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?
At StockStory, we dig beneath the surface of price movements to uncover whether a company's fundamentals justify its current valuation or suggest hidden potential. Keeping that in mind, here is one stock poised to prove the bears wrong and two where the skepticism is well-placed.
Two Stocks to Sell:
Churchill Downs (CHDN)
One-Month Return: -10.5%
Famous for hosting the Kentucky Derby, Churchill Downs (NASDAQ: CHDN) operates a horse racing, online wagering, and gaming entertainment business in the United States.
Why Do We Think CHDN Will Underperform?
- Sales trends were unexciting over the last two years as its 10.1% annual growth was below the typical consumer discretionary company
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
- Unchanged returns on capital make it difficult for the company’s valuation multiple to re-rate
Churchill Downs is trading at $92.88 per share, or 13.6x forward P/E. To fully understand why you should be careful with CHDN, check out our full research report (it’s free).
TransUnion (TRU)
One-Month Return: -10.8%
One of the three major credit bureaus in the United States alongside Equifax and Experian, TransUnion (NYSE: TRU) is a global information and insights company that provides credit reports, fraud prevention tools, and data analytics to help businesses make decisions and consumers manage their financial health.
Why Are We Hesitant About TRU?
- Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 2.6 percentage points
- Free cash flow margin shrank by 5 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
At $73.37 per share, TransUnion trades at 15.9x forward P/E. Dive into our free research report to see why there are better opportunities than TRU.
One Stock to Buy:
GitLab (GTLB)
One-Month Return: -12.2%
With its all-remote workforce pioneering a new approach to software development, GitLab (NASDAQ: GTLB) provides a single-application DevSecOps platform that helps development, operations, and security teams collaborate to build, secure, and deploy software faster.
Why Will GTLB Beat the Market?
- Customers view its software as mission-critical to their operations as its ARR has averaged 28.1% growth over the last year
- Prominent and differentiated software culminates in a best-in-class gross margin of 88%
- Strong free cash flow margin of 26.5% enables it to reinvest or return capital consistently
GitLab’s stock price of $29.02 implies a valuation ratio of 4.5x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. 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 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.
