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.
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 where the skepticism is well-placed and some better opportunities to consider.
Semrush (SEMR)
One-Month Return: -4.8%
Born from the need to make sense of the complex digital marketing landscape, Semrush (NYSE:SEMR) is a software-as-a-service platform that helps companies improve their online visibility, analyze digital marketing efforts, and optimize content across search engines and social media.
Why Are We Hesitant About SEMR?
- Below-average net revenue retention rate of 106% suggests it has some trouble expanding within existing accounts
- Efficiency fell over the last year as its operating margin declined by 4.3 percentage points because it pursued growth instead of profits
- Low free cash flow margin of 9.7% for the last year gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
At $6.91 per share, Semrush trades at 2.2x forward price-to-sales. Check out our free in-depth research report to learn more about why SEMR doesn’t pass our bar.
Alarm.com (ALRM)
One-Month Return: -2.4%
Processing over 325 billion data points annually from more than 150 million connected devices, Alarm.com (NASDAQ:ALRM) provides cloud-based platforms that enable residential and commercial property owners to remotely monitor and control their security, video, energy, and other connected devices.
Why Do We Pass on ALRM?
- Products, pricing, or go-to-market strategy may need some adjustments as its 7% average billings growth over the last year was weak
- Estimated sales growth of 3.8% for the next 12 months implies demand will slow from its two-year trend
- Operating margin expanded by 1.9 percentage points over the last year as it scaled and became more efficient
Alarm.com’s stock price of $50.20 implies a valuation ratio of 2.7x forward price-to-sales. If you’re considering ALRM for your portfolio, see our FREE research report to learn more.
Middleby (MIDD)
One-Month Return: -11.1%
Holding a Guinness World Record for creating the world’s fastest conveyor pizza oven, Middleby (NYSE:MIDD) is a food service and equipment manufacturer.
Why Do We Think MIDD Will Underperform?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 21.1 percentage points
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Middleby is trading at $122.05 per share, or 13.3x forward P/E. To fully understand why you should be careful with MIDD, check out our full research report (it’s free for active Edge members).
High-Quality Stocks for All Market Conditions
Fresh US-China trade tensions just tanked stocks—but strong bank earnings are fueling a sharp rebound. Don’t miss the bounce.
Don’t let fear keep you from great opportunities and take a look at 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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