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. That said, here are three stocks where the outlook is warranted and some alternatives with better fundamentals.
Designer Brands (DBI)
One-Month Return: -26.4%
Founded in 1969 as a shoe importer and distributor, Designer Brands (NYSE:DBI) is an American discount retailer focused on footwear and accessories.
Why Should You Dump DBI?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
- Underwhelming 2.7% return on capital reflects management’s difficulties in finding profitable growth opportunities
- High net-debt-to-EBITDA ratio of 11× increases the risk of forced asset sales or dilutive financing if operational performance weakens
At $2.29 per share, Designer Brands trades at 9.2x forward P/E. Dive into our free research report to see why there are better opportunities than DBI.
Park-Ohio (PKOH)
One-Month Return: -5.6%
Based in Cleveland, Park-Ohio (NASDAQ:PKOH) provides supply chain management services, capital equipment, and manufactured components.
Why Do We Pass on PKOH?
- Sales stagnated over the last five years and signal the need for new growth strategies
- Gross margin of 15.1% reflects its high production costs
- Free cash flow margin shrank by 5.1 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Park-Ohio’s stock price of $17.12 implies a valuation ratio of 5.3x forward P/E. Read our free research report to see why you should think twice about including PKOH in your portfolio.
Robert Half (RHI)
One-Month Return: -11%
With roots dating back to 1948 as the first specialized recruiting firm for accounting and finance professionals, Robert Half (NYSE:RHI) provides specialized talent solutions and business consulting services, connecting skilled professionals with companies across various fields.
Why Should You Sell RHI?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 1.5% annually over the last five years
- Sales were less profitable over the last five years as its earnings per share fell by 11.9% annually, worse than its revenue declines
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Robert Half is trading at $40.31 per share, or 15x forward P/E. To fully understand why you should be careful with RHI, check out our full research report (it’s free).
Stocks We Like More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today