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. That said, here are three stocks where the outlook is warranted and some alternatives with better fundamentals.

Chewy (CHWY)

One-Month Return: +2.4%

Founded by Ryan Cohen, who later became known for his involvement in GameStop, Chewy (NYSE: CHWY) is an online retailer specializing in pet food, supplies, and healthcare services.

Why Are We Cautious About CHWY?

1. Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 8.5% for the last three years
2. Estimated sales growth of 6.1% for the next 12 months implies demand will slow from its three-year trend
3. High servicing costs result in an inferior gross margin of 29.4% that must be offset through higher volumes

At $33.95 per share, Chewy trades at 16.1x forward EV/EBITDA. To fully understand why you should be careful with CHWY, check out our full research report (it’s free).

BJ's (BJ)

One-Month Return: +0.2%

Appealing to the budget-conscious individual shopping for a household, BJ’s Wholesale Club (NYSE: BJ) is a membership-only retail chain that sells groceries, appliances, electronics, and household items, often in bulk quantities.

Why Does BJ Worry Us?

1. Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
2. Widely-available products (and therefore stiff competition) result in an inferior gross margin of 18.5% that must be offset through higher volumes
3. Subpar operating margin of 3.9% constrains its ability to invest in process improvements or effectively respond to new competitive threats

BJ's is trading at $91.65 per share, or 19.7x forward P/E. Read our free research report to see why you should think twice about including BJ in your portfolio.

Lamb Weston (LW)

One-Month Return: -30.3%

Best known for its Grown in Idaho brand, Lamb Weston (NYSE: LW) produces and distributes potato products such as frozen french fries and mashed potatoes.

Why Are We Hesitant About LW?

1. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
2. Sales are projected to remain flat over the next 12 months as demand decelerates from its three-year trend
3. Easily substituted products (and therefore stiff competition) result in an inferior gross margin of 22.9% that must be offset through higher volumes

Lamb Weston’s stock price of $41.42 implies a valuation ratio of 15.6x forward P/E. If you’re considering LW for your portfolio, see our FREE research report to learn more.

High-Quality Stocks for All Market Conditions

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here in our Top 6 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.