3 Out-of-Favor Stocks Walking a Fine Line
The past year hasn’t been kind to the stocks featured in this article. Each has tumbled to its lowest point in 12 months, leaving investors to decide whether they’re witnessing fire sales or falling knives.
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 are three stocks where the skepticism is well-placed and some better opportunities to consider.
Stratasys (SSYS)
One-Month Return: -14.2%
Born from the Founder’s idea of making a toy frog with a glue gun, Stratasys (NASDAQ:SSYS) offers 3D printers and related materials, software, and services to many industries.
Why Is SSYS Not Exciting?
- Sales were flat over the last five years, indicating it’s failed to expand this cycle
- Persistent operating margin losses suggest the business manages its expenses poorly
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
Stratasys is trading at $7.72 per share, or 54.1x forward P/E. Check out our free in-depth research report to learn more about why SSYS doesn’t pass our bar.
Walker & Dunlop (WD)
One-Month Return: -4.8%
Originating as a small mortgage banking firm during the Great Depression in 1937, Walker & Dunlop (NYSE:WD) provides commercial real estate financing, property sales, appraisal, and investment management services with a focus on multifamily properties.
Why Do We Avoid WD?
- Net interest income tumbled by 41.6% annually over the last five years, showing market trends are working against it during this cycle
- Earnings per share fell by 13.7% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Loan losses and capital returns have eroded its tangible book value per share this cycle as its tangible book value per share declined by 8.5% annually over the last five years
At $40.53 per share, Walker & Dunlop trades at 0.8x forward P/B. Dive into our free research report to see why there are better opportunities than WD.
PennyMac Mortgage Investment Trust (PMT)
One-Month Return: -2.5%
Operating as a real estate investment trust since 2009 to maintain tax advantages, PennyMac Mortgage Investment Trust (NYSE:PMT) is a specialty finance company that invests in mortgage-related assets and operates a correspondent lending business.
Why Are We Bearish on PMT?
- Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
- Tangible book value per share tumbled by 6.3% annually over the last five years, showing banking sector trends are working against it during this cycle
PennyMac Mortgage Investment Trust’s stock price of $9.21 implies a valuation ratio of 0.6x forward P/B. If you’re considering PMT for your portfolio, see our FREE research report to learn more.
High-Quality Stocks for All Market Conditions
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.