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 is one stock where the poor sentiment is creating a buying opportunity and two where the skepticism is well-placed.
Two Stocks to Sell:
Health Catalyst (HCAT)
One-Month Return: -8.3%
Built on its "Health Catalyst Flywheel" methodology that emphasizes measurable outcomes, Health Catalyst (NASDAQ: HCAT) provides data and analytics technology and services that help healthcare organizations manage their data and drive measurable clinical, financial, and operational improvements.
Why Do We Think HCAT Will Underperform?
- Muted 5.4% annual revenue growth over the last two years shows its demand lagged behind its software peers
- Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
At $2.76 per share, Health Catalyst trades at 0.6x forward price-to-sales. Read our free research report to see why you should think twice about including HCAT in your portfolio.
PubMatic (PUBM)
One-Month Return: +1.5%
Powering billions of daily ad impressions across the open internet, PubMatic (NASDAQ: PUBM) operates a technology platform that helps publishers maximize revenue from their digital advertising inventory while giving advertisers more control and transparency.
Why Do We Steer Clear of PUBM?
- Below-average net revenue retention rate of 110% suggests it has some trouble expanding within existing accounts
- Sales are projected to tank by 8.7% over the next 12 months as demand evaporates
- Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 5 percentage points
PubMatic’s stock price of $8.27 implies a valuation ratio of 1.4x forward price-to-sales. To fully understand why you should be careful with PUBM, check out our full research report (it’s free for active Edge members).
One Stock to Watch:
Jack Henry (JKHY)
One-Month Return: -3.7%
Founded in 1976 by two entrepreneurs who saw the need for specialized banking software in the early days of financial computing, Jack Henry & Associates (NASDAQ: JKHY) provides technology solutions that help banks and credit unions innovate, differentiate, and compete while serving the evolving needs of their accountholders.
Why Do We Watch JKHY?
- Incremental sales over the last two years have been more profitable as its earnings per share increased by 11.5% annually, topping its revenue gains
- Industry-leading 23.7% return on equity demonstrates management’s skill in finding high-return investments
Jack Henry is trading at $152.62 per share, or 24.1x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound 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-micro-cap company Kadant (+351% 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
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