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.
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 three stocks where the skepticism is well-placed and some better opportunities to consider.
ZoomInfo (ZI)
One-Month Return: -25.6%
Founded in 2007 as DiscoveryOrg and renamed after a merger in 2019, ZoomInfo (NASDAQ: ZI) is a software as a service product that provides sales departments with access to a database of prospective clients.
Why Do We Think Twice About ZI?
- Offerings struggled to generate interest as its billings were flat over the last year
- Platform has low switching costs as its net revenue retention rate of 85.5% demonstrates high turnover
- Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 12.9 percentage points
At $8.24 per share, ZoomInfo trades at 2.5x forward price-to-sales. Dive into our free research report to see why there are better opportunities than ZI.
Medifast (MED)
One-Month Return: -13.2%
Known for its Optavia program that combines portion-controlled meal replacements with coaching, Medifast (NYSE: MED) has a broad product portfolio of bars, snacks, drinks, and desserts for those looking to lose weight or consume healthier foods.
Why Do We Steer Clear of MED?
- Products aren't resonating with the market as its revenue declined by 26.6% annually over the last three years
- Earnings per share decreased by more than its revenue over the last three years, showing each sale was less profitable
- Capital intensity has ramped up over the last year as its free cash flow margin decreased by 10.3 percentage points
Medifast’s stock price of $12.28 implies a valuation ratio of 41.1x forward price-to-earnings. If you’re considering MED for your portfolio, see our FREE research report to learn more.
Air Lease (AL)
One-Month Return: -10.8%
Established by a founder of Century City in Los Angeles, Air Lease Corporation (NYSE: AL) provides aircraft leasing and financing solutions to airlines worldwide.
Why Are We Cautious About AL?
- Muted 6.3% annual revenue growth over the last five years shows its demand lagged behind its industrials peers
- Free cash flow margin shrank by 54.3 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
Air Lease is trading at $44.15 per share, or 1.7x forward price-to-sales. To fully understand why you should be careful with AL, check out our full research report (it’s free).
Stocks We Like More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market 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 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 Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.
