $91.25 implies a valuation ratio of 11.8x forward price-to-earnings. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Axon (+711% five-year return). Find your next big winner with StockStory today for free.
