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?
At StockStory, we dig beneath the surface of price movements to uncover whether a company's fundamentals justify its current valuation or suggest hidden potential. That said, 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:
Asure Software (ASUR)
One-Month Return: +1.2%
Operating in the often-overlooked smaller metropolitan markets where HR expertise can be scarce, Asure Software (NASDAQ: ASUR) provides cloud-based human capital management software and services that help small and medium-sized businesses manage payroll, taxes, time tracking, and HR compliance.
Why Are We Out on ASUR?
- Sales trends were unexciting over the last two years as its 4% annual growth was well below the typical software company
- Operating margin was unchanged over the last year, suggesting it failed to gain leverage on its fixed costs
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 5.5% for the last year
Asure Software is trading at $8.32 per share, or 1.4x forward price-to-sales. Read our free research report to see why you should think twice about including ASUR in your portfolio.
PennyMac Mortgage Investment Trust (PMT)
One-Month Return: +4%
Operating as a real estate investment trust since 2009 to maintain tax advantages, PennyMac Mortgage Investment Trust (NYSE: PMT) is a specialty finance company that invests in mortgage-related assets and operates a correspondent lending business.
Why Does PMT Give Us Pause?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 21.6% annually over the last five years
- Estimated net interest income decline of 116% for the next 12 months implies a challenging demand environment
- Annual tangible book value per share declines of 5.2% for the past five years show its capital management struggled during this cycle
PennyMac Mortgage Investment Trust’s stock price of $12.32 implies a valuation ratio of 0.8x forward P/B. Check out our free in-depth research report to learn more about why PMT doesn’t pass our bar.
One Stock to Buy:
Costco (COST)
One-Month Return: -2.1%
Designed to be a one-stop shop for the suburban consumer, Costco (NASDAQ: COST) is a membership-only retail chain that sells groceries, apparel, toys, and household items, often in bulk quantities.
Why Will COST Beat the Market?
- Same-store sales growth averaged 5.6% over the past two years, showing it’s bringing new and repeat shoppers into its stores
- Enormous revenue base of $275.2 billion compensates for its low gross margin and provides significant leverage in supplier negotiations
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
At $915.48 per share, Costco trades at 45.7x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
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 9 Market-Beating Stocks. 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
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