3 Out-of-Favor Stocks We Find Risky

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.

Dropbox (DBX)

One-Month Return: -7.7%

Originally named after the founders' tendency to "drop" files into a shared folder, Dropbox (NASDAQ:DBX) provides a content collaboration platform that helps individuals and teams store, organize, share, and work on files from anywhere.

Why Should You Dump DBX?

1. Customers had second thoughts about committing to its platform over the last year as its billings averaged 1.1% declines
2. Estimated sales for the next 12 months are flat and imply a softer demand environment
3. Efficiency rose over the last year as its Operating margin increased by 8.3 percentage points

Dropbox is trading at $24.50 per share, or 2.5x forward price-to-sales. Read our free research report to see why you should think twice about including DBX in your portfolio.

Health Catalyst (HCAT)

One-Month Return: -21.2%

Built on its "Health Catalyst Flywheel" methodology that emphasizes measurable outcomes, Health Catalyst (NASDAQ:HCAT) provides data and analytics technology and services that help healthcare organizations manage their data and drive measurable clinical, financial, and operational improvements.

Why Are We Out on HCAT?

1. Sales trends were unexciting over the last two years as its 4.4% annual growth was well below the typical software company
2. Extended payback periods on sales investments suggest the company’s platform isn’t resonating enough to drive efficient sales conversions
3. Cash-burning history makes us doubt the long-term viability of its business model

Health Catalyst’s stock price of $1.75 implies a valuation ratio of 0.4x forward price-to-sales. If you’re considering HCAT for your portfolio, see our FREE research report to learn more.

Wiley (WLY)

One-Month Return: -1.1%

With roots dating back to 1807 when Charles Wiley opened a small printing shop in Manhattan, John Wiley & Sons (NYSE:WLY) is a global academic publisher that provides scientific journals, books, digital courseware, and knowledge solutions for researchers, students, and professionals.

Why Do We Avoid WLY?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 2.2% annually over the last five years
2. Sales are projected to be flat over the next 12 months and imply weak demand
3. Free cash flow margin shrank by 4.3 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive

At $30.60 per share, Wiley trades at 1x trailing 12-month price-to-sales. Check out our free in-depth research report to learn more about why WLY doesn’t pass our bar.

Stocks We Like More

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

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 Kadant (+351% five-year return). Find your next big winner with StockStory today.