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. Keeping that in mind, here is one stock where the poor sentiment is creating a buying opportunity and two where the outlook is warranted.
Two Stocks to Sell:
ACV Auctions (ACVA)
One-Month Return: -11.5%
Founded in 2014, ACV Auctions (NASDAQ:ACVA) is an online auction marketplace for car dealers and wholesalers to buy and sell used cars.
Why Does ACVA Fall Short?
- High servicing costs result in an inferior gross margin of 26.2% that must be offset through higher volumes
- Highly competitive market means it’s on the never-ending treadmill of sales and marketing spend
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
ACV Auctions is trading at $10.25 per share, or 17x forward EV/EBITDA. Check out our free in-depth research report to learn more about why ACVA doesn’t pass our bar.
Target (TGT)
One-Month Return: -14.9%
With a higher focus on style and aesthetics compared to other large general merchandise retailers, Target (NYSE:TGT) serves the suburban consumer who is looking for a wide range of products under one roof.
Why Are We Hesitant About TGT?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
- Commoditized inventory, bad unit economics, and high competition are reflected in its low gross margin of 28.1%
- Performance over the past six years shows its incremental sales were much less profitable, as its earnings per share fell by 4.2% annually
Target’s stock price of $89.30 implies a valuation ratio of 11.6x forward P/E. Read our free research report to see why you should think twice about including TGT in your portfolio.
One Stock to Buy:
Morningstar (MORN)
One-Month Return: -3.7%
Founded in 1984 by Joe Mansueto with just $80,000 in personal savings, Morningstar (NASDAQ:MORN) provides independent investment data, research, and analysis tools that help investors, advisors, and institutions make informed financial decisions.
Why Should You Buy MORN?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 12.7% annual sales growth over the last five years
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 321% over the last two years outstripped its revenue performance
- Market-beating return on equity illustrates that management has a knack for investing in profitable ventures
At $249 per share, Morningstar trades at 26.5x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at 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 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 Comfort Systems (+782% 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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