The past year hasn't been kind to the stocks featured in this article. Each has tumbled to their lowest points 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. That said, here are three stocks facing legitimate challenges and some alternatives worth exploring instead.
Salesforce (CRM)
One-Month Return: -7.6%
Launched in 1999 from a rented one-bedroom apartment in San Francisco by Marc Benioff and his three co-founders, Salesforce (NYSE:CRM) is a software-as-a-service platform that helps companies access, manage, and share sales information such as leads.
Why Are We Hesitant About CRM?
- Sizable revenue base leads to growth challenges as its 11.4% annual revenue increases over the last three years fell short of other software companies
- Customers were hesitant to make long-term commitments to its platform as its 8.7% average ARR growth over the last year was sluggish
- Estimated sales growth of 9.1% for the next 12 months implies demand will slow from its three-year trend
Salesforce is trading at $249.30 per share, or 5.7x forward price-to-sales. Check out our free in-depth research report to learn more about why CRM doesn’t pass our bar.
Coty (COTY)
One-Month Return: -2%
With a portfolio boasting many household brands, Coty (NYSE:COTY) is a beauty products powerhouse spanning cosmetics, fragrances, and skincare.
Why Should You Sell COTY?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Forecasted revenue decline of 2.5% for the upcoming 12 months implies demand will fall off a cliff
- ROIC of 0.6% reflects management’s challenges in identifying attractive investment opportunities
Coty’s stock price of $4.86 implies a valuation ratio of 8.9x forward P/E. Read our free research report to see why you should think twice about including COTY in your portfolio.
Prosperity Bancshares (PB)
One-Month Return: -10.3%
With a network of banking centers spanning the Lone Star State and beyond, Prosperity Bancshares (NYSE:PB) operates full-service banking locations throughout Texas and Oklahoma, offering a wide range of financial products and services to businesses and consumers.
Why Does PB Fall Short?
- Net interest income was flat over the last five years, indicating it’s failed to expand this cycle
- Net interest margin of 3% reflects its high servicing and capital costs
- Incremental sales over the last five years were less profitable as its earnings per share were flat while its revenue grew
At $66.06 per share, Prosperity Bancshares trades at 0.8x forward P/B. Dive into our free research report to see why there are better opportunities than PB.
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2024 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - 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 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% 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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