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 is one stock where the poor sentiment is creating a buying opportunity and two facing legitimate challenges.
Two Stocks to Sell:
Power Integrations (POWI)
One-Month Return: -11.2%
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 Are We Cautious About POWI?
- Sales stagnated over the last five years and signal the need for new growth strategies
- Expenses have increased as a percentage of 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
Power Integrations is trading at $39.57 per share, or 21.5x forward P/E. Dive into our free research report to see why there are better opportunities than POWI.
Choice Hotels (CHH)
One-Month Return: -8.7%
With almost 100% of its properties under franchise agreements, Choice Hotels (NYSE: CHH) is a hotel franchisor known for its diverse brand portfolio including Comfort Inn, Quality Inn, and Clarion.
Why Should You Dump CHH?
- Revenue per room has disappointed over the past two years due to weaker trends in its daily rates and occupancy levels
- Sales are projected to tank by 1.5% over the next 12 months as demand evaporates
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Choice Hotels’s stock price of $106.70 implies a valuation ratio of 14.9x forward P/E. If you’re considering CHH for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
Corpay (CPAY)
One-Month Return: -8.5%
Formerly known as FLEETCOR until its 2024 rebrand, Corpay (NYSE: CPAY) provides specialized payment solutions for businesses to manage vehicle expenses, corporate payments, and lodging costs with enhanced control and reporting capabilities.
Why Do We Like CPAY?
- 10.2% annual revenue growth over the last five years was better than the sector average, highlighting the value of its products and services
- Performance over the past five years was aided by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Market-beating return on equity illustrates that management has a knack for investing in profitable ventures
At $290.76 per share, Corpay trades at 12.6x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check 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 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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