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?
- Flat sales over the last five years suggest it must find different ways to grow during this cycle
- Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 15.7 percentage points
- 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?
- Costs have risen faster than its revenue over the last two years, causing its adjusted operating margin to decline by 3.9 percentage points
- Cash-burning history makes us doubt the long-term viability of its business model
- 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?
- Sales tumbled by 1.3% annually over the last two years, showing market trends are working against its favor during this cycle
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 6.1% annually
- 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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