Stocks near 52-week lows may feel like incredible bargains, but the savvy should recognize the risks.
Dumping these stocks is a strategic move, especially when they continue to trend downward, offering little to no upside potential ahead. When a stock continues reaching fresh lows, it’s typically a sign of deep-seated issues. Some of these issues may include dwindling fundamentals or ongoing negative market trends.
Selling lackluster stocks near 52-week lows enables investors to redirect their funds to more promising opportunities, effectively enhancing their portfolios. This approach effectively sidesteps the pitfall of catching falling knives while reallocating resources to maximize long-term gains.
With that in mind, three downtrodden stocks have been major disappointments over the past 12 months. With their floundering underlying businesses and bleak futures, these stocks continue eroding shareholder value at a worrying pace while offering little to no upside ahead.
Planet Image (YIBO)
Planet Image (NASDAQ:YIBO) faces major headwinds in the toner cartridge space with its portfolio of brands like TrueImage and CoolToner. Over the past three years, sales have increased from $141.5 million in December 2020 to $150.2 million by December 2023. This lackluster growth reflects a secular decline, shifting consumer preferences towards digital solutions and eco-friendly products.
Despite operating multiple sales channels and catering to a global audience, the company’s tepid growth is worrying. Its trajectory over the past few years indicates the drop in demand for traditional printing supplies. According to a report by Smithers, the industry plummeted nearly 15% between 2020 and 2022 and will continue losing value for the foreseeable future.
Unsurprisingly, the firm’s recent public listing in late January was a massive flop, with the stock plummeting by over 33% in the past six months. Hence, given the market’s lukewarm reception and questionable business viability, it’s best to steer clear of YIBO stock.
Eventbrite (EB)
Online event ticketing platform Eventbrite (NYSE:EB) has lost more than 56% of its value in the past year.
Despite the relatively encouraging top-line growth, Eventbrite’s new creator fees have sparked significant backlash. Though the change boosted revenue per ticket, it also led to a massive drop in creator engagement and paid ticket volumes. Its first-quarter (Q1) revenue growth came in at $86.3 million, roughly 11% year-over-year (YOY), but was a massive deceleration from the 22% growth rate in the previous quarter.
More concerning was the 8% YOY drop in paid ticket volumes to 21 million, a sharper decline than the 4% drop in the last quarter. Moreover, Eventbrite’s paid creator count dipped by 13,000 from the previous quarter to 170,000. Eventbrite also has to contend with stiff competition from major players such as StubHub and Ticketmaster, which significantly limits its upside potential.
Varex Imaging (VREX)
Varex Imaging (NASDAQ:VREX), which produces X-ray imaging systems, continues struggling to establish a dominant position in its niche. It operates through the Medical and Industrial segments, which have failed to make an impression. This is shown by its dreary stock market performance, marked by a 37% drop last year alone.
The Medical segment, typically the firm’s revenue backbone, saw a distressing 13% YOY drop in sales during Q1. Moreover, its recently released Q2 results showed a worsening trend, with a 15% drop. These alarming numbers show how hospitals and medical facilities are delaying investments in new X-ray technology.
Additionally, VREX’s Industrial segment, despite achieving a modest 6% growth in Q2, wasn’t able to offset the firm’s mounting losses in its medical division. Company-wide sales plummeted by 10% YOY to $206 million, indicating a worrying financial situation. Moreover, as the firm faces segment-specific and macroeconomic headwinds, its future appears remarkably uncertain, raising concerns over its sustainability.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.