1 Oversold Stock Ready to Bounce Back and 2 Facing Challenges

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. That said, here is one stock poised to prove the bears wrong and two facing legitimate challenges.

Two Stocks to Sell:

Floor And Decor (FND)

One-Month Return: -23.7%

Operating large, warehouse-style stores, Floor & Decor (NYSE:FND) is a specialty retailer that specializes in hard flooring surfaces for the home such as tiles, hardwood, stone, and laminates.

Why Should You Dump FND?

1. Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
2. Performance over the past three years shows its incremental sales were much less profitable, as its earnings per share fell by 11.5% annually
3. Low returns on capital reflect management’s struggle to allocate funds effectively, and its shrinking returns suggest its past profit sources are losing steam

Floor And Decor’s stock price of $52.25 implies a valuation ratio of 25.2x forward P/E. To fully understand why you should be careful with FND, check out our full research report (it’s free).

Connection (CNXN)

One-Month Return: -2.9%

Starting as a small computer products seller in 1982 and evolving into a Fortune 1000 company, Connection (NASDAQ:CNXN) is a technology solutions provider that helps businesses and government agencies design, purchase, implement, and manage their IT infrastructure and systems.

Why Do We Think CNXN Will Underperform?

1. Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last two years
2. Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 3.3% annually
3. Poor free cash flow margin of 3.3% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends

At $59.05 per share, Connection trades at 15.3x forward P/E. Check out our free in-depth research report to learn more about why CNXN doesn’t pass our bar.

One Stock to Buy:

Kinsale Capital Group (KNSL)

One-Month Return: -12.5%

Founded in 2009 during the aftermath of the financial crisis when many insurers were retreating from riskier markets, Kinsale Capital Group (NYSE:KNSL) is an insurance company that specializes in writing policies for hard-to-place, unusual, or high-risk businesses that standard insurers typically avoid.

Why Do We Love KNSL?

1. Net premiums earned expanded by 21.2% annually over the last two years, demonstrating exceptional market penetration this cycle
2. Performance over the past five years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 43.9% outpaced its revenue gains
3. Annual book value per share growth of 34.4% over the last two years was superb and indicates its capital strength increased during this cycle

Kinsale Capital Group is trading at $326.53 per share, or 3.4x forward P/B. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.

Stocks We Like Even More

ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum — both boxes checked at the same time.

Find out which stocks our AI platform is flagging this week. See this week's Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.