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?
Price charts only tell part of the story. Our team at StockStory evaluates each company's underlying fundamentals to separate temporary setbacks from structural declines. That said, here is one stock where the poor sentiment is creating a buying opportunity and two where the skepticism is well-placed.
Two Stocks to Sell:
H&R Block (HRB)
One-Month Return: -8.5%
Founded in 1955 by brothers Henry W. Bloch and Richard A. Bloch, H&R Block (NYSE:HRB) is a tax preparation company offering professional tax assistance and financial solutions to individuals and small businesses.
Why Do We Think Twice About HRB?
- Muted 4.1% annual revenue growth over the last two years shows its demand lagged behind its consumer discretionary peers
- Projected sales growth of 3.3% for the next 12 months suggests sluggish demand
- Eroding returns on capital suggest its historical profit centers are aging
At $51.33 per share, H&R Block trades at 1.8x forward price-to-sales. If you’re considering HRB for your portfolio, see our FREE research report to learn more.
Exponent (EXPO)
One-Month Return: -3%
With a team of over 800 consultants holding advanced degrees in 90+ technical disciplines, Exponent (NASDAQ:EXPO) is a science and engineering consulting firm that investigates complex problems and provides expert analysis for clients across various industries.
Why Does EXPO Worry Us?
- Sales trends were unexciting over the last two years as its 3.3% annual growth was below the typical business services company
- Performance over the past two years shows its incremental sales were less profitable as its earnings per share were flat
- Waning returns on capital imply its previous profit engines are losing steam
Exponent’s stock price of $70.48 implies a valuation ratio of 33.8x forward P/E. To fully understand why you should be careful with EXPO, check out our full research report (it’s free).
One Stock to Watch:
Allison Transmission (ALSN)
One-Month Return: +0.4%
Helping build race cars at one point, Allison Transmission (NYSE:ALSN) offers transmissions to original equipment manufacturers and fleet operators.
Why Are We Fans of ALSN?
- Offerings are difficult to replicate at scale and lead to a best-in-class gross margin of 47.9%
- Disciplined cost controls and effective management resulted in a strong long-term operating margin of 29.3%, and its profits increased over the last five years as it scaled
- Robust free cash flow margin of 20.2% gives it many options for capital deployment
Allison Transmission is trading at $86.45 per share, or 12.6x forward EV-to-EBITDA. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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 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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