3 Hated Stocks Skating on Thin Ice

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. Keeping that in mind, here are three stocks facing legitimate challenges and some alternatives worth exploring instead.

UiPath (PATH)

One-Month Return: -19.1%

Started in 2005 in Romania as a tech outsourcing company, UiPath (NYSE:PATH) makes software that helps companies automate repetitive computer tasks.

Why Does PATH Fall Short?

1. Customers had second thoughts about committing to its platform over the last year as its average billings growth of 5.7% underwhelmed
2. Estimated sales growth of 6.8% for the next 12 months implies demand will slow from its three-year trend
3. Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low

At $9.80 per share, UiPath trades at 3.6x forward price-to-sales. Check out our free in-depth research report to learn more about why PATH doesn’t pass our bar.

American Eagle (AEO)

One-Month Return: -20.9%

With a heavy focus on denim, American Eagle Outfitters (NYSE:AEO) is a specialty retailer offering an assortment of apparel and accessories to young adults.

Why Is AEO Not Exciting?

1. 4.3% annual revenue growth over the last five years was slower than its consumer retail peers
2. Projected sales decline of 2.7% for the next 12 months points to a tough demand environment ahead
3. Below-average returns on capital indicate management struggled to find compelling investment opportunities

American Eagle is trading at $9.57 per share, or 5.5x forward price-to-earnings. To fully understand why you should be careful with AEO, check out our full research report (it’s free).

Camping World (CWH)

One-Month Return: -23.5%

Founded in 1966 as a single recreational vehicle (RV) dealership, Camping World (NYSE:CWH) still sells RVs along with boats and general merchandise for outdoor activities.

Why Does CWH Give Us Pause?

1. Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
2. Earnings per share fell by 34.4% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
3. 9× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly

Camping World’s stock price of $12.23 implies a valuation ratio of 13.9x forward price-to-earnings. If you’re considering CWH for your portfolio, see our FREE research report to learn more.

Stocks We Like 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 5 Growth Stocks for this month. 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 United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.