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 is one stock where you should be greedy instead of fearful and two facing legitimate challenges.
Two Stocks to Sell:
Caesars Entertainment (CZR)
One-Month Return: -5%
Formerly Eldorado Resorts, Caesars Entertainment (NASDAQ: CZR) is a global gaming and hospitality company operating numerous casinos, hotels, and resort properties.
Why Does CZR Give Us Pause?
- Scale is a double-edged sword because it limits the company's growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 1.9% for the last two years
- Earnings per share fell by 26.4% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Caesars Entertainment is trading at $25.91 per share, or 25x forward price-to-earnings. Read our free research report to see why you should think twice about including CZR in your portfolio.
Fortrea (FTRE)
One-Month Return: -45.9%
Spun off from Labcorp in 2023 to focus exclusively on clinical research services, Fortrea (NASDAQ: FTRE) is a contract research organization that helps pharmaceutical, biotech, and medical device companies develop and bring their products to market through clinical trials and support services.
Why Do We Steer Clear of FTRE?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 6.7% annually over the last two years
- Earnings per share have contracted by 49.5% annually over the last three years, a headwind for returns as stock prices often echo long-term EPS performance
- High net-debt-to-EBITDA ratio of 5× could force the company to raise capital at unfavorable terms if market conditions deteriorate
At $5.54 per share, Fortrea trades at 4.9x forward price-to-earnings. If you’re considering FTRE for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
Integral Ad Science (IAS)
One-Month Return: -28.6%
Founded in 2009, Integral Ad Science (NASDAQ: IAS) provides digital advertising verification and optimization solutions, ensuring that ads are viewable by real people in brand-safe environments across various platforms and devices.
Why Does IAS Stand Out?
- Software platform has product-market fit given the rapid recovery of its customer acquisition costs
- Disciplined cost controls and effective management resulted in a strong trailing 12-month operating margin of 11.4%, and it turbocharged its profits by achieving some fixed cost leverage
- Strong free cash flow margin of 21.9% enables it to reinvest or return capital consistently
Integral Ad Science’s stock price of $7.07 implies a valuation ratio of 2.1x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio 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.
