3 Out-of-Favor Stocks We Steer Clear Of
Hitting a new 52-week low can be a pivotal moment for any stock. These floors often mark either the beginning of a turnaround story or confirmation that a company faces serious headwinds.
While market timing can be an extremely profitable strategy, it has burned many investors and requires rigorous analysis - something we specialize in at StockStory. That said, here are three stocks facing legitimate challenges and some alternatives worth exploring instead.
iHeartMedia (IHRT)
One-Month Return: -15.3%
Occasionally featuring celebrity hosts like Ryan Seacrest on its shows, iHeartMedia (NASDAQ:IHRT) is a leading multimedia company renowned for its extensive network of radio stations, digital platforms, and live events across the globe.
Why Should You Sell IHRT?
- Muted 4.2% annual revenue growth over the last five years shows its demand lagged behind its consumer discretionary peers
- Poor free cash flow margin of -0.1% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- 8× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
At $2.27 per share, iHeartMedia trades at 7.4x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than IHRT.
Pool (POOL)
One-Month Return: -13.2%
Founded in 1993 and headquartered in Louisiana, Pool (NASDAQ:POOL) is one of the largest wholesale distributors of swimming pool supplies, equipment, and related leisure products.
Why Do We Avoid POOL?
- Lackluster 2.2% annual revenue growth over the last five years indicates the company is losing ground to competitors
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 6.9% for the last two years
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Pool’s stock price of $161.69 implies a valuation ratio of 14.6x forward P/E. Check out our free in-depth research report to learn more about why POOL doesn’t pass our bar.
Array (ARRY)
One-Month Return: -13.4%
Going public in October 2020, Array (NASDAQ:ARRY) is a global manufacturer of ground-mounting tracking systems for utility and distributed generation solar energy projects.
Why Do We Pass on ARRY?
- Muted 3.7% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
- Issuance of new shares over the last five years caused its earnings per share to fall by 3.1% annually while its revenue grew
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Array is trading at $3.94 per share, or 5.1x forward P/E. Read our free research report to see why you should think twice about including ARRY in your portfolio.
Stocks We Like More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
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-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.