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 you should be greedy instead of fearful and two where the outlook is warranted.
Two Stocks to Sell:
Kadant (KAI)
One-Month Return: +0.5%
Headquartered in Massachusetts, Kadant (NYSE: KAI) is a global supplier of high-value, critical components and engineered systems used in process industries worldwide.
Why Are We Hesitant About KAI?
- Sales trends were unexciting over the last two years as its 3.8% annual growth was below the typical industrials company
- Earnings per share fell by 3.6% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
- Free cash flow margin dropped by 3.7 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Kadant’s stock price of $278.12 implies a valuation ratio of 28.1x forward P/E. If you’re considering KAI for your portfolio, see our FREE research report to learn more.
SAIC (SAIC)
One-Month Return: -6.1%
With over five decades of experience supporting national security missions, Science Applications International Corporation (NASDAQ: SAIC) provides technical, engineering, and enterprise IT services primarily to U.S. government agencies and military branches.
Why Do We Avoid SAIC?
- Sales tumbled by 1.5% annually over the last two years, showing market trends are working against its favor during this cycle
- Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 2.5 percentage points
SAIC is trading at $85.87 per share, or 10.1x forward P/E. To fully understand why you should be careful with SAIC, check out our full research report (it’s free for active Edge members).
One Stock to Watch:
Zoetis (ZTS)
One-Month Return: -11.7%
Originally spun off from Pfizer in 2013 as the world's largest pure-play animal health company, Zoetis (NYSE: ZTS) discovers, develops, and sells medicines, vaccines, diagnostic products, and services for pets and livestock animals worldwide.
Why Are We Positive On ZTS?
- Share repurchases over the last five years enabled its annual earnings per share growth of 10.5% to outpace its revenue gains
- ZTS is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
At $127.43 per share, Zoetis trades at 19.4x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free for active Edge members.
Stocks We Like Even More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in 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 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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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