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.
While market timing can be an extremely profitable strategy, it has burned many investors and requires rigorous analysis - something we specialize in at StockStory. Keeping that in mind, here is one stock where the poor sentiment is creating a buying opportunity and two facing legitimate challenges.
Two Stocks to Sell:
Sprout Social (SPT)
One-Month Return: -18.6%
Born from the recognition that businesses needed a centralized way to handle their growing social media presence, Sprout Social (NASDAQ: SPT) provides a comprehensive software platform that helps businesses manage, analyze, and optimize their presence across various social media networks.
Why Does SPT Worry Us?
- Track record of operating margin losses stem from its decision to pursue growth instead of profits
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
Sprout Social’s stock price of $15.18 implies a valuation ratio of 1.8x forward price-to-sales. Dive into our free research report to see why there are better opportunities than SPT.
Two Harbors Investment (TWO)
One-Month Return: +1.7%
Operating in the complex world of mortgage finance since 2009, Two Harbors Investment (NYSE: TWO) is a real estate investment trust that invests in mortgage servicing rights and agency residential mortgage-backed securities.
Why Do We Pass on TWO?
- Net interest income tumbled by 47.1% annually over the last five years, showing market trends are working against its favor during this cycle
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 20.2% annually while its revenue grew
- Products and services are facing significant credit quality challenges during this cycle as tangible book value per share has declined by 14.6% annually over the last five years
At $10.09 per share, Two Harbors Investment trades at 0.7x forward P/B. Read our free research report to see why you should think twice about including TWO in your portfolio.
One Stock to Watch:
CAVA (CAVA)
One-Month Return: -20.2%
Starting from a single Washington, D.C. location, CAVA (NYSE: CAVA) operates a fast-casual restaurant chain offering customizable Mediterranean-inspired dishes.
Why Is CAVA on Our Radar?
- Average same-store sales growth of 11.8% over the past two years indicates its restaurants are resonating with diners
- Earnings per share have massively outperformed its peers over the last one years, increasing by 200% annually
- Free cash flow margin jumped by 3.1 percentage points over the last year, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
CAVA is trading at $69.75 per share, or 113x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 5 Growth Stocks for this month. 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-small-cap company Comfort Systems (+782% 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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