3 Out-of-Favor Stocks We Keep Off Our Radar

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 skepticism is well-placed and some better opportunities to consider.

Ziff Davis (ZD)

One-Month Return: -31.9%

Originally a pioneering technology publisher founded in 1927 that became famous for PC Magazine, Ziff Davis (NASDAQ:ZD) operates a portfolio of digital media brands and subscription services across technology, shopping, gaming, healthcare, and cybersecurity markets.

Why Do We Think ZD Will Underperform?

1. Sales were flat over the last five years, indicating it’s failed to expand this cycle
2. Performance over the past five years shows each sale was less profitable, as its earnings per share fell by 4.1% annually
3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 9.3 percentage points

Ziff Davis is trading at $26.92 per share, or 3.8x forward P/E. Dive into our free research report to see why there are better opportunities than ZD.

MSCI (MSCI)

One-Month Return: -1.5%

Originally known as Morgan Stanley Capital International before becoming independent in 2007, MSCI (NYSE:MSCI) provides critical decision support tools, indexes, and analytics that help global investors understand risk and return factors and build more effective investment portfolios.

Why Does MSCI Worry Us?

1. Negative return on equity shows management lost money while trying to expand the business

At $572.91 per share, MSCI trades at 28.7x forward P/E. Check out our free in-depth research report to learn more about why MSCI doesn’t pass our bar.

PennyMac Financial Services (PFSI)

One-Month Return: -37.6%

Founded during the 2008 financial crisis to help address the mortgage market meltdown, PennyMac Financial Services (NYSE:PFSI) is a specialty financial services company that originates, services, and manages investments related to residential mortgage loans in the United States.

Why Does PFSI Give Us Pause?

1. Sales tumbled by 10.4% annually over the last five years, showing market trends are working against its favor during this cycle
2. Net interest income trends were unexciting over the last five years as its 7.1% annual growth was below the typical banking firm
3. Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term

PennyMac Financial Services’s stock price of $93.30 implies a valuation ratio of 1x forward P/B. To fully understand why you should be careful with PFSI, check out our full research report (it’s free).

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 9 Market-Beating Stocks. 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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.