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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.
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 is one stock where you should be greedy instead of fearful and two facing legitimate challenges.
Two Stocks to Sell:
Caesars Entertainment (CZR)
One-Month Return: -5%
Formerly Eldorado Resorts, Caesars Entertainment (NASDAQ:CZR) is a global gaming and hospitality company operating numerous casinos, hotels, and resort properties.
Why Does CZR Give Us Pause?
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Scale is a double-edged sword because it limits the company's growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 1.9% for the last two years
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Earnings per share fell by 26.4% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
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Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Caesars Entertainment is trading at $25.91 per share, or 25x forward price-to-earnings. To fully understand why you should be careful with CZR, check out our full research report (it’s free).
Fortrea (FTRE)
One-Month Return: -45.9%
Spun off from Labcorp in 2023 to focus exclusively on clinical research services, Fortrea (NASDAQ:FTRE) is a contract research organization that helps pharmaceutical, biotech, and medical device companies develop and bring their products to market through clinical trials and support services.
Why Do We Steer Clear of FTRE?
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Customers postponed purchases of its products and services this cycle as its revenue declined by 6.7% annually over the last two years
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Earnings per share have contracted by 49.5% annually over the last three years, a headwind for returns as stock prices often echo long-term EPS performance
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High net-debt-to-EBITDA ratio of 5× could force the company to raise capital at unfavorable terms if market conditions deteriorate
At $5.54 per share, Fortrea trades at 4.9x forward price-to-earnings. Read our free research report to see why you should think twice about including FTRE in your portfolio, it’s free.
One Stock to Watch:
Integral Ad Science (IAS)
One-Month Return: -28.6%
Founded in 2009, Integral Ad Science (NASDAQ:IAS) provides digital advertising verification and optimization solutions, ensuring that ads are viewable by real people in brand-safe environments across various platforms and devices.