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.

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.

Arhaus (ARHS)

One-Month Return: -15.6%

With an aesthetic that features natural materials such as reclaimed wood, Arhaus (NASDAQ:ARHS) is a high-end furniture retailer that sells everything from sofas to rugs to bookcases.

Why Are We Hesitant About ARHS?

1. Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
2. Smaller revenue base of $1.27 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
3. Efficiency has decreased over the last year as its operating margin fell by 5.9 percentage points

At $7.86 per share, Arhaus trades at 15.3x forward price-to-earnings. Check out our free in-depth research report to learn more about why ARHS doesn’t pass our bar.

Brunswick (BC)

One-Month Return: -24.5%

Formerly known as Brunswick-Balke-Collender Company, Brunswick (NYSE: BC) is a designer and manufacturer of recreational marine products, including boats, engines, and marine parts.

Why Do We Think BC Will Underperform?

1. Products and services aren't resonating with the market as its revenue declined by 12.3% annually over the last two years
2. Anticipated sales growth of 1.1% for the next year implies demand will be shaky
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

Brunswick is trading at $44.71 per share, or 8.9x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than BC.

Acuity Brands (AYI)

One-Month Return: -11%

One of the pioneers of smart lights, Acuity (NYSE:AYI) designs and manufactures light fixtures and building management systems used in various industries.

Why Does AYI Give Us Pause?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 1.9% annually over the last two years
2. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
3. Free cash flow margin dropped by 2.5 percentage points over the last five years, implying the company became more capital intensive as competition picked up

Acuity Brands’s stock price of $237.91 implies a valuation ratio of 12.9x forward price-to-earnings. If you’re considering AYI for your portfolio, see our FREE research report to learn more.

Stocks We Like More

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.