Hitting a new 52-week low can be a pivotal moment for any stock. These floors often mark either the beginning of a turnaround story or confirmation that a company faces serious headwinds.
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. Keeping that in mind, here are three stocks where the outlook is warranted and some alternatives with better fundamentals.
Foot Locker (FL)
One-Month Return: -22.9%
Known for store associates whose uniforms resemble those of referees, Foot Locker (NYSE: FL) is a specialty retailer that sells athletic footwear, clothing, and accessories.
Why Do We Think FL Will Underperform?
- Ongoing store closures and lackluster same-store sales indicate sluggish demand and a focus on consolidation
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
- High net-debt-to-EBITDA ratio of 6× could force the company to raise capital at unfavorable terms if market conditions deteriorate
Foot Locker is trading at $12.51 per share, or 7.2x forward price-to-earnings. Check out our free in-depth research report to learn more about why FL doesn’t pass our bar.
The Toro Company (TTC)
One-Month Return: -11.7%
Ceasing all production to support the war effort during World War II, Toro (NYSE: TTC) offers outdoor equipment for residential, commercial, and agricultural use.
Why Are We Out on TTC?
- Annual sales declines of 1.6% for the past two years show its products and services struggled to connect with the market during this cycle
- Free cash flow margin dropped by 5.5 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Diminishing returns on capital suggest its earlier profit pools are drying up
The Toro Company’s stock price of $66.62 implies a valuation ratio of 14.9x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than TTC.
American Woodmark (AMWD)
One-Month Return: -1.3%
Starting as a small millwork shop, American Woodmark (NASDAQ: AMWD) is a cabinet manufacturing company that helps customers from inspiration to installation.
Why Do We Pass on AMWD?
- Sales tumbled by 8.1% annually over the last two years, showing market trends are working against its favor during this cycle
- Earnings per share have dipped by 1.2% annually over the past five years, which is concerning because stock prices follow EPS over the long term
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 5.7 percentage points
At $58.15 per share, American Woodmark trades at 7.7x forward price-to-earnings. To fully understand why you should be careful with AMWD, check out our full research report (it’s free).
Stocks We Like 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 9 Market-Beating Stocks. 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 United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.
