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?

While market timing can be an extremely profitable strategy, it has burned many investors and requires rigorous analysis - something we specialize in at StockStory. That said, here are three stocks facing legitimate challenges and some alternatives worth exploring instead.

Power Integrations (POWI)

One-Month Return: -22.6%

A leading supplier of parts for electronics such as home appliances, Power Integrations (NASDAQ: POWI) is a semiconductor designer and developer specializing in products used for high-voltage power conversion.

Why Do We Think POWI Will Underperform?

1. Flat sales over the last five years suggest it must find different ways to grow during this cycle
2. Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 15.7 percentage points
3. Performance over the past five years shows each sale was less profitable, as its earnings per share fell by 2.1% annually

At $43.84 per share, Power Integrations trades at 24.3x forward P/E. Dive into our free research report to see why there are better opportunities than POWI.

agilon health (AGL)

One-Month Return: -62.7%

Transforming how doctors care for seniors by shifting financial incentives from volume to outcomes, agilon health (NYSE: AGL) provides a platform that helps primary care physicians transition to value-based care models for Medicare patients through long-term partnerships and global capitation arrangements.

Why Does AGL Worry Us?

1. Costs have risen faster than its revenue over the last two years, causing its adjusted operating margin to decline by 3.9 percentage points
2. Cash-burning history makes us doubt the long-term viability of its business model
3. Negative returns on capital show that some of its growth strategies have backfired

agilon health’s stock price of $0.84 implies a valuation ratio of 0.1x forward price-to-sales. Read our free research report to see why you should think twice about including AGL in your portfolio.

Connection (CNXN)

One-Month Return: -7.7%

Starting as a small computer products seller in 1982 and evolving into a Fortune 1000 company, Connection (NASDAQ: CNXN) is a technology solutions provider that helps businesses and government agencies design, purchase, implement, and manage their IT infrastructure and systems.

Why Should You Sell CNXN?

1. Sales tumbled by 1.3% annually over the last two years, showing market trends are working against its favor during this cycle
2. Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 6.1% annually
3. Poor free cash flow margin of 2.3% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends

Connection is trading at $61.38 per share, or 17x forward P/E. To fully understand why you should be careful with CNXN, check out our full research report (it’s free).

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 5 Strong Momentum Stocks for this week. 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 Exlservice (+354% 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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