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.
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 are three stocks where the outlook is warranted and some alternatives with better fundamentals.
Papa John's (PZZA)
One-Month Return: -15.2%
Founded by the eclectic John “Papa John” Schnatter, Papa John’s (NASDAQ: PZZA) is a globally recognized pizza delivery and carryout chain known for “better ingredients” and “better pizza”.
Why Do We Pass on PZZA?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Forecasted revenue decline of 5.5% for the upcoming 12 months implies demand will fall off a cliff
- Day-to-day expenses have swelled relative to revenue over the last year as its operating margin fell by 2.9 percentage points
Papa John’s stock price of $30.37 implies a valuation ratio of 19.1x forward P/E. Dive into our free research report to see why there are better opportunities than PZZA.
Medifast (MED)
One-Month Return: -9.5%
Known for its Optavia program that combines portion-controlled meal replacements with coaching, Medifast (NYSE: MED) has a broad product portfolio of bars, snacks, drinks, and desserts for those looking to lose weight or consume healthier foods.
Why Are We Bearish on MED?
- Annual sales declines of 39.1% for the past three years show its products struggled to connect with the market
- Revenue base of $346.1 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Earnings per share have contracted by 28.9% annually over the last three years, a headwind for returns as stock prices often echo long-term EPS performance
Medifast is trading at $9.68 per share, or 0.4x forward price-to-sales. If you’re considering MED for your portfolio, see our FREE research report to learn more.
SmartRent (SMRT)
One-Month Return: -22.1%
Founded by an employee at a real estate rental company, SmartRent (NYSE: SMRT) provides smart home devices and software for multifamily residential properties, single-family rental homes, and student housing communities.
Why Are We Wary of SMRT?
- Annual sales declines of 17.9% for the past two years show its products and services struggled to connect with the market during this cycle
- Historically negative EPS is a worrisome sign for conservative investors and obscures its long-term earnings potential
- Negative free cash flow raises questions about the return timeline for its investments
At $0.95 per share, SmartRent trades at 42.4x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including SMRT in your portfolio.
Stocks We Like More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 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-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
